TMI Blog2016 (12) TMI 1245X X X X Extracts X X X X X X X X Extracts X X X X ..... material which was already before the AO is nothing but a mere change of opinion which is not permissible under the Income Tax Act. - Decided in favour of assessee - I.T.A. No.1338/Mum/2012, I.T.A. No.2291/Mum/2012, Cross-objection No.82/Mum/2013 - - - Dated:- 27-10-2016 - SHRI AMIT SHUKLA, JM AND SHRI RAJESH KUMAR, AM For The Assessee : Shri M M Golvala and Shri Hormuzd Jamshedji For The Revenue : Shri Love Kumar ORDER PER RAJESH KUMAR, AM : These cross appeals filed by the respective parties against the order dated 18.1.2012 passed by the ld. CIT(A)-21, Mumbai for the assessment year 2005-06. The assessee also filed cross-objection against the ITA No.2291/Mum/2012 filed by the revenue. Since these appeals and cross-objection pertain to the same assessee, these were clubbed and heard together and are being decided by this common order for the sake of convenience. I.T.A. No.1338/Mum/2012 ( AY: 2005-06)(by assessee) 2. Grounds of appeal taken by the assessee are as under: This appeal is against the Order uls.l43(3) r.w.s. 147 of the Income-tax Act 1961, dated 18.01.2012 passed by the Commissioner of Income-tax (Appeals)-21, Mumbai and rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 32,59,83,402/-. It is seen that the assessee company has claimed deduction u/s. 1OA of the Act which includes P .Fees of ₹ 55,84,47,000/OPE's of ₹ 12,62,44,000/- as shown in the P L a/c. As regards OPE's income the assessee vide its letter dated 24.10.2008 stated that these are out of pocket expenses recovered from customer, the assessee does not keep ... track of the exact nature of such expenses . Apparently, it appears that the expenses recovered by the assessee had been included in the export turnover at the of computing of deduction u/s. 1OA. Further, from the details furnished it was observed that vide letter dated 30.11.2008 assessee had stated that the OPE's income is arrived on the pro-rata basis and it is of ₹ 11,13,74,064/- instead of ₹ 12,62,44,000/- shown in the P L a/ c. As such the difference in the OPE's income of ₹ 1,48,69,936/- should have been reduced from the profit of undertaking. Hence, the assessee was eligible for deduction u/s 1OA of ₹ 9,30,95,305/- whereas the deduction u/s. 1OA allowed to the assessee is of ₹ 11,18,44,590/- resulting in under levy of income of ₹ 1,87,49,285/- and shor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he original assessment. The ld. AR drew our attention to the statement of the total income filed at page 4 of the paper book in which the deduction u/s 10A for Unit at Gate 1A, Godrej Industries Complex, Vikroli, Mumbai-400079 was claimed at ₹ 11,57,73,763/- which was restricted to Rs ₹ 11,18,44,590/- by the AO after examining all the aspects with respect to calculation of profits from the said Unit. In the light of provisions of section 10A of the Act. It is pertinent to mention that the assessee was also having other two units which were eligible for deduction u/s 10A of the Act, however, due to losses incurred in the said Units no exemption was claimed. 7. The ld. CIT(A) decided the issue of reopening in favour of the assessee on the First and Third reasons recorded whereas upholding the reopening of assessment u/s 147 r.w.s 148 of the Act on the second reason. Now, the assessee has challenged the jurisdictional issue of reopening of the assessment u/s 147 read with section 148 of the Act before us. 8. The ld. AR vehemently argued that there was no fresh and tangible material before the AO to reopen the assessment. The ld. Counsel for the assessee submitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore for all practical purposes, the interest on FDR was part of the profit earned from the said UNIT. In defence, the ld.AR heavily relied on a number of decisions namely Kelvinator of India Ltd. (320 ITR 561(SC), CIT V/s ICICI Bank Ltd reported in (349 ITR 482) (Bom), Cliantha Research Ltd V/s DCIT (SCA No.1547 of 2013)(Guj), Metal Alloys Corporation v.ACIT [2013] 350 ITR 245 (Gujarat) and the decision of Hon ble Gujarat High Court in the case of CIT V/s Sun Pharmaceutical Industries Ltd in Income Tax Appeal No.128 of 2016 order dated 1.4.2016. 9. On the other hand, the ld DR heavily relied on the orders of the authorities below and submitted that the interest on FDR could not be part of the profit of Unit eligible for deduction u/s 10A of the Act and therefore, the assessee has treated the same as part of the profit for the purpose of claiming the higher deduction u/s 10A thereby concealing the income to that extent. Therefore the, AO has rightly reopened the assessment of the assessee on the ground that ₹ 20,89,000/- being interest on FDR has escaped assessment. The ld. DR argued that there was no need for the fresh material for reopening the assessment and the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 8,50,06,151/- as against ₹ 11,57,73,763/- claimed by the assessee in the return of income. From the above facts it is adequately clear that the issue of interest on FDR forming part of the net profit and calculation for the purpose of section 10A of the Act was very much before the AO which was furnished vide written submission dated 24.10.2008 in reply to the questionnaire dated 19.8.2008 which is placed at page 37 of the paper book and the AO after considering all these information and documents filed before him during the assessment proceedings reduced the amount of deduction u/s 10A to ₹ 8,50,06,151/- as against ₹ 11,57,73,763/- claimed by the assessee. In our opinion, reopening of the assessment on the basis of interest on FDR stating that the same to have escaped the assessment u/s 147 r.w.s 148 of the Act is not correct as the material was already before the AO at the time of framing the original assessment and therefore, we are in agreement with the argument of the ld. AR that the reopening of assessment on the basis of material which was already before the AO is nothing but a mere change of opinion which is not permissible under the Income Tax Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing, but a change of opinion. It was not a case of escape assessment as nothing was concealed by the assessee nor he has failed to furnish the material relevant to the assessment year before the Assessing Officer. Therefore, notice issued under section 148 of the Act was liable to be quashed . 11. Considering the facts as discussed above, we are of the considered view that the issue of interest on FDR of ₹ 20,89,000/- was examined by the AO at the time of framing the original assessment and reopening the same on that basis is just a mere change of opinion . The facts of the case of the assessee are squarely covered by the ratios laid down in the above mentioned decisions. Therefore, respectfully following the same we quash the assessment proceedings, u/s 148 of the Act. The AO is directly accordingly. 12. The issue raised in ground no.7 is on merit. Since we have already quashed the reopening of the assessment on the legal and technical issue, the ground is rendered academic and accordingly dismissed as being infructuous. I.T.A. No.2291/Mum/2012 (By revenue) 13. Grounds of appeal taken by the revenue are as under : l. On the facts and in the circumstance ..... X X X X Extracts X X X X X X X X Extracts X X X X
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