TATA HOUSING DEVELOPMENT CO. LTD.(FORMERLY KNOWN AS THDC LTD.), MUMBAI V. D.C.I.T. CIRCLE 7(3), MUMBAI

ITA 8655/MUM/2011

• Counselvise Citation: 865519914 RSA 2011
• Duration Of Justice: 3 year(s) 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2015
• Appeal Filed By: Assessee
• Bench Allotted: E
• Next Hearing Date: 16-06-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 22-12-2011
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Assessee Lawyers: DINESH VYAS; INDRA G ANAND
• Keywords: Reopening of assessment; Business income; Retrospective amendment; Reason to believe
• Section: 143(3); 115JB; 147; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E , BENCH MUMBAI . . , , BEFORE SHRI R.C.SHARMA , A M & SHRI SANJAY GARG , J M ./ ITA NO . 8655 / MUM/20 11 ( / ASSESSMENT YEAR : 2003 - 04 ) TATA HOUSING DEVELOPMENT CO. LTD. (FORMERLY KNOWN AS THDC LTD.), TIMES TOWER , 12 TH FLOOR, KAMALA MILLS COMPOUND, SENAPATI BAPAT MARG, LOWER PAREL (WEST), MUMBAI - 400013 VS. DCIT, CIRCLE - 7(3), MUMBAI - 20 ./ ./ PAN/GIR NO. : AA ACT 0191 Q ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI DINESH VYAS & MS. INDRA G. ANAND /REVENUE BY : SHRI NEIL PHILIP / DATE OF HEARING : 16/06 / 2015 / DATE OF PRONOUNCEMENT 16 /06 /2015 / O R D E R PER R.C.SHARMA (A.M) : TH IS IS AN APPEAL FILED BY THE ASSESSEE AGAIN ST THE ORDER OF CIT(A) - 13 , MUMBAI , DATED 15 - 7 - 2011, FOR THE ASSESSMEN T YEAR 2003 - 04 IN THE MATTER ORDER PASSED U/S. 143(3) R.W.S.147 OF THE I.T.ACT. 2. THE ASSESSEE IS AGGRIEVED BY THE ACTION OF CIT(A) IN CONFIRMING THE REOPENING OF A CONCLUDED ASSESSMENT U/S.143(3) AFTER EXPIRY OF 4 YEARS FOR THE REASONS OF SUBSEQUENT AMENDM ENT TO PROVISION OF SECTION 115JB ITA NO. 8655/11 2 OF THE ACT, 1961 VIDE FINANCE (NO.2) ACT, 2009, WHEREBY CLAUSE (I) HAS BEEN INSERTED WITH RETROSPECTIVE EFFECT FROM 01.04.2001. 3 . RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF REAL ESTATE DEVELOPMENT AND IT HAD FILED ITS RETURN OF INCOME, FOLLOWING COMPLETED CONTRACT METHOD ON 24.112003, DECLARING TOTAL BUSINESS INCOME OF RS. 5,72,45,237/ - WHICH WAS REDUCED TO NIL AFTER SETTING OFF BROUGHT FO RWARD LOSSES OF AY. 2002 - 03 AND HENCE RETURN WAS FILED U/S 115J B OF THE ACT TAKING BOOK PROFITS OF RS. 19,79,520 / - . RETURN FILED WAS SUPPORTED WITH AUDITED PROFIT & LOSS ACCOUNT, BALANCE SHEET, AND TAX AUDIT REPORT. SUBSEQUENTLY, AN ASSESSMENT U/S 143(3) OF ACT WAS COMPLETED AND ORDER WAS PASSED ON 31.10.2005 WHEREIN THE ASSESSING OFFICER ASSESSED THE BUSINESS INCOME OF ASSESSEE FOLLOWING THE PERCENTAGE COMPLETION METHOD WHEREIN TOTAL LOSS WORKED OUT TO RS.20,92,465/ - I.E. LOWER THAN RETURNED INCOME & ACCO RDINGLY TOTAL INCOME UNDER MAT PROVISIONS AS COMPUTED BY THE ASSESSEE IN ITS RETURN OF INCOME FILED WAS ACCEPTED. THUS ASSESSED INCOME U/S 143(3) OF THE ACT WAS RS.19,79,520 / - . SUBSEQUENTLY NOTICE U/S 148 OF THE ACT WAS ISSUED TO THE ASSESSEE STATING THE R EASONS FOR REOPENING THE CONCLUDED ASSESSMENT OF AY. 2003 - 04. THE ASSESSING OFFICER REFERRED TO THE AMENDMENT IN PROVISIONS OF SECTION 115JB OF THE ACT VIDE FINANCE (NO.2) ACT, 2009 WHERE BY CLAUSE (I) HAD BEEN INSERTED WITH RETROSPECTIVE EFFECT FROM 01.04 .2001. THE CLAUSE (I) READ AS UNDER: ITA NO. 8655/11 3 '(I) THE AMOUNT OR AMOUNTS SET ASIDE AS PROVISION FOR DIMINUTION IN THE VALUE OF ANY ASSET' IN VIEW OF THIS RETROSPECTIVE ASSESSMENT IN THE ACT, THE ASSESSING OFFICER REOPENED THE ASSESSMENT A.Y. 2003 - 04 TO ADD DIMI NUTION IN VALUE OF INVESTMENT OF RS. 1.81 CRORES TO THE ASSESSED MAT INCOME OF RS.19,79,520 / - . 