DCIT 8(2), MUMBAI V. MONSANTO INDIA LTD, MUMBAI

ITA 6662/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83770 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 25-07-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 04-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: KIRIT KAMDARPOOJA BATTACHARJEE
• Keywords: Depreciation; Difference of opinion; Change of opinion; Reassessment proceedings
• Section: 143(3); 80IB; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO. 6662/MUM/2011 ASSESSMENT YEAR: 2004-05 DCIT -8(2) R. NO. 216-A, AAYAKAR BHAVAN M.K. ROAD MUMBAI VS. M/S. MONSANTO INDIA LTD. AHURA CENTRE, 5 TH FLOOR, 96, MAHAKALI CAVES ROAD ANDHERI (E), MUMBAI- 400 093 PAN:AAACM 2875 L (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI KIRIT KAMDAR/POOJA BATTACHARJEE REVENUE BY : MS. AMRITA SINGH DATE OF HEARING : 25.07.2014 DATE OF PRONOUNCEMENT : 10.09.2014 O R D E R PER DR. S.T.M. PAVALAN, JM: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF THE LD.CIT(A) -17, MUMBAI DATED 12.07.2011 FOR THE ASSE SSMENT YEAR 2004-05. 2. IN THIS APPEAL, THE REVENUE, AMONG OTHER THINGS, HAS AGITATED THE DECISION OF THE LD.CIT(A) HOLDING THAT THE REASSESSMENT MADE BY THE AO U/S 143(3) READ WITH SECTION 147 OF THE INCOME-TAX ACT IS NOT VALID. 3. THE RELEVANT FACTS ARE THAT THE ASSESSEE, IN ITS ORIGINAL RETURN, HAD DECLARED A TOTAL INCOME OF RS.39.97 CORES AFTER CLAIMING DEDUC TION U/S 80IB AMOUNTING TO RS.6,55,18,933/- ON ITS PLANT NO.II. THE CASE WAS A SSESSED U/S 143(3) AT RS.80,93,64,563/- VIDE ORDER DATED 22.12.2006 AND T HE SAID ORDER THE AO MADE THE ADJUSTMENTS TO THE TOTAL INCOME ON ACCOUNT OF THE F OLLOWING: (I) THE INCOME EARNED HAD SCRAP SALES WAS NOT ELIGIBLE FOR DEDUCTION U/S 80IB AND (II) THE EFFECT OF DEPRECIATION THRUST ON THE ASSESSEE FOR THE PAST AS SESSMENT YEARS. THE ASSESSEE FILED AN APPEAL AGAINST THE ASSESSMENT ORDER BEFORE THE FIRST APPELLATE AUTHORITY, I.E., ITA NO. 6662/MUM/2011 M/S. MONSANTO INDIA LTD. ASSESSMENT YEAR: 2004-05 2 THE LD.CIT(A) RAISING VARIOUS GROUNDS OF APPEAL INC LUDING THE ELIGIBILITY OF DEDUCTION U/S 80IB ON SCRAP SALES. HOWEVER, THE LD.CIT(A) UPH ELD THAT THE INCOME ON SCRAP SALES WAS NOT ELIGIBLE FOR DEDUCTION U/S 80IB. ON F URTHER APPEAL BEFORE THE TRIBUNAL, THE TRIBUNAL ALLOWED CERTAIN RELIEF WHICH INTER ALI A INCLUDES THAT SCRAP SALES SHOULD BE COMPUTED WHILE COMPUTING DEDUCTION U/S 80IB. THE IN COME ASSESSED ON GIVING EFFECTS TO THE TRIBUNAL ORDER WAS DETERMINED AT RS. 44,49,86,025/. SUBSEQUENTLY, VIDE NOTICE, DATED 23.02.2010 U/S 148, THE CASE