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2016 (10) TMI 95 - GUJARAT HIGH COURT

2016 (10) TMI 95 - GUJARAT HIGH COURT - TM - Reopening of assessment - petitioner company is not entitled to claim any deduction after the lapse of 10 years under section 80IB - Held that:- If we examine the stand of the petitioner with respect to its set up and commencement of manufacturing process, the documents attached to the petition compilation reveal that with respect to single piece and foldable lens manufacturing, the eligible business set up in the assessment year 2001-02, and therefor .....

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ect to another contention of Revenue, the total investment of the unit in question is not more than ₹ 1 crores, but the fact of that has already been explained by the petitioner vide communication dated 30.11.2006, precisely in para 2 of the said communication, and therefore, this issue is already been a part of the record and therefore, the conditions which are laid down in section 80IB appears to have not been violated in terms of aforesaid explanation. Learned counsel for the petitioner .....

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benefit has been granted and recognized and therefore, learned counsel rightly pointed out that it is not open for the authority to pick up in between period and to disturb the benefit which has already been considered and for that purpose relying upon the decision in case of Saurashtra Cement & Chemical Industries Ltd. v. Commissioner of Income Tax GujaratV [1979 (2) TMI 21 - GUJARAT High Court ] It appears that since the authority cannot take up an in between period to deny the benefit, the r .....

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opinion for the assessment year 2006-07. If this be allowed, the same would be based upon a mere change of opinion - Decided in favour of assessee. - SPECIAL CIVIL APPLICATION NO. 15349 of 2011 - Dated:- 14-9-2016 - MR. AKIL KURESHI AND MR. A.J. SHASTRI, JJ. FOR THE PETITIONER : MRS SWATI SOPARKAR, ADVOCATE FOR THE RESPONDENT : MRS MAUNA M BHATT, ADVOCATE ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE A.J. SHASTRI) 1. By way of present petition, the petitioner has challenged the legality and validit .....

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to be filed on 29.09.2006 declaring total income of ₹ 1.38 crores (rounded off). The assessment proceedings came to be processed under section 143(3) of the Act and an assessment order came to be passed on 24.11.2008 while passing the said order of assessment, various deductions claimed by the assessee at length and made certain variations to the income submitted by the assessee, and ultimately an assessment order came to be passed. During the assessment year 2006-07, on 15.05.2008 by issu .....

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, the respondent authority has issued the impugned notice under section 148 of the Income Tax Act on 04.03.2011 for the purpose of reopening assessment for the assessment year 2006-07. On receipt of the said notice, the petitioner company has demanded the reasons for the same, which came to be supplied vide letter dated 04.03.2011 and the main reason which has been assigned for reopening is that assessment is proposed to be reopened as the period of ten years is lapsed from the date of establish .....

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action of respondent authority, the petitioner has approached this Court by way of present petition. 3. Learned advocate Mr.Bandish Soparkar appearing for the petitioner has contended that the issue pertaining to this claim of deduction under section 80IB was examined at length while passing an order of assessment and it was contended that the issue having been examined in detail, the reopening of the same would tantamount to be a change of opinion which is not permissible. It was also contende .....

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ot be on a mere change of opinion, suspicion or rework and thereby contended that reopening of assessment is in the background of this fact is impermissible. It was contended that issue giving rise to reopening has already gone into at the time of original assessment and therefore, having examined all the material brought before the Assessing Officer, now it is impermissible on the part of the respondent authority to issue notice for reopening of assessment. Learned counsel further contended tha .....

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aw that Assessing Officer cannot take any action under section 147 of the Act, merely, because he happens to have a different opinion and inclined to take another view from his predecessor on the basis of same set of facts. Learned counsel further submitted that the reasons which have been supplied are not valid reason to permit the reassessment and therefore, the notice which has been issued, be quashed and set aside. It was also contended by the counsel that the business unit of single piece o .....

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lvinator Of India Limited reported in 320 ITR 561 and contended that on the basis of mere change of opinion, the notice the impermissible to be issued under section 148. While contending this, the learned counsel for the petitioner has taken us through various documents attached to the petition to justify the claim sought for under section 80IB. The learned counsel has drawn the attention of the Court to a communication dated 15.05.2008, wherein, in clause No.2 a specific query came to be raised .....

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s of Section 80IB of the Income Tax Act, 1961. The necessary calculations have been submitted in prescribed form along with the Income Tax Return filed, which is duly certified by the qualified Chartered Accountant. The copy of Form 10CCB duly certified by the Chartered Accountant is attached herewith, the basis on which deduction of ₹ 54,81,367/- u/ s. 80IB of the Income Tax Act, 1961 has been claimed. 4. Learned counsel further submitted that in an objection raised before the authority o .....

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aphs of the objections raised in detail before the authority and subsequently, the attention is drawn further to the audit report which was attached to the additional affidavit filed by the petitioner company. While drawing the attention to the said audit report, for the purpose of claiming deduction under section 80IB, the counsel has pointed out to clause 8 and clause 9 of the said report, which reflects that the unit pertaining to foldable lens set up in the assessment year 2001-02 and theref .....

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essment year 2006-07 and in assessment proceedings also, the chartered accountant appointed by the petitioner has represented the petitioner company and produced all relevant material and after considering those relevant materials, the claim of deduction made available to the petitioner. A reference is made by the counsel to the last portion of said scrutiny assessment order dated 24.11.2008, wherein, under the head of deduction under chapter6A, item No.II which is dealing with the said claim an .....

