TMI Blog2013 (8) TMI 365X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue. - ITA No.1742/Kol/2008, 847/Kol/2009 & 347/Kol/2011, C.O. No.54/Kol/2009, C.O. No.22/Kol/2011 - - - Dated:- 31-7-2013 - Shri N. S. Saini And Shri Mahavir Singh,JJ. For the Petitioner : Shri R. N. Bajoria, SR-AR Shri A.K. Gupta, AR For the Respondent : Shri L. K. S. Dehiya, CIT-DR ORDER. Per Mahavir Singh, Judicial Member:- Three appeals filed by Revenue and two Cross Objections filed by assessee are against the different orders of Commissioner of Income-tax(Appeals)-VIII, XVI, Kolkata dated 25-08-2008,17-03-2009 and 30-11-2010 pertaining to assessment years 1999-00, 2001-02 and 2002-03 respectively. Assessments were framed separately by DCIT, Circle-8, Kolkata vide his orders dated 29.12.2006, 07.11.2007 and 31.12.2009 u/s. 147/143(3) of the Income-tax Act, 1961 (hereinafter referred to as the "Act". All these are heard together and are being disposed of by way of common order for the sake of convenience. First we take up Revenue's appeal in ITA No.1742/Kol/2008 for A.Y. 99-00. 2. The only issue in this appeal of Revenue is against the order of CIT(A) quashing the re-assessment proceedings initiated by Assessing Officer u/s. 147 r.w.s. 148 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 139 of the I.T. Act truly or correctly disclosing all materials facts necessary for their assessment for the year which has income chargeable to tax has escaped assessment." The Assessing Officer during the course of re-assessment proceedings noticed that assessee claimed deduction u/s. 80IA of the Act amounting to Rs.3,18,83,094/- in respect of profit from Bangalore unit but while claiming deduction u/s. 80HHD of the Act it did not exclude its income from Bangalore unit, on which deduction u/s. 80IA of the Act was claimed. Accordingly, AO re-computed the deduction u/s. 80HHD of the Act by observing as under:- "The assessee has attempted to segregate its profits from the same enterprise for the purpose of claiming deduction u/s. 80HHD and u/s. 80IA. The Act does not allow such segregation and it is clear that if deduction is claimed u/s. 80HHD on profits of a unit deduction under any other section of Chapter VIA of the Income Tax Act, 1961 under the heading "C - Deduction in respect of certain incomes" cannot be allowed on the profits of the same unit." And deduction u/s 80HHD of the Act was allowed at Rs.33,05,30,050/- as against originally allowed u/s. 143(3) of the Act vid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessment for the assessment year under consideration. The appellant claimed deduction under sec. 80HHD and 90-IA of the Act in the original Return of Income and for that purpose supporting documents were filed with the return and the same had been examined and allowed by the Assessing Officer after application of proper mind and knowledge. This has been recorded in the assessment order itself. It is undisputed hast the primary facts were before the Assessing Officer at the time of original assessment under sec. 143(3) for the assessment year 1999-2000. It is evident from the abovementioned fact that it is not the case of Assessing Officer that any income escaped assessment on account of omission or failu9e on the part of the assessee to disclose fully and truly all materials facts necessary for the purpose of assessment. In the opinion of the present Assessing Officer the deduction under sec. 80HHD and 80-IA of the Act allowed by his predecessor was noted properly done, resulting in underassessment and would constitute grounds for reopening the assessment. It is a case of change of opinion between the two Assessing Officer so far as granting deduction under sec. 80HHD an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. CIT-DR in view of the above, stated that in re-assessment order, the Assessing Officer has consequently made disallowance of deduction u/s. 80HHD of the Act effectively at Rs.3,12,33,439/-. Further, Ld. CIT-DR stated that even foreign exchange earnings of Rs.37 crores has not been included in the computation of income despite the fact that its utilization had not been made for the purposes specified in Section 80HHD(4) (5) of the Act, which reads as under:- "80HHD (1) ... ... (2) .... ... (3) ... ... (4) The amount credited to the reserve account under clause (b) of sub-section (1), shall be utilized by the assessee before the expiry of a period of five years next following the previous year in which the amount was credited for the following purposes, namely :- (a) Construction of new hotels approved by the prescribed authority in this behalf or expansion of facilities in existing hotels already so approved; (b) Purchase of new cars and new coaches by tour operators already so approved or by travel agents; (c) Purchase o sports equipment for mountaineering, trekking, golf, river- rafting and other sports in or on water; (d) Construction of conference or conv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same is utilized by the assessee or not and even during the course of assessment proceedings, the assessee has not fled any details of utilization for the above earning of foreign exchange. For this, Ld. CIT-DR referred para-17 of the assessment order which reads as under:- "17. The assessee claimed deduction u/s. 80HHD to the tune of Rs.36,96,25,490/-. In the said calcu9lation for deduction the assessee claimed receipt of Rs.272,54,15,600/- in foreign currency. It is noticed that the receipt in foreign currency was inclusive of sale proceeds of Rs.25,9894,752/- representing sale of