WAS REOPENED BY THE AO ON THE GROUNDS THAT (I) DEPRECIATION OF RS.15,00,395/- PER TAINING TO COMMON ASSETS CLAIMED BY THE ASSESSEE IN ITS RETURN IS NOT REDUCED WHILE COMPUTING THE DEDUCTION U/S 80IB IN THE ORDER U/S 143(3) AND (II) COMMON CORPORATE E XPENSES HAVE BEEN ALLOCATED BY THE ASSESSEE AT 10% ON ESTIMATE BASIS WHEREAS THEY SHOULD HAVE BEEN ALLOCATED IN THE RATIO OF SALES BETWEEN THE UNITS. ACCORDINGLY, IN THE REOPENED ASSESSMENT, THE AO RECOMPUTED THE DEDUCTION U/S 80IB AT RS.5,42,81, 222/- INSTEAD OF RS.6,45,18,933/-. ON APPEAL, THE LD.CIT(A) HELD THA T THE REASSESSMENT MADE BY THE AO U/S 143(3) READ WITH SECTION 147 OF THE ACT IS N OT VALID. AGGRIEVED BY THE IMPUGNED DECISION, THE REVENUE IS IN APPEAL BEFORE US. 4. HAVING HEARD BOTH THE SIDES AND PERUSED THE MATE RIAL ON RECORD, IT IS PERTINENT TO MENTION THAT THERE IS NO DISPUTE THAT THE ORIGINAL STATEMENT HAS BEEN COMPLETED U/S 143(3) AND THE CASE HAS BEEN REOPENED AFTER FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THE CASE HAS BEEN REOPENED BY THE AO ON THE GROUNDS THAT (I) DEPRECIATION OF RS.15,00,395/- PER TAINING TO COMMON ASSETS CLAIMED BY THE ASSESSEE IN ITS RETURN IS NOT REDUCED WHILE COMPUTING THE DEDUCTION U/S 80IB IN THE ORDER U/S 143(3) AND (II) COMMON CORPORATE E XPENSES HAVE BEEN ALLOTTED BY THE ASSESSEE AT 10% ON ESTIMATE BASIS WHEREAS THEY SHOULD HAVE BEEN ALLOCATED IN THE RATIO OF SALES BETWEEN THE UNITS. IN THIS CONNE CTION, IT IS RELEVANT TO STATE THAT NO NEW MATERIAL OR INFORMATION HAS COME TO THE POSSESS ION OF THE AO SUBSEQUENT TO THE ORIGINAL ASSESSMENT AND THE ENTIRE INFORMATION HAS BEEN AVAILABLE IN FORM 10CCB FILED ALONG WITH RETURN OR IN THE VARIOUS SUBMISSIO NS MADE AT THE TIME OF ORIGINAL ASSESSMENT. THEREFORE, IT CANNOT BE SAID THAT THERE WAS NO FULL OR TRUE DISCLOSURES BY THE ASSESSEE. THIS CLEARLY INDICATES THAT THE CONDI TION PRESCRIBED IN THE PROVISO TO SECTION 147 IS NOT FULFILLED BY THE AO FOR REOPENIN G THE ASSESSMENT ALREADY COMPLETED BY THE AO U/S 143(3). FURTHER, THE PERUSA L OF THE ORIGINAL ASSESSMENT ITA NO. 6662/MUM/2011 M/S. MONSANTO INDIA LTD. ASSESSMENT YEAR: 2004-05 3 ORDER INDICATES THAT THE DEDUCTION U/S 80IB HAS BEE N SCRUTINIZED BY THE AO AND VIDE PARA 6.2 OF ORDER, THE PLANT WISE PROFIT AND LOSS A CCOUNT ALONG WITH THE PLANT WISE DEPRECIATION HAS BEEN PLACED IN THE ORDER ITSELF. A LSO, THE ASSESSEE HAS POINTED OUT VIDE SUBMISSIONS DATED 22.12.2006 AND 31.03.2004, A COMPLETED DISCLOSURES WITH REGARD TO THE PLANT WISE ALLOCATION OF DEPRECIATION AND COST DURING THE COURSE OF THE ORIGINAL ASSESSMENT PROCEEDINGS. