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2015 (11) TMI 117 - ITAT PUNE

2015 (11) TMI 117 - ITAT PUNE - TMI - Addition made on account of employees contribution to PF after due date - contravention of the provisions of section 36(i)(va) - Held that:- It is an undisputed fact that the assessee has contributed towards PF and ESIC before due date of filing return under the Income Tax Act. It is well settled law that the contributions made to such funds before due date of filing return are admissible as expenditure. The Hon'ble Bombay High Court in the case of CIT Vs. G .....

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iation of the amalgamating companies in the hands of the assessee company denied - Held that:- In the present case, the reassessment proceedings u/s. 147 r.w.s. 148 have been initiated by the Assessing Officer merely on the basis of change of opinion which is not permissible under law. At the time of scrutiny assessment all the information was available before the Assessing Officer. The Assessing Officer had an opportunity to examine and raise query. A perusal of the assessment order passed u/s. .....

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our view wherein the Assessing Officer has categorically stated, ‘On perusal of the material available on record…..’ the Assessing Officer has reasons to believe that the amalgamating companies does not satisfy the definition of Industrial Undertaking u/s. 72A. From the documents on record, it is writ large that the reassessment proceedings have been initiated on the change of opinion which is impermissible under the Act. Therefore, reopening of assessment is bad in law and subsequent proceedin .....

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sessment year 2004-05. The assessee in its appeal has assailed the orders of Commissioner of Income Tax (Appeals) in upholding the reassessment proceedings u/s. 147 of the Income Tax Act, 1961 (hereinafter referred to as the Act ). The assessee has also assailed the action of Commissioner of Income Tax (Appeals) in enhancing the income assessed by the Assessing Officer, by withdrawing the deduction allowed u/s. 80IA(4) without issuing show cause notice. The assessee has also raised additional gr .....

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ention of the provisions of section 36(i)(va) of the Act. 2. The brief facts of the case as emanating from records are : The assessee is a company engaged in the business of construction, development, operation and maintenance of infrastructure facilities. The assessee filed its return of income for the impugned assessment year on 01-11-2004 declaring total income of ₹ 2,81,67,780/-. The case of the assessee was selected for scrutiny. Accordingly, notice u/s. 143(2) was issued to the asses .....

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sessment proceedings various issues were raised including issue arising from the amalgamation of various companies with the assessee company. The Assessing Officer computed the tax liability of the assessee under MAT provision i.e. u/s. 115JB as ₹ 70,15,438/-. 2.1 Thereafter the Assessing Officer issued notice u/s. 148 on 06-03-2007 on the ground that the assessee company and the amalgamating companies are not industrial undertaking within the meaning of section 72A of the Act. Therefore, .....

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rder dated 23-04-2007. In re-assessment proceedings, the Assessing Officer held that all the amalgamating companies are not industrial undertaking within the meaning of section 72A of the Act. Therefore, the assessee cannot claim the benefit of set off of business losses and unabsorbed depreciation allowances of the amalgamating companies. The Assessing Officer vide order dated 27-12-2007 passed u/s. 143(3) r.w.s. 147 assessed the income of the assessee at ₹ 12,42,43,556/- by disallowing t .....

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ons of the assessee in respect of reassessment proceedings, as well as on merits. However, the Commissioner of Income Tax (Appeals) granted relief only in respect of disallowance of ₹ 8,68,974/- on account of delayed payments of employee contributions to PF and ESIC. 3. Shri Nikhil Pathak appearing on behalf of the assessee submitted that the assessee is engaged in the development and construction of infrastructure facilities and is operating under BOT Scheme. During the period relevant to .....

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sment is within the period of 4 years, but the reassessment proceedings are initiated merely on the basis of change of opinion . No fresh tangible material was available with the Assessing Officer so as to invoke the provisions of section 147 of the Act. There is no allegation by the Assessing Officer that the assessee has failed to make true and full disclosure. A perusal of reasons for re-opening which are at pages 205 and 206 of the paper book would make it amply clear that reassessment proce .....

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sessee had provided all the material documents to the Assessing Officer. The Auditor in his report had categorically stated about the scheme of merger approved by the Hon'ble High Court of Bombay and the fact that the audited financial statements were adjusted in accordance with the approved scheme of merger. During the assessment proceedings, the question of revaluation of assets on amalgamation was raised by the Assessing Officer which was duly answered. Hence, the reassessment proceedings .....

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down by the Hon'ble Jurisdictional High Court and the Hon'ble Supreme Court of India. In support of his submissions, the ld. AR placed reliance on the following case laws: i. CIT Vs. Kelvinator of India Ltd., 320 ITR 561 (SC); ii. Asian Paints Ltd. Vs. DCIT, 308ITR 195 (Bom); iii. Idea Cellular Ltd. Vs. DCIT, 301 ITR 407 (Bom); iv. CIT Vs. Amitabh Bachchan, 349 ITR 76 (Bom); v. Hindustan Unilever Ltd. Vs. DCIT, 325 ITR 102 (Bom); vi. CIT Vs. Eicher Ltd., 344 ITR 37 (Del)(HC); and vii. CI .....

