TMI Blog2015 (12) TMI 198X X X X Extracts X X X X X X X X Extracts X X X X ..... nt year 2007-08. Thus, the Assessing Officer, after calling for the above material, did not deem it fit to assess capital gain under section 45(2) of the Act nor has the aspect of capital gains been discussed in the assessment order. Therefore, it is evident that while examining the claim under section 80IB(10) of the Act, the Assessing Officer has also called for material relating to the lands in question and as to whether profit/gain was offered for income tax when the land was brought as capital, but has not assessed capital gain under section 45(2) of the Act in relation to conversion of the capital assets to stock in trade, under the circumstances, the reopening of assessment for the purpose of examining such issue is clearly based on a change of opinion. - Decided in favour of assessee. - SPECIAL CIVIL APPLICATION NO.12129 of 2014 - - - Dated:- 2-11-2015 - MS. HARSHA DEVANI AND MR. A.G.URAIZEE, JJ. FOR THE PETITIONER : MR RK PATEL, ADVOCATE FOR THE RESPONDENT : MR NITIN K MEHTA, SR. STANDING COUNSEL ORAL JUDGMENT (PER : HONOURABLE MS. JUSTICE HARSHA DEVANI) 1. This petition under Articles 226 and 227 of the Constitution of India is directed agains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and produced voluminous material to support the claim of deduction. It could not, therefore, by any stretch of imagination be stated that such claim of deduction under section 80IB(8A) of the Act was not examined by the Assessing Officer in the original assessment. It may be that he did not raise specific query as regards the allowability of the claim on the premise that the petitioner was doing scientific research for and on behalf of the companies. The court, however, was of the opinion that merely for the failure of the Assessing Officer to raise such a question, would not authorise him to reopen the assessment even within a period of four years from the end of the relevant assessment year. Any such attempt on his part would be based on mere change of opinion. To reiterate, when a claim was processed at length and after calling for detailed explanation from the assessee, the same was accepted, merely because a certain element or angle was not in the mind of the Assessing Officer while accepting such a claim, cannot be a ground for issuing notice for reassessment. It was pointed out that the special leave petition filed by the revenue against the above decision has been dismisse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made on the very same claim on the basis of the same material, is a mere change of opinion and impermissible. Reliance was also placed upon the decision of this court in the case of Commissioner of Income-tax v. Fag Bearing India Ltd., (2013) 33 taxmann.com 238 (Gujarat), where the assessee s claim for exemption under section 10B was allowed after scrutinising it in detail. The court held that subsequently the Assessing Officer could not initiate reassessment proceedings merely on the basis of change of opinion that apportionment of expenses between two units of the assessee i.e. EOU and another eligible unit, was not proper. The decision of this court in the case of Parixit Industries (P) Ltd. v. Assistant Commissioner of Income-tax, (2012) 20 taxmann.com 750 (Gujarat) was cited for a similar proposition of law. Reliance was also placed upon an unreported decision of this court in the case of Lanxess ABS Limited v. Deputy Commissioner of Income-Tax rendered on 11th April, 2012 in Special Civil Application No.17530/2011. 3.3 The decision of this court in the case of Vodafone Essar Gujarat Ltd. v. Assistant Commissioner of Incometax, (2012) 344 ITR 447 Gujarat, was cited wherein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, stands vitiated. 4. Vehemently opposing the petition, Mr. Nitin Mehta, learned senior standing counsel for the respondent invited the attention of the court to the reasons recorded for reopening the assessment to submit that there was no change of opinion in the present case and that the issue had not been considered from the angle of section 45(2) of the Act. It was pointed out that one Babubhai J. Desai, a partner of the firm had transferred the land in question to his capital account in the assessee firm s books on 7th December, 2006. The assessee firm had claimed expenditure of ₹ 1,91,84,250/- towards purchase of the land in its balance sheet for the year ended 31st March, 2009. It was submitted that the aspect of capital gains arising in the hands of the petitioner firm had never been gone into at the time of framing the original assessment and that there is nothing on record to show that the Assessing Officer has considered this issue. It was submitted that this court in exercise of powers under Article 226 of the Constitution of India would not go into the factum of the ultimate outcome of the proceedings. The only question is whether there is any change ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s part of having formed an opinion with respect to non-taxability of such an amount. The court, accordingly, held that the notice cannot be said to be without jurisdiction or invalid. Reliance was also placed upon the decision of this court in the case of Aquagel Chemicals P. Ltd. v. Assistant Commissioner of Income Tax, (2013) 353 ITR 131, wherein the court in the facts of the said case had found that from the material on record, it could not be said that the Assessing Officer had specially called for information in relation to the issue in question. It was an undisputed position that there was no reference to the claim of depreciation in the assessment order and the only issue discussed therein pertained to disallowance under section 14A of the Act. The court held that insofar as the assessment order was concerned, it did not reflect any application of mind by the Assessing Officer to the claim of depreciation on coal fire boiler building while framing the assessment. The court, accordingly, held that the matter did not relate to change of opinion and upheld the reopening of assessment. 