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Mercedes-Benz India Pvt. Ltd., (formerly known as DaimlerChrysler India Pvt. Ltd.) Versus The Dy. Commissioner of Income Tax, Circle – 9, Pune

2016 (5) TMI 920 - ITAT PUNE

Reopening of assessment - Deduction under section 80IB disallowed for non-submission of audit report in form No.10CCB - Held that:- Where the assessee had fully and truly disclosed all the material facts vis-à-vis computation of income in its hands, the reassessment proceedings, if any, could be initiated against the assessee within four years from the end of relevant year and where the reassessment proceedings are initiated beyond the period of four years, the same is to be held to be invalid. .....

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on under section 154 of the Act along with copy of accountant’s report in form No.10CCB in respect of its claim of deduction under section 80IB of the Act. The Assessing Officer accepted the contention of assessee and observed that it was a mistake apparent from the record and passed rectification order under section 154 of the Act, dated 28.02.2007 granting deduction under section 80IB of the Act. These proceedings reflect that a mistake which had crept in the order of assessment was acknowledg .....

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ceedings initiated against the assessee. Accordingly, we cancel the same holding the relevant proceedings to be invalid and beyond limitation period prescribed in the Act.- Decided in favour of assessee - ITA No.1780/PN/2013 - Dated:- 11-4-2016 - MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA, AM For The Appellant : Shri Pramod Achudan For The Respondent : Shri S.K. Rastogi, CIT ORDER PER SUSHMA CHOWLA, JM: This appeal filed by the assessee is against the order of CIT(A)-V, Pune, dated 02.07. .....

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. 2. The learned CIT(A) erred in law by upholding the action of the then Assessing Officer of initiating reassessment proceedings under section 147 of the Act on account of a change of opinion . 3. The learned CIT(A) erred by upholding the action of the then Assessing Officer while passing the reassessment order in withdrawing the deduction under section 80-IB of the Act which was granted to the Appellant earlier. 4. The learned CIT(A) erred in not adjudicating on issue relating to denial of ded .....

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e is dismissed as not pressed. 4. Briefly, in the facts of the present case, the assessee had in the original return of income claimed deduction under section 80IB of the Act at ₹ 2,59,88,592/-, which was allowed to the assessee vide order passed under section 143(3) of the Act. Thereafter, it was noted by the Assessing Officer that the assessee had not furnished the audit report in form No.10CCB, which was mandatory for allowing deduction under section 80IB of the Act. Therefore, the Asse .....

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pointed out by the assessee that in view of the decision of Tribunal relating to assessment year 1999-2000, effect for which is yet to be given, there would be brought forward losses to the assessee. The Assessing Officer observed that in view of the assessee having not filed audit report in form No.10CCB, which was mandatory, the assessee was not eligible for deduction under section 80IB of the Act for the year under consideration. The Assessing Officer further held that however, sub sequent t .....

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10CCB. The said report was filed along with an application under section 154 of the Act on 30.08.2006, on the basis of which the order under section 154 of the Act was passed on 28.02.2007, in which the deduction under section 80IB of the Act was allowed. Therefore, it could not be said that there was change of opinion while initiating re-opening assessment proceedings under section 147 of the Act. With regard to merits of the issue, the CIT(A) held that the said deduction under section 80IB of .....

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d Authorized Representative for the assessee pointed out that in the return of income, no deduction was claimed under section 80IB of the Act because of brought forward losses. Our attention was drawn to the computation of income filed, in which a note was given vis-à-vis no claim of deduction under section 80IB of the Act on account of losses, which is placed at page 8 of the Paper Book. The learned Authorized Representative for the assessee pointed out that the Assessing Officer while p .....

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epresentative for the assessee pointed out that the deduction under section 80IB of the Act was allowed to the assessee under section 154 of the Act, copy of the order is placed at pages 24 to 26 of the Paper Book. Thereafter, notice under section 148 of the Act was issued for withdrawal of deduction under section 80IB of the Act, which is placed at page 29 of the Paper Book, which in turn, is supported by the reasons for initiating re-assessment proceedings, which are placed at pages 30 and 31 .....

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. The second objection raised by the learned Authorized Representative for the assessee was that where deduction has been considered and allowed by the Assessing Officer and all material facts in this regard were disclosed by the assessee and available before the Assessing Officer, then the re -assessment proceedings initiated in the case amounts to change of opinion, which cannot be allowed. The learned Authorized Representative for the assessee pointed out that the deduction under section 80IB .....

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artmental Representative for the Revenue placed reliance on the order of CIT(A). 9. We have heard the rival contentions and perused the record. The first issue which arises in the present appeal is invoking of jurisdiction by the Assessing Officer under section 147 of the Act by recording reasons for reopening and thereafter, issue of notice under section 148 of the Act. In order to appreciate the issue, it is necessary to look at the sequence of events in the case, which has been filed by the a .....

