TMI Blog2017 (1) TMI 1106X X X X Extracts X X X X X X X X Extracts X X X X ..... id that the assessee disclose true and correct facts necessary for assessment, more particularly with respect to deduction under Section 80IA of the Act, more particularly, with respect to windmill unit at Bhogat. Thus it cannot be said that the impugned notice under Section 148 to reopen the assessment for AY 200910 can be said to be without jurisdiction and / or contrary to the provision of Section 147 of the Act. Under the circumstances, present petition challenging the impugned notice under Section 148 of the Act deserve to be dismissed - Decided against assessee. - SPECIAL CIVIL APPLICATION NO. 15863 of 2016 - - - Dated:- 29-12-2016 - MR. M.R. SHAH AND MR. B.N. KARIA, JJ. FOR THE PETITIONER : MR MANISH J SHAH, ADVOCATE FOR THE RESPONDENT : MR PRANAV G DESAI, ADVOCATE CAV JUDGMENT (PER : HONOURABLE MR.JUSTICE M.R. SHAH) 1.0. By way of present petition under Article 226 of the Constitution of India, the petitionerassessee has prayed for an appropriate writ, direction and order to quash and set aside the impugned notice issued under Section 148 of the Income Tax Act, by which, the Assessing Officer has sought to reopen the assessment for AY 200910 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Generation Division. During the year under consideration, the assessee has claimed benefit u/s 80IA of ₹ 56,22,625/in respect of power generation income from windmill at Bhogat 1.75 M.W. Geda, Wind Power Generation, Tal: Kalyanpur, Dist. Jamnagar . The assessee has not debited any financial charges and administrative expenses to the windmills division. However, on perusal of the P L A/c of the assessee, it has been noticed that assessee has not debited any administrative expenses and financial charges, while computing the profits from Wind Mill Division. However, from the records with this office, it has been found that the assessee ought to have apportioned administrative expenses, and financial charges of ₹ 10,83,692/on its wind mill unit at Bhogat 1.75 M.W. Dedu, Wind Power Generation, Tal: Kalyanpur, Dist. Jamnagar, on which it has claimed deduction u/s 80IA of the Act. Since no such expenses have been debited while computing the profits from the said Wind Mill Unit eligible for 100% deduction u/s 80IA. As per law, the expenses which have direct nexus with apportioned against the line of business should be debited to such respective business, whereas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly did not apportion the financial and administrative charges between two divisions and as such the Assessing Officer while passing the assessment order under Section 143(3) of the Act accepted the same and therefore, the successor Assessing Officer on a mere change of opinion cannot reopen the assessment and cannot apportion the said expenditure to the Windmill Division. Therefore, it was requested to drop the reassessment proceedings. That vide communication dated 07.07.2016 the Assessing Officer has disposed of the said objection and has not accepted the objection raised by the assessee stating amongst others that the issue of apportionment of expenditure was not before the then Assessing Officer and therefore, there is not change of opinion. 2.4. Feeling aggrieved and dissatisfied with the impugned notice under Section 148 of the Act and rejection of the objection vide communication dated 07.07.2016, the assessee has preferred present Special Civil Application under Article 226 of the Constitution of India. 3.0. Shri JP Shah, learned counsel for the assessee has vehemently submitted that in the facts and circumstances of the case the reopening of the assessment beyond a p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n'ble Supreme Court as well as this Hon'ble court in catena of decisions on mere change of opinion of successor Assessing Officer, reopening of the assessment is not permissible. In support of his above submission, Shri Shah, learned counsel for the petitionerassessee has heavily relied upon the decision of the Hon'ble Supreme Court in the case of Commissioner of Income Tax vs. Kelvinator of India Ltd reported in (2010) 320 ITR 561(SC) as well as decisions of this Court in the case rendered in Special Civil Application No.3352 of 2001. 3.4. Shri Shah, learned counsel for the petitioner has also relied upon the decision of the Hon'ble Supreme Court in the case of Commissioner of Income Tax vs. Corporation Bank Ltd. reported in (2002) 254 ITR 791 as well as decision of the Division Bench of this Court in the case of Shree Chalthan Vibhagdkhand vs. Deputy Commissioner of Income Tax reported in (2015) 376 ITR 419(Guj). Making above submissions and relying upon above decisions, it is requested to allow the present Special Civil Application. 