food and drinks at flights, which cannot be treated as sales in hotels. Therefore, necessary modification has been done while allowing deduction u/s. 8HHD." And he referred to deduction allowed by the Assessing Officer and relevant deduction allowed, reads as under:- "...... (iii) u/s. 80HHD (as per annexure Rs.48,98,74,299/-'A' enclosed) (iv) u/s. 80IA (as per computation filed by the assessee) Rs.3,18,83,094/- Rs.52,21,27,243/-" Ld. CIT-DR stated that there are no details of utilization of foreign exchange earnings and this is sufficient reason for reopening of assessment. The Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant AY were filed along with return and were available on the record of the AO. As regards the claim of deduction u/s.80HHD of the Act, a certificate from the Chartered Accountant in the form of 10CCA was filed with the return of income and similarly the computation of deduction u/s. 80-IA of the Act was also filed. The AO in original assessment allowed the claim of the assessee for deduction u/s.80HHD and 80-IA of the Act after examining the relevant details and even the computation made by AO in respect of the claim of these deductions are as per the provisions of Chapter-VI referred to now by the AO were very much available at the time of original assessment also. Ld. AR of the assessee further stated that the AO could not bring any new material which was not disclosed earlier nor there was an error in the computation of income filed along with the return of income. Regarding none-inclusion of the amount of foreign exchange earning in reserve account of Rs.37 crores, which is part of profit and loss account AR of the assessee stated that as laid down in Section 80HHD(4)(a) of the Act, the amount utilized for expansion of facilities in existing hotels having exceeded to Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and truly all material facts or not. From assessment order, it will be evident that all particulars had been shown and / or disclosed by assessee in the course of original assessment. Where primary facts necessary for assessment are fully and truly disclosed to AO at the time of original assessment proceedings and no new material has come on record nor any new information has been received, it is merely a fresh application of mind by AO to same set of facts and in such a situation, it would be a case of mere change of opinion which does not provide justification for initiation of proceedings u/s. 147 of the Act. 8. We have heard rival submissions and gone through facts and circumstances of the case. We find from reasons recorded that amount of foreign exchange earnings was transferred to profit and loss account for the year after arriving at net profit out of reserves but the same was utilized for the purpose mentioned in Section 80HHD(4) as is evident from assessee's paper book page-12 i.e., Schedule of depreciation as per Income Tax Rule 1962 for year ended as on 31-03-1999 for the AY 1999-00, as referred by Ld. Counsel for the assessee. We find from the depreciation chart tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere was an error in the computation of income filed along with the return of income. Regarding none-inclusion of the amount of foreign exchange earning in reserve account of Rs.37 crores, which is part of profit and loss account as laid down in Section 80HHD(4)(a) of the Act, the amount utilized for expansion of facilities in existing hotels having exceeded to Rs.37 crores i.e., Rs.34,17,37,961/-, the entire amount allowing in foreign exchange earning reserve amount as on 31-03-1998 was transferred to profit and loss account. The details of addition to hotel building, plant and machinery, furniture and fixtures in hotel rooms were filed in tax audit report and depreciation chart forming part of account. We have gone through the proviso to section 147 of the Act and find that as per the proviso, if an assessment is made u/s. 143(3) of the Act for the relevant AY unless any income chargeable to tax has escaped assessment for such AY by reason of the failure on the part of assessee to disclose fully and truly all material facts necessary for that AY. Even there is no dispute that there is assessment in this case was made u/s. 143(3) of the Act and the only question is, therefore wheth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... treat the concept of "change of opinion" as an in-built test to check abuse of power by the Assessing Officer. Hence, after 1st April, 1989, the Assessing Officer has power to reopen, provided there is "tangible material" to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief. Our view gets support from the changes made to section 147 of the Act, as quoted hereinabove. Under the Direct Tax Laws (Amendment) Act, 1987, Parliament not only deleted the words "reason to believe" but also inserted the word "opinion" in section 147 of the Act. However, on receipt of representations from the companies against omission of the words "reason to believe", Parliament reintroduced the said expression and deleted the word "opinion" on the ground that it would vest arbitrary powers in the Assessing Officer. We quote herein below the relevant portion of Circular No. 549 dated October 31, 1989 ([1990] 182 ITR (St.) 1, 29), which reads as follows: "7.2 Amendment made by the Amending Act, 1989, to reintroduce the expression `reason to believe' in section 147.-A number of representations were received against the o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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