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE REASONS RECORDED FOR THE REOPENING THE ASSESSMENT A MOUNTS TO A REVIEW OF THE ORIGINAL ASSESSMENT ORDER, WHICH IS NOT LEGALLY TEN ABLE AS THE SAME WOULD AMOUNT TO CHANGE OF OPINION. IT IS FOUND THAT THE LD.CIT(A) H AS RIGHTLY APPRECIATED THE SAID FACTS IN THE LIGHT OF VARIOUS DECISIONS TO COME TO A CONCLUSION THAT THE NOTICE ISSUED U/S 148 IS WITHOUT JURISDICTION AND LIABLE TO BE CA NCELLED. 4.1 AS REGARDS THE CONTENTION OF THE REVENUE RELYIN G ON THE DECISIONS OF THE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. RINKU CHAKRABORTHY 242 CTR 425 IN SUPPORT OF THE PROPOSITION THAT WHEN THE INCOME LIA BLE TO BE ASSESSED TO TAX HAS ESCAPED ASSESSMENT DUE TO OVERSIGHT/INADVERTENT MIS TAKE COMMITTED BY THE AO, THE AO HAS THE JURISDICTION TO REOPEN THE ASSESSMENT, I T IS PERTINENT TO MENTION THAT THE CLAIM OF THE REVENUE IS NOT SUPPORTED WITH COGENT R EASONS TO EXPLAIN THAT THE AO, DURING THE ASSESSMENT EARLIER COMPLETED U/S 143(3), DUE TO OVERSIGHT/INADVERTENT MISTAKE, ALLOWED THE CLAIM OF THE ASSESSEE. AS REG ARDS THE DELHI HIGH COURT DECISION IN THE CASE OF DALMIA PVT LTD VS. CIT RELIED BY THE REVENUE TO SUPPORT THE PROPOSITION THAT DESPITE SPECIFIC AND POINTED QUERI ES IN THE ASSESSMENT PROCEEDINGS U/S 143(3), THE AO CANNOT BE SAID TO HAVE FORMED AN Y OPINION IF EXPLICIT OPINION IS NOT RECORDED, THE PERUSAL OF PARA 6.2 OF THE ASSESS MENT ORDER EARLIER PASSED UNDER SECTION 143(3) CLEARLY INDICATES THAT THE AO HAS FO RMED AN EXPLICIT OPINION ON THE ISSUE DEPRECIATION FOR THE PURPOSE OF COMPUTING THE DEDUCTION U/S 80IB. THEREFORE, WE DO NOT FIND ANY MERIT IN THE CONTENTION OF THE R EVENUE RELYING ON THE SAID DECISIONS. IN VIEW OF THE AFOREMENTIONED DISCUSSION S, WE ARE OF THE CONSIDERED VIEW THAT THE DECISION OF THE LD.CIT(A) HOLDING THAT THE REASSESSMENT MADE BY THE AO U/S 143(3) READ WITH SECTION 147 OF THE INCOME-TAX ACT IS A NOT VALID DESERVES TO BE UPHELD. SINCE, THE NOTICE U/S 148, THE REASSESSMENT PROCEEDINGS AND THE CONSEQUENT ITA NO. 6662/MUM/2011 M/S. MONSANTO INDIA LTD. ASSESSMENT YEAR: 2004-05 4 REASSESSMENT ORDER ARE HELD TO BE INVALID, THE MERI TS ON THE IMPUGNED ADDITIONS ARE NOT REQUIRED TO BE FURTHER ADJUDICATED UPON. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 10 TH DAY OF SEPTEMBER, 2014. SD/- SD/- (SANJAY ARORA) (DR. S.T.M. PAVALAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 10.09.2014 *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR B BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.