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has submitted that still the period of 10 years has not lapsed and therefore, the authority has passed an erroneous order. The counsel submitted that a technology has been developed for manufacturing of intraocular lenses during the assessment year 2001-02, it has been stated that the company started manufacturing of single piece intraocular lenses has been set up and as a result of which, the company was stated to have initiated manufacturing process which is eligible for deduction under sectio .....

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and therefore, it was held that authority cannot withdraw the relief to a new industrial undertaking which which has already been granted the benefit without disturbing such relief of earlier years and therefore, by drawing the attention, the counsel submitted that the issuance of notice under section 148A is not sustainable. The relevant extract of the said decision reflected in paragraph no.2 of the same is reproduced hereinafter. 2. Now before us, that order of the Tribunal titled as ACIT (O .....

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d to the assessee for assessment year 2006-07 for which also, the assessment was completed u/s 143(3). He has followed the judgement of Hon'ble Gujarat High Court rendered in the case of Saurashtra Cement & Chemical Industries Ltd. (supra) and held that the A.O. Cannot withdraw relief to a new industrial undertaking which has already been granted without disturbing such relief for earlier years. Considering these facts, we do not find any reason to interfere in the order of Ld. Commissio .....

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sment year 2006-07, deduction was allowed by the A.O. to the assessee u/s 80IB. The A.O. himself has stated in the assessment order that for the unit established by the assessee in assessment year 1994-95, assessee was getting deduction u/s 801A up to assessment year 2004-05. If this be so, then for new unit only, deduction was allowed by the A.O. u/s 80IB in assessment year 2006-07. This goes to show that this fact was very much available in the record of the department that the assessee has es .....

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ck be applied and it has been contended that with respect to assessment year 2005-06, the issue pertaining to deduction under section 80IB has not been examined in detail and therefore, the learned counsel submitted that no interference be made. It was also contended by the counsel for the Revenue that the reasons which have been recorded for the assessment year 2005-06, it is the specific case of the department that so called new undertaking/unit is merely an expansion of the existing undertaki .....

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ut deduction under section 80IB being disallowed in the immediately preceding year, this material facts having been suppressed, writ petition may not be entertained. It was then contended by counsel for the Revenue that initial assessment year for claiming deduction under section 80IB was assessment year 1995-96 and therefore, in view of subsection (3) of section 80IB, the deduction was allowable upto the year 2004-05 only being a lapse of 10 years and therefore, the assessee has made a wrong cl .....

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005-06 and therefore, since this claim has not been discussed and examined in scrutiny assessment, it is not open for the petitioner to justifiably claim the benefit under section 80IB and therefore, learned counsel submitted that in the background of this fact, no relief be granted. 8. Learned counsel for the Revenue has further submitted that condition precedent which is engrafted in section 80IB has not been fulfilled by the assessee, hence it is not open for the petitioner company to claim a .....

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parate registration certificate as SSI unit as a new undertaking, the same having not been produced the claim was not accepted in past, for assessment year 2005-06. By contending this, in summary, learned counsel for the Revenue submitted that all these aspects have not been examined in scrutiny assessment and since the issuance of notice under section 148 of the Act is within a period of four years, it is always open for the authority to examine by reopening the assessment and therefore, learne .....

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sons which have been recorded for the purpose of reopening of assessment. The said reasons are reproduced hereinafter. The assessee company filed its return of income on 29.09.2006, declaring total income of ₹ 1,38,38,057/- after claiming deduction of ₹ 56,46,617/- u/ s. 80IB of the Act for A.Y. 200607. The assessment u/s. 143(3) of the Act on 24.11.2008 determining total income at ₹ 1,78,09,600/- after granting the deduction of ₹ 52,33,100/- u/ s. 80IB for A.Y. 200607. I .....

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eduction u/s. 80IB of ₹ 52,33,100/- resulted in under assessment. In view of the facts discussed above, I have reason to believe that income of ₹ 52,33,100/- being the amount of disallowable u/s. 80IB chargeable to tax has escaped assessment for A.Y. 200607 and accordingly it is the fit case for reopening the assessment u/s. 147 for the A.Y. 200607. 11. From the aforesaid reasons, it appears that a sole ground appeared to be that the assessee company has started operations on 16.08.1 .....

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hese reasons, if we examine the stand of the petitioner with respect to its set up and commencement of manufacturing process, the documents attached to the petition compilation reveal that with respect to single piece and foldable lens manufacturing, the eligible business set up in the assessment year 2001-02, and therefore, the tenure of 10 years to be commenced for the purpose of eligibility from 2001 onwards and therefore there appears to be justification in stand of the petitioner which is f .....

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to assessment year 2006-07, the authority has examined and recognized the deduction under section 80I for the manufacturing of foldable and single piece of lens unit is already considered which can be seen from page 26 of the petition compilation and therefore, it appears that in past as well as from assessment year 2006-07 after recognizing a separate unit, the deduction is made available to the assessee by the authority and therefore, it appears that only with respect to year under considerat .....

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been explained by the petitioner vide communication dated 30.11.2006, precisely in para 2 of the said communication, and therefore, this issue is already been a part of the record and therefore, the conditions which are laid down in section 80IB appears to have not been violated in terms of aforesaid explanation. Learned counsel for the petitioner has submitted that on earlier occasion as well as in subsequent years, the exemption has been permitted and therefore, it is not open for the responde .....

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nt year 2001-02 and thereby, for the assessment year 2006-07, the deduction was allowed by Assessing Officer under section 80IB. 15. Thus, it is clear from the record that on prior period to 2005-06, the benefit of section 80IB was already granted to the petitioner unit and after the year 2005-06 also, the said benefit has been granted and recognized and therefore, learned counsel rightly pointed out that it is not open for the authority to pick up in between period and to disturb the benefit wh .....

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