TMI Blog2023 (7) TMI 171X X X X Extracts X X X X X X X X Extracts X X X X ..... 3) of the Act was completed after due consideration of the facts. Thus reassessment proceedings initiated by the A.O. u/s 147/148 of the Act on mere change of opinion and review. Thus, we find merit in Ground No. 1 of the assessee. Applicability of amended provision of Section 2(24) sub-section (xviii) - HELD THAT:- As in the case of Pr. Commissioner of Income Tax Vs. Ankit Metal Power Ltd. [ 2019 (7) TMI 878 - CALCUTTA HIGH COURT ] held that the amendment to Section 2(24) w.e.f. 01.04.2016 is having prospective effect and held incentive subsidies are 'capital receipts' and is not an 'income' liable to be taxed in relevant assessment year 2010-11. - Dr. B. R. R. Kumar, Accountant Member And Sh. Yogesh Kumar U.S., Judicial Member For the Appellant : Shri S. K. Vatta, C. A.; For the Respondent : Shri Sanjay Nargas, Sr. D. R.; ORDER PER YOGESH KUMAR U.S., JM These two appeals are filed by the assessee for assessment years 2012- 13 and 2013-14 against two separate orders of the ld. Commissioner of Income Tax (Appeals)-7, New Delhi, dated 05.09.2018 and 23.07.2019 respectively. I.T.A. No. 6971/DEL/2018 (A.Y 2012-13) : 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed at page 4 5 of his appellate orders, and pass a speaking orders on the issue of disposing of legal objections by the Assessing Officer in complete disregard of the decision of the Hon ble Supreme Court in the case of GKN Drive Shaft (India) Ltd. Vs ITO (2004) 259 ITR 19 - 20 (SC) and other judgements as relied upon. 5. That the worthy CIT(A) have erred both on facts and in Law while upholding the application of the provisions of section 2(24) sub-section (xviii), which amendments have prospective application w.e.f. 1.4.2016 for the Asstt. Year 2016-17. I.T.A. No. 7726/DEL/2019 (A.Y 2013-14) : 3. The assessee has raised the following substantive grounds of appeal :- 1. That the worthy CIT(Appeals) was absolutely wrong, unjustified and have erred both on facts and in Law to have uphold the orders of the Assessing Officer initiating the reassessment proceedings on mere change of opinion and on review, subsequently of a completed assessment u/s 143(3) of the Act on the same primary and material facts as stood categorically disclosed in the Audited Financial Statements and tax Audit Report u/s 44AB of the Act and in view of the specific replv/les on record, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9, 10 of the appellate orders read with our submissions of 27th Sept., 28th Sept before the Ld. ACIT, 20(1), ignoring the substance of the decision of the Hon ble Supreme Court in the case of GKN Drive Shaft (India) Ltd vs. ITO (2004) 259 ITR 19 20 (SC) and other judgements as per our submissions. 5. That the worthy CIT(Appeals) while upholding the said disallowance of depreciation by adjusting the capital subsidy amount from the cost of the assets was wrong and unjustified, both on facts and in law by invoking the provisions of section 2(24)(xviii) as amended by the Finance Act, 2015, which have prospective application w.e.f. 01.04.2016. I.T.A. No. 6971/DEL/2018 (A.Y 2012-13) 4. Since the issue involved in the above appeals are similar, the brief facts of the case for the Assessment Year 2012-13 are considered for the sake of convenience which are that, the assessee filed return of income at an income of NIL but paid taxes on income of Rs. 4,16,26,187/- u/s 115JB of the Act. Assessment order u/s 143(3) of the Income Tax Act, 1961 ( Act for short) was passed on 26/12/2017 at an income of Rs. 72,90,000/- at normal provision and Rs. 4,16,26,187/- u/s 115JB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tta high Court in the case of Pr. Commissioner of Income Tax Vs. Ankit Metal Power Ltd. reported in (2019) 182 DTR (Cal) 333. 7. On the other hand, the Ld. DR submitted that the reopening is in accordance with the provisions of the Act which cannot be found fault with. There was sufficient reason to believe that income had escapement assessment and proceedings were initiated after recording reasons and submitted that the reassessment is valid if there is a prima facie reason to believe that income had escaped assessment. It is the case of the Department that after the amendment of Section 147 w.e.f. 01/04/1989 the scope of Section 147 of the Act has been considerably widened the only requirement under the amended Section is that A.O. must have reason to believe that any income chargeable to tax has escaped assessment for any assessment year. Therefore submitted that, the initiation of proceedings u/s 147/143(3) of the Act is in accordance with law. 8. We have heard the parties and perused the material available on record. 