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TMI Blog2013 (8) TMI 187X X X X Extracts X X X X X X X X Extracts X X X X ..... 01 wherein the net profit from the STPI Unit was shown, on which deduction under section 10A was claimed. It also claimed adjustment of the loss from non-STPI Units situated at Visakhapatnam and Mumbai. According to the assessee the Mumbai Unit is a Research and Development Unit and its services are utilised by the STPI Unit at Visakhapatnam. Since it is a captive R&D Unit, according to the learned counsel for the assessee, it cannot have a separate commencement date. It is not in dispute that the STPI Units commenced its operations on 08.03.2000 and hence the non-STPI Units, which are only part of the main unit, cannot be said to have a separate commencement date. In fact, from A.Y. 2003-04 onwards losses from R&D unit was reduced from STPI Units and claimed as exempt. 4. During the course of assessment proceedings the AO noticed that the assessee claimed set off of losses from non-STPI Units and also issued notice seeking details with regard to the expenditure in excess of Rs1,00,000/-. The learned counsel for the assessee adverted our attention to pages 1- 3, 16, 19, 23, 27, 29 and 34 of the paper book to submit that the assessee furnished complete details with regard to the lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ately. Elaborate submissions were made to the AO on all the issues raised during the course of assessment proceedings. The AO took into consideration all the facts and details and passed a detailed order under section 143(3) of the Act. Further, despite having sufficient information with regard to the R&D Unit, at no point of time the AO objected to assessee's claim of carry forward of the losses of the said Unit. It was therefore contended that the present notice, issued under section 148, is only on account of change of opinion on the part of the AO and hence notice issued is not valid in law. It was also contended that no action can be taken for reopening of the assessment after four years unless the AO has reasons to believe that income has escaped assessment by reasons of failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. In other words, if the assessee disclosed fully and truly all material facts necessary for assessment, notice under section 148 of the Act is liable to be quashed. Reliance was placed upon several case laws in this regard. It was also contended that reopening is done on the basis of audit objections an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and even with regard to the date of commencement of business of the STPI Unit at Visakhapatnam. In short, there is no evidence to prove that the expenditure booked against the R&D Unit is related to business of STPI unit at Visakhapatnam. The AO therefore capitalized the expenditure incurred by the R&D unit of Mumbai by holding that it cannot be treated as revenue expenditure. 8. The learned CIT(A) observed that w.e.f. 01.04.1989 the scope of section 147 has been enlarged so as to empower the AO to initiate reassessment proceedings in cases where it is apparent from record that income chargeable to tax has been underassessed. In his opinion the concept of change of opinion at a subsequent stage becomes irrelevant after the amendment brought into section 147 w.e.f. 01.04.1989. He also observed that there was a bonafide belief on the part of the AO who initiated the reassessment proceedings in as much as there is nothing on record to indicate that the Unit at Mumbai was an R&D unit of the STPI unit at Visakhapatnam for the purpose of supporting the latter. Merely because the AO examined the books of account, bills and vouchers, etc. during the stage of original assessment proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use the latter incumbent AO holds a different view on the matter, assessment cannot be reopened after a period of four years without pointing out that there was failure on the part of the assessee to furnish full and true particulars for completion of assessment. Since the assessee furnished material facts at the time of making regular assessment, reassessment proceedings based upon same set of facts is not permissible in the light of the following decisions: - i. Hindustan Lever Ltd. vs,. R.B. Wadlar 268 ITR 332 (Bom) ii. Bhavesh Developers vs. AO 329 ITR 249 (Bom) iii. Kimplas Trenton Fittings Ltd. vs. ACIT 340 ITR 299 (Bom) iv. ICICI Bank Ltd. vs. K.J. Rao and Another 268 ITR 203 (Bom) v. CIT vs. Kelvinator of India Ltd. 320 ITR 561 (SC) vi. ACIT vs. ICICI Securities Primary Dealership Ltd. 348 ITR 299 (SC) vii. CIT VS. Viniyas Finance & Investment P. Ltd. 2013-TIOL-135-Del-IT 10. In the case of ICICI Securities Primary Dealership Ltd. (supra) the Apex Court observed that upon completion of assessment under section 143(3) after taking into consideration the details furnished by the assessee, on a mere relook of the accounts, which were earlier furnished by the assessee, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the event of holding that the reassessment proceedings are valid in law. 12. The learned D.R., on the other hand, strongly relied upon the orders passed by the AO as well as the CIT(A). It was contended that the records furnished by the assessee do not clearly indicate that the non-STPI Unit at Mumbai is a capitve unit of STPI Unit at Visakhapatnam. Only during the reassessment proceedings the assessee, for the first time, explained that the Mumbai unit commenced its operations from 1999 onwards and it is a captive R&D unit but these facts were not explained and there was no occasion, at the time of making regular assessment, to go into these details since the AO mainly focussed his attention on eligibility to claim deduction under section10A and 10B of the Act; though he mentioned about the losses from non-STPI unit no detailed enquiry was made in that regard and hence the reassessment proceedings are valid in law. 13. We have carefully considered the rival submissions and perused the record. It is not in dispute that the reassessment proceedings were initiated after expiry of four years from the end of the relevant assessment year and in a case where the original assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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