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TMI Blog2012 (2) TMI 283X X X X Extracts X X X X X X X X Extracts X X X X ..... he Petitioner collects Container Detention Charges (CDCs) which are levied upon importers on behalf of the foreign principal. Under the agreement, the Petitioner was entitled to a commission for services rendered to its foreign principal. The Reserve Bank of India issued a circular on 15 September 1993 under which modalities were prescribed for considering applications for appropriation of Container Detention Charges. Under the circular, a sum of US $ 1.5 for a container per day was to be retained to meet local expenses of the agent towards administration charges. The Petitioner maintained a separate bank account for debiting and crediting receipts and payments on account of its principal. The Container Detention Charges were also credited to the account upto 31 March 2009. On 25 May 2009, the Petitioner entered into an agreement with its foreign principal by which the Petitioner was authorized to retain an amount of US $ 1.5 per day per container collected on behalf of the principal between 1993 to 2009. The Petitioner has offered the whole of the amount received as its own income during the period 1993 to 2009 for Assessment Year 201011. The total amount offered to tax is Rs.9.34 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... These are kept in a separate bank account matched by a corresponding liability to the principal. Currently, credit balances in debtors account and unpaid brokerage account are only outstanding with the principal. 5. At the outset please note that the containers are not owned by the company but by Nippon Yusen Kaisha, the principal. Container Detention Charges (CDC) are charges levied on third party importers by the principal when the containers are not unloaded by the importers at the port of destination but are instead moved/ transported by the importers to their respective factories and retained by the importers for a certain number of days. In view thereof, the potential freight income is lost as the containers are not available. The principal thus levies CDC on importers to recover the opportunity cost of earning the freight income and also to recompensate the port charges that the principal has to bear. These charges are collected by the company as agent of the principal and are deposited in the separate bank account. These funds are then used to meet the expenses of the principal in India or could be remitted back to the principal in accordance with the Foreign Exchange Regu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that, it also takes care of the management of the containers, collecting container rent, paying the ports and other agents for container on behalf of the Principal. The assessee company doesn't charge anything for these services and towards the expenses it incurs for rendering these services. The RBI to stop such practice has issued a directive/ circular No.EC By Pass II.361/Misc.93.94 dt. 15.09.03 issued by Exchange Control Department of RBI notifying the remission of container rent so collected whereby it is mandatory for the agent (like assessee company) to retain 1.50 $ per TOU paid out of 12.50$ CDC collected towards its own administrative expenses. This amount cannot be remitted to the holding company abroad. The assessee company has kept this amount which it could not remit to the holding company in a separate account and shows it as payable to the holding company whereas in reality is should have shown as part of the receipts of the assessee company. The amount for the year is Rs.1,16,89,636/. This amount was added as income of the assessee company in the scrutiny assessment for A.Y. 200708. The facts being the same, similar treatment has to be given for this amount in A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essary for assessment as a result of which income chargeable to tax has escaped assessement. But, that is not to say that within a period of four years, the power of the Assessing Officer to reopen an assessment is untrammelled. Even within a period of four years, it is now a settled principle of law that an assessment cannot be reopened on the basis of a mere change of opinion. The Supreme Court has emphasized that the Assessing Officer has no power to review, but his power is a power to reassess. If a mere change of opinion cannot furnish a ground for reopening of an assessement, then, under the garb of reopening an assessment, a review would not equally be permissible. Consequently, the test is that there should be tangible material to come to a conclusion that there is an escapement of income from assessment. 13 These principles have been emphasized in the judgment of the Supreme Court in Commissioner of Income Tax v/s Kelvinator of India Ltd. [2010] 320 ITR 561 (SC) The Supreme Court has observed as follows:" 6. ........... Therefore, post 1st April, 1989, power to reopen is much wider. However, one needs to give a schematic interpretation to the words "reason to beli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elements of fiscal duty and the other direct manufacturing costs were not included by the Assessee. This resulted in undervaluation of inventories and understatement of profits. This information, as the Supreme Court emphasized, was obtained by the Revenue in the assessment proceedings of a subsequent year. Consequently, the reopening of the assessment was held to be valid. The point to be emphasized is, therefore, that where in the case of assessment proceedings for a subsequent year certain additional information is obtained by the Revenue which was not available to it in the course of an assessment for an earlier year, that may legitimately be utilized as a ground for reopening an assessment of the earlier year. Where the reopening has taken place within four years that may legitimately give rise to an inference of escapement of income. The new information which has come to the knowledge of the Revenue would, therefore, constitute tangible material. 16 The judgment of the Division Bench of this Court in Multiscreen Media (P) Ltd. v/s Union of India [2010] 324 ITR 54 (BOM) adverts to a decision of the Supreme Court in Ess Ess Kay Engineering Co. (P) Ltd. v/s Commissioner of Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing this matter in his original assessment order, it could not be said that there was any change of opinion in this case. In our view, once all the material was before the Assessing Officer and he chose not to deal with the several contentions raised by the petitioner in his final assessment order, it cannot be said that he had not applied his mind when all material was placed by the petitioner before him." 18 Consequently and in this background the mere fact that the Assessing Officer for Assessment Year 200708 had come to a different conclusion would not justify the reopening of the assessment for Assessment Year 200607. In order to establish that the reopening of the assessment for Assessment Year 200607 is not a mere change of opinion, the Revenue must demonstrate before the Court that during the course of the assessment proceedings for the subsequent year i.e. Assessment Year 200708 some new information or material had been brought on record which was not available when the assessment order was passed for Assessment Year 200607. That indeed is not the case of the Revenue. All material which was relevant to the determination was available when the assessment was completed fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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