9. It is emerges from the record that, originally the assessment order u/s 143(3) of the Act was passed on 30/03/2015 assessing the income of the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eme is to enable the tax payer to set up a new unit or to expand the existing unit then the subsidy would qualify as capital receipt. Capital subsidies were held as not taxable - subject, to reduction from actual cost of asset in case of depreciable assets. Finance Act, 2015 w.e.f. 01.04.2016 with due insertion of Sub Clouse (xviii) in section 2(24} of the. Income Tax Act, 1961 providing an inclusive definition of the expression 'Income' under the taxing law. 5. In view of the above, it is dear that the assesses has claimed excess depreciation amounting to Rs 72,90 000/-on Plant A Machinery as the assesses has received subsidy on new set up of plant A machinery in, the-month of August, 2011 and the assesses had not reduced the cost of Plant A machinery. As per Explanation 2(c) to section 147, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment; (c) where, an assessment has hem made, but --- (i) income chargeable to tax has been under assessed: or: (ii) such income has been assessed at too low a rate: or (iii) such income has been made the subject of excessive relief under this Act; or (iv) exces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment proceedings a specific query has been raised by the A.O. u/s 143(3) of the Act for which a submission has been filed by the Assessee on 11/02/2015, wherein in Para 5 6 the subject matter of treatment of capacity subsidy received/accrued of Rs. 4.80 crore along with the copy of the Notification No. 14(1) 2001/SAP dated 11/12/2009 issued by Ministry of New and Renewal Energy (MNRE) explaining the status of receipt/accrual of the said capacity subsidy was duly filed along with citation in support of the treating the said amount of the subsidy as capital receipt which is reproduced as under:- During the year, the company has capitalized interest amounting to Rs. 17,363,114/- on borrowings in respect of Hydro Power Projects in accordance with AS 16 issued by the institute of Chartered Accountants of India and has not been claimed expenditure. Please refer Annexure 3 above. Regarding capital subsidy amounting to Rs. 4.86 Croros credited to reserve account it is submitted that during the year the assessee has received part amount of such subsidy - Rs, 2.43 Crore and balance amount of Rs. 2.43 Crore is shown as capital subsidy receivable. Such capital subsidy relat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inal assessment wherein the A.O. has specifically examined the issue of capital subsidy received/accrued of Rs. 4.80 Crore and the Ld. A.O. has not made the addition on the said count, accordingly passed the assessment order on 30/03/2015 u/s 143(3) of the Act for the Assessment Year 2012-13. 16. The case of the Assessee was reopened u/s 147 and notice u/s 148 dated 01/03/2017 had been issued and made the addition by the A.O. in following manner:- 4.13. Assesses was asked to identify the assets which were purchased and put to use with the amount received as subsidy from MNRE vide questionnaire dated 28.11.2017. However, in response to the questionnaire no specific information w.r.t. the fixed assets were provided by the assessee. Further, from the documents produced with respect to the capital subsidy received, it was found that the subsidy was given for the purpose of commissioning the small hydro power projects only. Therefore, in view of this it can be deduced that the sum of Rs. 4.86 crore was not 'reduced from the actual cost of the asset. Further, due to this fact, assessee while accounting for depreciation has claimed excess depreciation of Rs. 72,90,000/-. In vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings- Neither the AO nor the Departmental Representative pointed out any discrepancy in the above mentioned information submitted by the assessee to the Revenue authorities nor they brought any evidence on record to show that the said information in the assessment order Assessment cannot be reopened on the basis of mere change of opinion on the same set of facts on record - In this case, there was true and full disclosure of facts and no new information came to the knowledge of the A.O. Therefore, the reopening of - assessment was invalid. 19. Further, the Hon'ble Supreme Court in the case of CIT Vs. Kelvinator of India Ltd. (2010) 320 ITR 561 S.C, while deciding the question whether the concept of change of opinion stands obliterated with effect from 1st April, 1989, i.e., after substitution of Section 147 of the Income Tax Act, 1961 by Direct Tax Laws (Amendment) Act, 1987 held as under:- On going through the changes, quoted above, made to Section 147 of the Act, we find that, prior to Direct Tax Laws (Amendment) Act, 1987, re-opening could be done under above two conditions and fulfillment of the said conditions alone conferred jurisdiction on the Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer. It was pointed out that the meaning of the expression, `reason to believe' had been explained in a number of court rulings in the past and was well settled and its omission from section 147 would give arbitrary powers to the Assessing Officer to reopen past assessments on mere change of opinion. To allay these fears, the Amending Act, 1989, has again amended section 147 to reintroduce the expression `has reason to believe' in place of the words `for reasons to be recorded by him in writing, is of the opinion'. Other provisions of the new section 147, however, remain the same. For the afore-stated reasons, we see no merit in these civil appeals filed by the Department, hence, dismissed with no order as to costs. 