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2018 (10) TMI 585 - AT - Income TaxReopening of assessment u/s 148 - disallowance of deduction u/s 80IA(4) - reasons to believe - Held that:- Referring to the decision of Hon’ble Gujarat High Court in the cases of Classic Network Ltd. Vs. DCIT [2014 (6) TMI 263 - GUJARAT HIGH COURT], Parixit Industries P.ltd. Vs. ACIT [2012 (4) TMI 464 - GUJARAT HIGH COURT] AO has earlier granted deduction under section 80IA, thereafter reopened the assessment by re-appreciating the same material. Hon’ble Court has held that re-opening is being made on account of change of opinion and it is not justifiable. In the present case, AO has re-appreciated the material. Earlier, the AO considered the assessee as engaged in the business of development of infrastructure project, but later on the basis of same material he construed the assessee as a contractor. To our mind, it is a just his change of opinion, and there is no tangible material in possession of the AO to reopen the assessment. Therefore, we allow first ground of appeal in both the years, and quash re-assessment orders in both the years. We taken all the submissions of the assessee while taking cognizance of the statement of facts extracted (supra) vis-àvis finding recorded by the AO. AO construed the assessee as a contractor or sub-contractor for two companies viz. s.MSK Infrastructure & Toll Bridge Pvt.Ltd. and MSK Highway Ltd. It is also pertinent to observe that the AO failed to take of the facts that these two companies are wholly owned subsidiaries of the assessee. The assessee has applied in response to the tenders invited by M.P. Rajya Setu Nirman Nigam Ltd.. It was fully qualified and well equipped to undertake development and completion of contract work. According to the assessee on account of certain technicalities, it has to float two subsidiaries as special purpose vehicle. Later on these subsidiaries amalgamated with the assessee company during the accounting period relevant to AY 2005-06. The scheme of amalgamation was approved by the Hon’ble Gujarat High Court and given effect from the appointed date i.e. 1.1.2005. These facts have totally been ignored while framing the assessment order. Thus, considering the order of the ITAT in the AY 2010-11 and order of the Commissioner passed under section 264 in the AY 2008-09, and details submitted in these years, we are of the view that the assessee is entitled for deduction under section 80IA(4) - decided in favour of assessee.
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