4 . LD. AR PLACED ON RECORD ORDER OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF DIL LTD. VS. CIT, 343 ITR 296, WHEREIN IT WAS HELD THAT REOPENING OF THE ASSESSM ENT ON THE BASIS OF RETROSPECTIVE AMENDMENT IN THE ACT, AFTER EXPIRY OF FOUR YEARS WHERE ASSESSMENT HAS BEEN FRAMED U/S.143(3) AND THERE IS FULL AND TRUE DISCLOSURE OF MATERIAL FACTS BY ASSESSEE, IS INVALID. 5 . WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF THE HONBLE BOMBAY HIGH COURT, IN THE CASE OF DIL LTD. (SUPRA), WHEREIN REASSESSMENT WAS QUASHED AFTER HAVING THE FOLLOWING OBSERVATIONS : - THE REASONS FOR REOPENING CONTAIN ABSOLUTELY NO REFERENCE TO THERE BEING ANY FAILURE ON THE PART OF THE ASSESSEE T O FULLY AND TRULY DISCLOSE ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. THE PRIMARY REQUIREMENT SET OUT IN THE PROVISO TO SECTION 147 HAS NOT BEEN FULFILLED. THAT APART, IT IS EVIDENT THAT IN SO FAR AS THE DIMINUTION IN THE VALUE OF INVESTMENT OF RS.1.28 C RORES IS CONCERNED, EXPLANATION (L)(I) WAS INSERTED INTO THE PROVISIONS OF SECTION 115JB BY THE FINANCE (NO.2) ACT, 2009 WITH RETROSPECTIVE EFFECT FROM 1 APRIL 2001 . CLAUSE (I) OF EXPLA NATION (1) WAS INTRODUCED TO INCLUDE AMOUN T OR AMOUNTS SET ASIDE AS P RO VISION FOR DIMINUTION IN THE VAL UE OF INVESTMENT. IN VIEW OF THE RETROSPECTIVE AMENDMENT OF LAW B Y PARL IAMENT TH E ASSESSING OFFICER MAY HAVE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. BUT THAT IN ITSELF IS NOT SUFFICIENT FOR REOPENING AN ASSESS MENT BEY OND THE PERIOD OF FOUR YEARS. BEYOND THE PERIOD OF FOUR EARS WHEN AN ASSESSMENT IS SOUGHT TO BE REOPENE D , THERE MUST B E A FAILURE ON THE PART OF THE ASSESSEE TO FULLY AN D T RUL Y DISCLOSE ALL MATERIAL FACTS NECESSA RY FOR ASSESSMENT. IN FACT, THE RETR OSPECTIVE AMENDMENT OF LAW B Y PARLIAMENT WOULD NEGATE THE INFERENCE WHICH IS SOUGHT TO BE DRAWN OF THE FAILURE TO DISCL OSE MATERIAL FACTS . IN SO F AR AS THE BUSINESS DEVELOPMENT EXPENDITURE OF RS.10.79 LAKHS IS CONCERNED, HERE AGAIN IT IS EVIDENT ITA NO. 8655/11 4 FROM THE O RDER OF ASSESSMENT THAT THE CLAIM OF THE ASSESSEE WAS DISALLOWED BY THE ASSESSING OFFICER AND THE AMOUNT WAS ADDED BACK TO THE INCOME. SIMILARLY, IN REGARD TO THE GRATUITY AND SUPERANNUATION AS WELL, THERE IS MERIT IN THE CONTENTION OF LEARNED COUNSEL THAT THERE IS EXFACIE NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE THE MATERIAL FACTS. THE REASONS DISCLOSED TO THE ASSESSEE ON 11 JULY 2011, IN FACT, MERELY INDICATE A REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. 6 . IN THE INSTANT CASE ALSO T HE ASSESSMENT WAS REOPENED MERELY ON THE GROUND OF AMENDMENT IN SECTION 115JB BY FINANCE (NO.2) ACT, 2009, WHEREBY CLAUSE (I) HAS BEEN INSERTED WITH RETROSPECTIVE EFFECT FROM 1 - 4 - 2001. SIMILAR VIEW HAS BEEN TAKEN BY THE HONBLE DELHI HIGH COURT IN THE CASE OF SUN INVESTMENT PVT. LTD., 344 ITR 1. APPLYING THE PROPOSITION OF LAW LAID DOWN BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF DIL LTD. (SUPRA), WE ANNUL THE REOPENING OF ASSESSMENT . 7 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . O RDER PRONOUN CED IN THE OPEN COURT ON THIS 16 /06 / 201 5 . SD/ - SD/ - ( ) ( SANJAY GARG ) ( . . ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 16 /06 /201 5 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR ) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY// ITA NO. 8655/11 5