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6 Refer page 32-48 of the Paper Book 3 Rectification application under section 154 of the Act filed with the AO along with accountant s report in Form 10CCB in support of its claim for deduction under section 80-IB of the Act 30-Aug-06 Page 10-23 of the Paper Book 4 Rectification Order passed under section 154 of the Act granting deduction under section 80- IB of the Act 28-Feb-07 Page 24-28 of the Paper Book 5 Second notice under section 148 of the Act initiating re-assessment for withdrawal of .....

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tiating reassessment 22-Dec-09 Page 49-50 of the Paper Book 9 Second reassessment order passed under section 147 of the Act disallowing deduction under section 80-IB of the Act due to nonsubmission of audit report in Form 10CCB along with the return of income 31-Dec-09 Page 35-36 of the Appeal memo 10. In the facts of the present case, the assessee had furnished the return of income on 31.10.2003 at Rs.Nil by setting off of brought forward business losses of past years. The copy of computation o .....

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003, the deduction under section 80IB of the Act was Rs.Nil. It was further stated by the assessee that if during the assessment proceedings, the assessee is determined to have positive income, then it would submit its claim under section 80IB of the Act. The original assessment order was completed under section 143(3) of the Act, copy of which is placed at pages 32 to 48 of the Paper Book, in which positive total income was determined at ₹ 36,26,96,920/-. While passing the assessment orde .....

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wed to the assessee for the year under consideration. Pursuant to the assessment order being received by the assessee, the assessee furnished the rectification application under section 154 of the Act on 30.08.2006 along with copy of accountant s report in form No.10CCB, which is placed at pages 10 to 23 of the Paper Book. The Assessing Officer accepted the claim of the assessee and granted deduction under section 80IB of the Act vide order passed under section 154 of the Act on 28.02.2007, copy .....

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f the Act was issued, copy of which is placed at page 29 of the Paper Book and copy of reasons recorded for reopening assessment is placed at pages 30-31 of the Paper Book, in which it is admitted that original assessment was completed on 30.03.2006 and thereafter, order under section 154 of the Act was passed. During the year under consideration, the assessee was found not to have submitted any audit report in form No.10CCB, which was mandatory for all the assessees including commercial assesse .....

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ubmission of audit report in form No.10CCB. 11. The first objection raised by the assessee is that where the assessment under section 143(3) of the Act has been completed, under the provisions of section 148 of the Act notice for reassessment could be issued within four years from the close of the year, unless there was failure on the part of assessee to disclose fully and truly all material facts. The assessment year under consideration is assessment year 2003-04 and the period of four years ex .....

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o taxable income during the previous year ending 31.03.2003, the deduction under section 80IB of the Act allowable to the assessee was Nil. Vide note No.5, it was further submitted by the assessee that if during the course of assessment proceedings, positive income is determined in the hands of assessee, then it would submit its claim of deduction under section 80IB of the Act. Admittedly, when the original assessment order dated 30.03.2006 was passed under section 143(3) of the Act, the Assessi .....

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irst of all, it has been held by various Courts and the Tribunals that the filing of form No.10CCB along with return of income is directary and not mandatory in nature. In the facts of the present case, where the income computed in the hands of assessee, because of adjustment of brought forward losses was Nil, the assessee made disclosure to the effect in its return of income and also submitted that in case any positive income was determined in his hands, then it should be allowed an opportunity .....

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-vis computation of income in its hands, the reassessment proceedings, if any, could be initiated against the assessee within four years from the end of relevant year and where the reassessment proceedings are initiated beyond the period of four years, the same is to be held to be invalid. 12. We find support from the ratio laid down by the Hon ble Bombay High Court in Anil Radhakrishna Wani Vs. ITO (2010) 323 ITR 564 (Bom) , wherein it has been held as under:- 7. The proviso to section 147 of t .....

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at assessment year. The Revenue has relied upon section 149(1)(b) under which no notice under section 148 can be issued for the relevant assessment year after four years, but not more than six years have elapsed from the relevant assessment year, unless the income chargeable to tax which has escaped assessment amounts or is likely to amount to one lakh of rupees or more. The power to reopen an assessment beyond a period of four years but up to six years under section 149(1)(b) is subject to the .....

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akh or more. This provision has nothing to do with the condition precedent for reopening beyond four years, which has to be fulfilled in any event. Therefore, the basic question that needs to be addressed on facts is, as to whether there was any failure on the part of the petitioner, as the assessee, to disclose fully and truly all material facts necessary for the assessment. 13. The records of proceedings in the present case reflect that return of income was filed on 31.10.2003 along with which .....

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ion under section 80IB of the Act. The Assessing Officer accepted the contention of assessee and observed that it was a mistake apparent from the record and passed rectification order under section 154 of the Act, dated 28.02.2007 granting deduction under section 80IB of the Act. These proceedings reflect that a mistake which had crept in the order of assessment was acknowledged by the Assessing Officer while passing rectification order. 14. Now, we come to the second objection raised by the ass .....

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