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2015 (10) TMI 2232 - ITAT MUMBAI

2015 (10) TMI 2232 - ITAT MUMBAI - TMI - Reopening of the assessment - exemption allowed u/s 10(23C)(iiiab) disallowed - CIT(A) allowed the claim - Held that:- The facts and circumstances are identical for the assessment year under consideration and the CIT(A) has decided the issue of validity of reopening by following the order of this Tribunal in the assessee’s own case. Accordingly, we do not find any error or illegality in the impugned order of the CIT(A) qua this issue. The same is upheld. .....

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ason to interfere with the findings of the CIT(A) qua this issue. - Decided in favour of assessee. - ITA Nos.3660 & 3661/Mum/2013 - Dated:- 16-9-2015 - SHRI VIJAY PAL RAO, JUDICIAL MEMBER and SHRI N.K.BILLAIYA, ACCOUNTANT MEMBER, JJ. For The Appellant : S/Shri Manjunatha Swamy, CIT(DR) & Sumit Kumar. For The Respondent : Shri Anil J.Sathe (AR) ORDER Per VIJAY PAL RAO, JM: These two appeals by the revenue pertain to assessment years 2004-05 and 2006-07 arising from the respective orders of th .....

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re was no requirement of showing any failure to disclose material facts fully and truly. 2. That on the facts and circumstances of the case and in law, the Ld. C/T(A) erred in holding that the reopening the assessment was bad in law on the ground that the A O has not dealt with the objections to reopening, raised by the assessee, when the defects are curable and not fatal to the re-assessment. 3. That on the facts and in the circumstances of the case and in law, the CIT(A) erred in directing the .....

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als) I, Mumbai be set aside and that of the Assessing Officer be restored. 5. The Appellant craves leave to amend or alter any ground or add a new ground which may be necessary." 2. The assessee is an educational institution existing for the purpose of education and substantially financed by the Government. The institution is in existence for over 60 years and was formed with the object of providing education in various fields in general and in social science in particular. The assessee-ins .....

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ent year 2007-08, the AO took a view that since the total Government grant for the year constituted less than 75% of total expenditure, the institution is not substantially financed by the Government. The AO relied on the provisions of sec.14(1) of the Comptroller and Auditor General s (Duties, Powers and Conditions of Services) Act, 1971 and denied the assessee s claim of exemption u/s 10(23)(iiiab) of the Act. A similar view was taken by the AO for the assessment year 2003-04 and the case was .....

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fore us, the revenue has challenged the impugned order of the CIT(A) on both the grounds i.e. (i) reopening of the assessment as well as the exemption allowed u/s 10(23C)(iiiab). 5. We have heard the learned Departmental Representative as well as the learned AR and considered the relevant material on record. At the outset, we not that an identical issue has been considered and decided by this Tribunal in assessee s own case for the assessment year 2003-04 as well as for assessment year 2007-08 v .....

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31.03.2008. To correctly reopen the proceedings under section 148 on a regular assessment, attention has to be paid, that the founding issue has not been dealt with in the regular assessment. If, the issue has been dealt with by the AO in regular assessment then the only basis for reopening can be that the AO must have evidence, to prove that the material fact was not made available to the AO. In the present set of circumstances, there was no material fact, which was not available with the AO i .....

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ssments on the basis of mere change of opinion , which cannot be per se, reason to reopen. We must also keep in mind the conceptual difference between power to review and power to reassess. The Assessing Officer has no power to review; he has the power to reassess. But reassessment has to be based on fulfilment of certain preconditions and if the concept of change of opinion is removed, as contended on behalf of the Department, then, in the garb of reopening the assessment, review would take pla .....

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ion which has been urged on behalf of the assessee is that a full disclosure was made in the return of income. Pursuant thereto, the Assessing Officer passed an order of assessment under section 143(3). It was urged that the Assessing Officer applied his mind specifically to both the aspects of the case noted earlier and to the explanation furnished by the assessee during the course of assessment proceedings. It has been urged that there was no tangible material before the Assessing Officer on t .....

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repetition it would be proper to refer to the relevant aspects of the record while dealing with the submissions which have been urged on behalf of the assessee.. 12. The Hon ble Bombay High Court, in this case, held (head note), The power to reopen an assessment is conditional on the formation of a reason to believe that income chargeable to tax has escaped assessment. The power is not akin to a review. The existence of tangible material is necessary to ensure against an arbitrary exercise of po .....

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ve leverage of another two years, i.e. a total of six years. This extended period of two further years is subject to the conditions laid down in the first proviso to section 147, which reads as under: Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has esc .....

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as been made the subject of excessive relief under this Act ; or (iv) excessive loss or depreciation allowance or any other allowance under this Act has been computed;] 15. In case where there is in existence of a regular assessment, the period of six years becomes available to the AO only in a case where there is a failure on the part of the assessee to fully and truly disclose all material facts. If in case, the reasons being recorded and relied upon by the AO has been dealt with in the regula .....