20. The Hon ble High Court of Delhi at New Delhi in the case of D.T T.D. C. Ltd. Vs. ACIT 232 CTR 260 (Del) held as under:- 9. We may also point out that insofar as the assessment year 1997- 98 and 1998-99 are concerned, the same would require application of the proviso to Section 147 of the said Act, inasmuch as the notices under Section 148 of the said Act in respect of these two years have been issued beyond the period of four years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to taxability of the amount transferred to TIUF. 21. The Jurisdictional High Court in the case of CIT-VI, New Delhi Vs. Usha International Ltd. (2012) 348 ITR 485 (Delhi High Court) Now we examine the claim of the assessee regarding this contention that reopening is on mere change of opinion. Reliance has been placed on a judgment of Hon'ble Delhi High Court rendered in the case of Usha Intern ational Ltd. (supra). Para 13 to 17 of this judgment are relevant for the dispute in present case and the same are reproduced below for the sake of ready reference:- 13. It is, therefore, clear from the aforesaid position that : (1) Reassessment proceedings can be validly initiated in case return of income is processed under section 143(1) and no scrutiny assessment is undertaken. In such cases there is no change of opinion. (2) Reassessment proceedings will be invalid in case the assessment order itself records that the issue was raised and is decided in favour of the assessee. Reassessment proceedings in the said cases will be hit by the principle of change of opinion . (3) Reassessment proceedings will be invalid in case an issue or query is raised and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of prior period expenses. But still it has to be accepted that opinion was formed by the Assessing Officer although the reasons for forming an opinion is not available in the assessment order u/s 143(3) of the Act. Hence, this judgment of full Bench of Hon'ble Delhi High Court rendered in the case of Usha Intern ational Ltd. (supra) is squarely applicable in the present case and hence, respectfully following this judgment of Hon'ble Delhi High Court, we hold that in the present case, reopening is on mere change of opinion and therefore, not valid. These grounds of the assessee are allowed. 22. In view of the above facts and circumstances, we are of the opinion that the reassessment proceedings initiated by the A.O. u/s 147/148 of the Act on mere change of opinion and review. Thus, we find merit in Ground No. 1 of the assessee, accordingly, we allow Ground No. 1 of the assessee quash the assessment order and the order of the CIT(A). 23. In so far as Ground No. 5 of the Assessee is regarding the applicability of amended provision of Section 2(24) sub-section (xviii). The Hon ble Calcutta High Court in the case of Pr. Commissioner of Income Tax Vs. Ankit Metal P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received from the Govt. has been done by the assessee during the Financial Year 2012-13, i.e. the assessee has claimed depreciation on the plant machinery during the F 2012-13 while no treatment of the subsidy received from the Government has been shown by the assessee in its ITR. Therefore, notice u/s 148 dated 28.04.2017 was issued. The said notice u/s 148 was served upon the Assessee. The assessee vide his letter dated 01.05.2017 received in the office on 11.05.2017 submitted that the return filed originally for the AY 2013-14 shall considered return filed against notice u/s 148 of the IT Act, 1961. Thereafter notice u/s 143(2) was issued to the assessee and the representative of the assessee attended the proceedings and filed the basic details as called. 25. The assessment order came to be passed by making disallowance of depreciation of Rs. 72.90 lacs in respect of receipt/actual of central capacity subsidy amount on the power project. The said addition has been confirmed by the CIT(A). The primary basis for reopening in the year under consideration is that the same set of facts the record has been found for the Assessment Year 2012-13. The said issue has already been dec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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