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ppeals) has erred in withdrawing the deduction allowed u/s. 80IA(4) thereby enhancing the assessed income without issuing show cause notice. In the revised return of income, the assessee had claimed deduction 80IA of the Act. The Assessing Officer during the assessment proceedings wrongly computed the amount of deduction. The assessee raised this ground before the Commissioner of Income Tax (Appeals) in appeal. The Commissioner of Income Tax (Appeals) without issuing show cause notice withdraws .....

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orward business losses and unabsorbed depreciation of the amalgamating companies in the hands of the assessee company. The ld. AR further submitted that without prejudice to the grounds raised in the appeal, if the set off and carry forward business losses and unabsorbed depreciation of the amalgamating companies is not allowed to the assessee then the correct WDV of the block of assets in the hands of the assessee should be allowed to be carry forward to the next year. The ld. AR submitted that .....

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true disclosure during the scrutiny assessment proceedings. The assessee has deliberately furnished the information sought by the Assessing Officer in a vague and sketchy manner. This is evident from the tabular reply given by the assessee during the assessment proceedings. The ld. DR referred to page 21 of the order of the Commissioner of Income Tax (Appeals) to show that the reply given by the assessee is indistinct. The ld. DR pointed out that in the reply given by the assessee, in some of t .....

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g case laws: i. CIT Vs. Usha International Ltd., 348 ITR 485 (Del)(FB); ii. ACIT Vs. Appollo Hospitals Enterprises Ltd., 300 ITR 167 (Madras); iii. Export Credit Guarantee Corporation of India Ltd. Vs. Addl. CIT, 350 ITR 651 (Bom); iv. Honda Siel Power Products Ltd., 340 ITR 53. 4.1 The ld. DR submitted that the Assessing Officer was justified in invoking the provisions of section 147 r.w.s. 148 of the Act. The issue relating to admissibility of assessee in claiming set off of brought forward lo .....

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failed to deposit employees share of contribution towards PF and ESIC within the stipulated time as prescribed under the respective laws. Therefore, the assessee is not eligible to claim the amount deposited after the due date. 5. The ld. AR of the assessee while rebutting the contentions of the ld. DR submitted that, in the return of income the assessee had stated about the amalgamation. During the course of scrutiny assessment proceedings, the assessee had given the details of the nature of b .....

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y the ld. DR, the ld. AR submitted that the facts in the case of ACIT Vs. Appollo Hospitals Enterprises Ltd. (supra) are entirely distinguishable. No fresh tangible material was available with the Assessing Officer to initiate reassessment proceedings in the present case. The ld. AR contended that even the judgments rendered in the case of Honda Siel Power Products Ltd. (supra), CIT Vs. Usha International Ltd. (supra) and Export Credit Guarantee Corporation of India Ltd. Vs. Addl. CIT (supra) th .....

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Bombay High Court in the case of CIT Vs. Ghatge Patil Transport Ltd. reported as 368 ITR 749 (Bom). The Commissioner of Income Tax (Appeals) has rightly allowed the claim of the assessee in respect of PF and ESIC. 6. We have heard the submissions made by the representatives of both the sides and have perused the orders of the authorities below. We have also considered the decisions on which the rival sides have placed reliance in support of their respective contentions. The assessee in its appea .....

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d Ashoka Construction Engineers Pvt. Ltd. were amalgamated with the assessee company w.e.f. 01-04-2003. To give effect to this merger and amalgamation sanctioned by the Hon'ble Bombay High Court, the assessee filed revised return of income on 30-10-2005 declaring Nil income. In the return of income, the assessee had claimed set off of brought forward business losses and unabsorbed depreciation of earlier years in respect of amalgamating companies. In scrutiny assessment proceedings, the Asse .....

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ing Officer on 06-03-2007 issued notice u/s. 148 to the assessee. The reasons for reopening show that the provisions of section 147 r.w.s. 148 has been invoked on the basis of material already available on record. The relevant extract of the reasons for reopening communicated to the assessee reads as under: Reasons for Re-opening: As per terms of Scheme of Amalgamation (merger) sanctioned by order Dt. 03rd December, 2004 of Hon. High Court of Mumbai following companies (merged companies) has bee .....

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rial undertaking with another company, allows carry forward and set off of accumulated loss and unabsorbed depreciation allowance provided the amalgamation satisfies the conditions laid down in sub-section 2 of section 72A. Section 72A(1) reads as under:- Where there has been an amalgamation of a company owning an industrial undertaking or a ship or a hotel with another company or an amalgamation of a banking company referred to in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 .....

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erusal of material available on record with respect to the merger and acquisition the A.O. has reason to believe that none of the above six companies satisfies the definition of Industrial Undertaking as given in sub-section 7(aa) of section 72A. The definition of "industrial undertaking" as given in sub-section 7(aa) of section 72A reads as under:- "industrial undertaking " means any undertaking which is engaged in - (i) the manufacture or processing of-goods; or (ii) the ma .....