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e provisions of Explanation 2 of section 147 shall apply as they apply for the purposes of that section. Explanation 2 to section 147 Explanation 2.-For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely :- (a) where no return of income has been furnished by the assessee although his total income or the total income of any other person in respect of which he is assessable under this Act during the previous ye .....

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as been made, but- (i) income chargeable to tax has been underassessed ; 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) excessive loss or depreciation allowance or any other allowance under this Act has been computed;] (d) where a person is found to have any asset (including financial interest in any entity) located outside India. 16. In the instant case, assessment under section 143(3) was fra .....

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axman 178 (Bom) • Mistry Lalji Narsi Development Corp. vs. ACIT :323 ITR 194 (Bom) • 3i Infotech Ltd. vs. ACIT :192 Taxman 137 (Bom) • Haryana Acrylic manufacturing co. vs. CIT :308 ITR 38 (Del HC) • Sterlite Industries (I) Ltd. vs. ACIT :305 ITR 339 (Cal HC) • Anil Kumar Bhandari vs. JCIT :294 ITR 222 (Cal HC) • CIT & Anr. Vs. Saipem SPA :300 ITR 133(Uttarakhand) • CIT vs Rajasthan Patrika Ltd. :258 ITR 300 (Raj.) • Nikhil Kotak vs. Mahesh Kumar, A.O. .....

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93, whereas a deduction under the provision is permissible only when the undertaking has commenced construction, hence the deduction was wrongly taken. The Hon ble High Court concluded, Significantly, the reasons which have been recorded by the Assessing Officer for reopening the assessment show that reliance is placed on a commencement certificate which it is now common ground before the court was already on record before the Assessing Officer when the original order under section 143(3) was pa .....

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facts. Moreover, it is also common ground before the court that a deduction has been granted under section 80IB(10) to the assessee for the assessment year 2002-03. This statement of fact by the counsel appearing on behalf of the assessee has not been controverted by counsel for the Revenue during the course of submissions. We would, while concluding once again clarify that in the present case, we are not concerned with the question as to whether a deduction under section 80IB(10) was validly gr .....

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u/s 143(3), the issue of 10(23C)(iiiab) had been gone into and the AO, only initiated the reassessment proceedings, because he had taken a divergent view on the allowability of exemption. Since the issue was discussed in regular assessment proceedings and the AO did not stumble upon any evidence/material, which was not placed before him, the initiation cannot be sustained. In any case, the initiation cannot survive, because even the basis of initiation has been deleted by us in ITA No.4394/Mum/2 .....

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ings, we do not intend to go into the issue involved in the grounds, invoking the merits. 6. We find that the facts and circumstances are identical for the assessment year under consideration and the CIT(A) has decided the issue of validity of reopening by following the order of this Tribunal in the assessee s own case. Accordingly, we do not find any error or illegality in the impugned order of the CIT(A) qua this issue. The same is upheld. 7. As regards the issue of claim of exemption u/s 10(2 .....

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institution existing solely for educational purposes and not for purposes of profit, and which is wholly or substantially financed by the Government . 15. From the fact emerging from the assessment order is that the assessee being a Registered Society, is devoting its objects towards social services and Research Institution. In the year under consideration assessee received Government grant to the tune of ₹ 12,79,13,233/- and it incurred expenses to the tune of ₹ 22,49,72,584/-. Acc .....

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ed and which would mean, grant or loan is not less than 75% of the total expenditure . For importing the legislative meaning from another legislation, it becomes imperative that not only the meaning of the entire section is read and understood as a whole, but due cognizance be given to the meaning. The AO, through referred to section 14(1) only, but when we read the entire section, along with sub sections (2) & (3), what we gather from reading of the entire section, is that sub-section (3) a .....

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or any person, is out of the parameters of CAG. 17. According to us, this could never have been the intention of the CAG. We cannot subscribe to the observation of the AO, when he defines the expression, substantially financed by the Government to mean nearer to 100% or by relying on Explanation to section 14(1) to be not less than 75%. 18. Looking from another angle, that too, strictly following the provisions of the Act, that to claim exemption under section 10(23C)(iiiab), as per clause (vi) .....

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emptions under section 10(23c)(iiiab) and other corresponding sections, would, automatically get covered by CAG rules, and in that circumstance, application of clause (vi) would be at otiose. 19. In that sense, we cannot accept the reasoning given by the AO to import the provisions of section 14 of Comptroller and Auditor General (Duties, Powers and Conditions of Service) Act, 1971. We, therefore, hold that the AO erred in importing the section of another legislature, that too partly, to negate .....

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terpretation by various Courts in various contexts. The authorities in deciding what constitutes a substantial portion of the finance have taken note of the statutory provisions contained in the Banking Regulation Act, 1949, where, a person has beneficial interest of more than 10% of the total capital subscribed by all the partners of the firm has been held to be having substantial interest. Para 5 - In the case of assessee itself when the grant was more than 50%, exemption has been extended to .....

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