4.2 The decision of this court in the case of Sun Pharmaceuticals Industries Limited v. Dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lia called for further details regarding the supplementary partnership deed dated 1st September, 2007 whereby Shri Babubhai Desai had brought land as his capital. Various queries have been put with regard to the land brought as capital with supporting evidence and detailed working of profit/gain offered for income-tax when the land was brought as capital as also the income computation of Babubhai Desai for financial year 2006-07 and 2007-08. In response to the said notice, the petitioner by a communication dated 2nd September, 2011, had inter alia shown that Babubhai had shown short term capital gain of ₹ 1,08,60,381/- in respect of the land in question and offered the same for tax in assessment year 2007-08. Subsequently, pursuant to an inquiry made by the Assessing Officer, the petitioner by a communication dated 15th November, 2014 had provided information stating that Shri Babubhai Desai had bought land admeasuring 46957 square metres, however, he had got final plot admeasuring 37763 square metres out of which he brought 30856.1 square metres of land as stock-in-trade. The balance land admeasuring 6906.9 square metres was retained by him. The price of the land is shown to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection (1), the profits or gains arising from the transfer by way of conversion by the owner of a capital asset into, or its treatment by him as stock-in-trade of a business carried on by him shall be chargeable to income-tax as his income of the previous year in which such stock-in-trade is sold or otherwise transferred by him and, for the purposes of section 48, the fair market value of the asset on the date of such conversion or treatment shall be deemed to be the full value of the consideration received or accruing as a result of the transfer of the capital asset. The assessee should have paid short capital gain on the capital asset which is transferred as stock in trade and the profit arising out of this should have been charged to tax under the head capital gains , on the date of such transfer. The assessee has failed to do so. 7. In connection with the reasons recorded by the Assessing Officer, the petitioner has raised objections whereby it has been submitted that the Assessing Officer had duly verified the claim of the petitioner for deduction under section 80IB(10) of the Act. The Assessing Officer had, during the assessment proceedings, called for explanatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of Cliantha Research Limited v. Deputy Commissioner of Income-tax, (supra) wherein the court has held thus:- 18. In addition to such queries with respect to the entire claim, he also raised pointed queries with respect to sample storage income and miscellaneous income for which the petitioner had claimed deduction. 19. In response to such queries, the petitioners had given detailed replies and produced voluminous material to support the claim of deduction. It cannot be stated by any stretch of imagination that such claim of deduction under Section 80IB(8A) of the Act was not examined by the Assessing Officer in the original assessment. It may be that he did not raise specific query to allowability of the claim on the premise that the petitioner was doing scientific research for and on behalf of the companies. However, merely for the failure of the Assessing Officer to raise such a question, in our opinion, would not authorize him to reopen the assessment even within the period of 4 years from the end of the relevant assessment year. Any such attempt on his part would be based on mere change of opinion. To reiterate when a claim was processed at length and after ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch amount without assigning reasons, could not be seen as an act on his part of having formed an opinion with respect to non-taxability of such an amount. In the facts of the present case, the eligibility of deduction under section 80IB(10) has been duly examined by the Assessing Officer at the time of framing the original assessment. While considering the claim for deduction under section 80IB(10) of the Act, the Assessing Officer has called for details of the land in question which was brought as capital of Shri Babubhai Desai, the amount of land brought as capital and the value considered, the detailed working of profit/gain offered for income-tax when land was brought as capital asset, as well as copy of the return of income with computation of income of Shri Babubhai Desai for financial years 2006-07 and 2007-08. In response thereto, the petitioner has submitted copies of the revenue record pertaining to the lands in question, the purchase deed of the land, copy of the capital account of Shri Babubhai Desai for financial years 2006-07 and 2007-08, supplementary deed and copy of the capital account of Shri Babubhai Desai and his income tax return for the above years which clear ..... X X X X Extracts X X X X X X X X Extracts X X X X
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