9911796707
TMI Blog2016 (12) TMI 1245X X X X Extracts X X X X X X X X Extracts X X X X ..... assed by the Commissioner of Income-tax (Appeals)-21, Mumbai and relates to AY 2005-2006. 1) The learned Commissioner of Income-tax (Appeals) erred in holding that the Assessing Officer correctly assumed jurisdiction u/s.147 when the conditions precedent were not satisfied. 2) The learned Commissioner of Income-tax (Appeals) failed to consider that the Assessing Officer did not have "reason to believe" that income chargeable to tax had escaped Assessment. 3) The learned Commissioner of Income-tax (Appeals) failed to consider that the reasons recorded for reopening were erroneous and misconceived. 4) The learned Commissioner of Income-tax (Appeals) failed to consider that the reopening had taken place on a pure change of opinion. 5) The learned Commissioner of Income-tax (Appeals) failed to consider that there was no tangible material before the Assessing Officer to demonstrate that income had escaped assessment. 6) The learned Commissioner of Income-tax (Appeals) failed to consider that the reassessment proceedings were barred under the second proviso to section 147. 7) The ld. CIT(A) erred in holding that interest income Rs. 20,89,000/- did not constitute profits and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 32/- It is also seen that interest was received on the Fixed Deposits of Rs. 20,89,000 of Unit-II on which deduction u/s. 10A has been allowed. Various decisions from case laws were quoted wherein it is laid down that interest on fixed deposits received by an assessee having business income is to be assessed under the head "Income from other sources' and not as 'Business income'. Thus, interest receipt of Rs. 20,89,000/- is to be excluded from the profit of undertaking at the time of computing deduction u/s 10A. From the perusal of the TDS certificates filed alongwith the return of income it is seen that the assessee company has claimed TDS from IDBI Capital Market Services, without submitted the TDS certificate and credit was granted. The same is to be looked in to. In view of the above facts and under the circumstances, I have reason to believe that income which was chargeable to tax has escaped assessment. Proceedings, u/s 147 is being initiated. Issue notice u/s 148 of the IT Act, 1961" 4. Out of the above three reasons recorded for reopening the assessment, the additions made on account of first and third Reasons as referred to above were deleted by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20,89,000/- was not to be included in the profit for the purpose of claiming exemption u/s 10A of the Act, resulting into escarpment of income to the extent of Rs. 20,89,000/-and accordingly assumed jurisdiction u/s 147 of the Act. The ld. AR argued that the issue of interest on FDR was very much before the AO at the time of original assessment proceedings which was specifically raised by the AO and the assessee accordingly submitted complete particulars and working of net profit for the purpose of claiming deduction u/s 10A of the Act including details of interest on FDR being treated as part of profit for the purpose of claim of deduction u/s 10A of the Act. The ld. AR drew our attention to the questionnaire dated 19.8.2008 as filed in paper book at pages 30 to 32 issued by the ACIT-Range -10, Mumbai and at para 14,15 and 16 vide order dated 19.10.2008, the issue of deduction u/s 10A was specifically asked calling upon the assessee to furnish the copies of profit and loss account, balance-sheet of the three Units. The ld.Counsel argued that the said query of the AO was replied by the assessee vide letter dated 24.10.2008, wherein vide para 6, the assessee furnished Unit-wise work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... original assessment but was not considered. 10. We have heard the rival submissions and perused the material on record including the impugned orders of the authorities below and various case laws relied upon by the rival parties. We find that there were three reasons recorded by the AO for reopening of the assessment already finalized and framed under sect. 143(3) of the Act vide order dated 8.12.2008. The reasons No.1 and 3 were held by the ld. CIT(A) to be wrong and invalid for assuming jurisdiction u/s 147 of the Act, whereas the reason no.2 i.e. escapement of income by way of interest on FDR amounting to Rs. 20,89,000/- was held to be valid reason for re-opening of the assessment by the AO. Therefore, issue before us is whether the assumption of jurisdiction on the basis of escapement of income by way of interest on FDR constituted a valid ground for reopening the completed assessment when it was claimed u/s 10A of the Act by treating the same as part of profit. During the course of hearing, the ld.AR drew our attention to the statement of income for the assessment year 2005-06 filed at page No.1 of the paper book in which the assessee has claimed deduction under section 10A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment was finalized and framed by the AO after considering all the material. Merely for the reasons that the successor AO does not agree with the conclusion drawn by the predecessor AO the assessment can be allowed to be disturbed. The case of the assessee is also supported by the number of decisions relied and referred to by the ld AR during the course of hearing before us. In the case of CIT V/s Kelvinator of India Ltd, the Hon'ble Supreme Court held that "The Assessing Officer has no power to review the assessment whereas the AO has the power to reassess/ The Hon'ble Supreme Court has held that assessment has to be made on fulfillment of certain conditions on the satisfaction of certain conditions and if the concept of 'change of opinion' is removed as contended, then in the garb of reopening the assessment, the review would take place. The concept of 'change of opinion' as an in-built test to check abuse of power by the Assessing Officer. Hence, post 1-4-1989, the Assessing Officer has power to reopen, provided there is 'tangible material' to come to conclusion that there is escapement of income from assessment.". In the case of Cliantha Researc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t which is contrary to the provision of the Act and the legislative intent." 2. The appellant prays that the order of CIT(A) on the above ground be set aside and that of the Assessing Officer be restored." 14. The issue raised by the revenue in this appeal is regarding deduction u/s 10A of the Act. Since we have already quashed the reopening proceedings, u/s 147 r.w.s 148 of the Act in assessee's appeal bearing ITA No.1336/Mum/2012. Therefore, this ground is rendered infructuous and accordingly dismissed as infructuous. Cross-objection No.82/Mum/2013 15. Single and solitary ground taken by the assessee in the cross-objection is as under : " Without prejudice to the contention that the Department's appeal is required to be dismissed, the Respondent submits that in case it is held that the OPE income of Rs. 12,62,44,000/- should be reduced from the export turnover of the eligible unit, then OPE income needs to be reduced from the total turnover of the eligible unit as well" 16. Since, we have dismissed the appeal of the revenue for the reasons stated in ITA No.1338/Mum/2012, the cross-objection filed by the assessee in revenue's appeal becomes infructuous and hence dismis ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