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as been made but excessive loss and depreciation allowance under this Act has been computed and allowed and also the income of the assessee has been made the subject of excessive relief under this Act. A.O. is of the opinion that as per explanation 2 to section 147 of the I.T. Act, 1961 it is to be deemed to be a case wherein income chargeable to tax has escaped assessment, namely :- because as an assessment has been made, but (i) Such income has been made the subject cf excessive relief under t .....

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of MAT as per section 115JB will not apply to assessee. After disallowing the set off of brought forward losses and depreciation, assessee's tax liability comes to ₹ 2,88,38,334/-. In view of the above mentioned reasons the assessment for A, Y. 2004-05 is reopened and notice u/s 147 is issued to the assesses on 01/03/2007. Sd/- (V.R. PATIL) Asstt. Commissioner of Income Tax, Circle-2, Nashik 8. Thus, it is evident that that the reassessment proceedings were not initiated on the basis .....

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under the provisions of section 143(3), it is presumed that the Assessing Officer has applied his mind on each and every aspect of source of income, expenditure and deductions claimed. The assessee has placed on record the revised return of income at pages 87 to 92 of the paper book. A perusal of the same shows that the assessee has specifically stated in the note that the Hon'ble Bombay High Court has approved the scheme of amalgamation w.e.f. 01-04-2003 and hence, the accounts of the asse .....

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unabsorbed depreciation allowance in case of amalgamation, demerger etc. Since, the assessee had claimed set off of losses and unabsorbed depreciation of the amalgamating companies the Assessing Officer was duty bound to refer to the provisions of section 72A, which he has failed to do or after considering the same has granted relief to the assessee. 9. The legislature in its wisdom has not granted power to Assessing Officer to review its order. The provisions of Income Tax Act has provided vari .....

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ments. The Hon'ble Delhi High Court in the case of CIT Vs. Kelvinator of India Ltd. (supra) has held: 14. It is well settled principle of interpretation of statute that entire statute should be read as a whole and the same has to be considered thereafter chapter by chapter and then section by section and ultimately word by word. It is not in dispute that the Assessing Officer does not have any jurisdiction to review its own order. His jurisdiction is confined only to rectification of mistake .....

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ail and the view taken is a possible view the order cannot be changed by way of exercising the jurisdiction of rectification of mistake. 15. It is a well settled principle of law that what cannot be done directly cannot be done indirectly. If the ITO does not possess the power of review, he cannot be permitted to achieve the said object by taking recourse to initiating a proceeding of re-assessment or by way of rectification of mistake. In a case of this nature the Revenue is not without remedy. .....

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l acts have been regularly performed. If it be held that an order which has been passed purportedly without application of mind would itself confer jurisdiction upon the Assessing Officer to reopen the proceedings without anything further, the same would amount to give premium to an authority exercising quasi-judicial function to take benefit of its own wrong. The Hon'ble Supreme Court of India in the case of CIT Vs. Kelvinator of India Ltd. reported as 320 ITR 561 has affirmed the findings .....

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ry provisions, which is section 147 and attempt to reopen concluded assessments. If such exercise is permitted that would be quite contrary to the intention of the Act. In that case, there would be no finality to any assessment and at any point of time after expiry of time, the Assessing Officer could reopen assessment. That would plainly be against the statutory policy. 12. The Hon'ble Bombay High Court in the case of Asian Paints Ltd. Vs. DCIT (supra) set aside the reassessment proceedings .....

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In the said case during the assessment the assesses had claimed deduction of provision for estimated liability of arrears of wages payable to workmen at its Ankleshuar plant and contribution by way of reimbursement of capital loss incurred by provident fund, gratuity and superannuation funds. A notice-cum-questionnaire was issued to the petitioner in the course of assessment proceedings investigating into the aforesaid issue and eventually the deduction was allowed. Later, notice .under section .....

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aid details were called for but inadvertently the same were not taken into account while framing the assessment and, therefore, it cannot be said that there was a change of opinion. According to Assessing Officer thus, the relevant material was available on record, but he failed to apply his mind to that material in making the assessment order. The .Assessing Officer cannot take recourse to the provision of section 147 for his own failure to apply his mind to the material which, according to him .....

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ion which was impermissible. Therefore, the reassessment was not justified. 13. In view of the facts of the present case and case laws discussed above, we are of the considered opinion that in the present case, the reassessment proceedings u/s. 147 r.w.s. 148 have been initiated by the Assessing Officer merely on the basis of change of opinion which is not permissible under law. At the time of scrutiny assessment all the information was available before the Assessing Officer. The Assessing Offic .....

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issues relating thereto. A perusal of the reasons for reopening further strengthen our view wherein the Assessing Officer has categorically stated, On perusal of the material available on record….. the Assessing Officer has reasons to believe that the amalgamating companies does not satisfy the definition of Industrial Undertaking u/s. 72A. From the documents on record, it is writ large that the reassessment proceedings have been initiated on the change of opinion which is impermissible u .....

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