4.0. Present petition is vehemently opposed by Shri P.G. Desai, learned counsel for the revenue. 4.1. It is submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Raymond Woollen Mills Ltd. vs. IncomeTax Officer reported in (1999) 236 ITR 34 (SC) in support of his submissions that as held by the Hon ble Supreme Court in the said decision that at the time when the reopening case has been challenged before the High Court and/or Hon ble Supreme Court, the Court is not required to give a final decision as to whether there is suppression of material facts by the assessee or not. It is held that at that stage the only thing required to be seen is whether there was prima facie some material on the basis of which the department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at this stage. 4.6. Now, so far as reliance placed upon the proceedings under Section 263 of the Act, the order passed by the Principal Commissioner of Income Tax 3, Rajkot dropping the proceedings under Section 263 of the Act is concerned, it is submitted by Shri Desai, learned counsel for the revenue that as such it was with respect to AY 201213 i.e. different assessment year then the assessment under consideration. It is submitted that so far as the year under consideration is concerned, the assessee had not s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the line of business should be debited to such respective business, whereas the indirect expenditure (or common expenditure) needs different lines of business. However, it is noticed that the assessee company has not apportioned a single rupee, spent on directors remuneration; interest expenses, traveling expenses, the establishment expenses of the head office like electricity, vehicles, rates and taxes, rent, telephone, stationery etc. and staff expenses on the windmill division. Any line of business cannot function on its own. The assessee company seems to have debited only some direct expenses to the wind mill divisions, where all the indirect expenses have been debited to the Electronic Appliances Division, thereby artificially pumping its income eligible for deduction u/s 80IA, leading to lower returned income and consequently lower taxes. The assessee ought to have enhanced the total income of his Electronic Appliances Division to the extent of unapportioned administrative expenses and financial charges which of ₹ 10,83,692/which is not done. This has resulted into under assessment of income of ₹ 10,83,692/within the meaning of Section 147 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... more particularly with respect to deduction under Section 80IA of the Act, more particularly, with respect to windmill unit at Bhogat. At this stage recent decision of the Hon ble Supreme Court in the case of Girilal Co. (Supra) is required to be referred to. In the case before the Hon ble Supreme Court while submitting the return of income the assessee claimed the deduction under Section 80IB( 10) of the IT Act. That during the assessment proceedings the question was raised only about value of the land. However, subsequently, the assessment was reopened under Section 147 of the IT Act to deny the deduction under Section 80IB( 10) of the IT Act on the ground that considering the size of the plot the assessee was not entitled to the said benefit. The reopening was challenged by the assessee on the ground that the assessee had disclosed all the facts fully and truly and even the Assessing Officer was fully aware of the FSI. Not accepting the above, the Hon ble Supreme Court has observed that the information which was supplied to the Assessing Officer was only with respect to the value of the land and as the assessee had not correctly disclosed the actual assets of the plot and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the form of profit and loss and balance sheet of the eligible undertaking remained to be filed, therefore, the revisional proceedings were dropped. In the present case, as observed herein above, there is non disclosure of material facts necessary for assessment. 7.0. Now, so far as reliance placed upon the decision of the Hon'ble Supreme Court in the case of Corporation Bank Ltd (supra) and the decision of the Division Bench of this Court in the case of Shree Chalthan Vibhagkhand (supra) are concerned, in light of the aforesaid finding, none of the aforesaid decisions shall be applicable to the facts of the case on hand. On the contrary, the recent decision of the Hon'ble Supreme Court in the case of Girilal Co. (Supra) shall be directly applicable to the facts of the case on hand. 8.0. In view of the above and for the reasons stated above, it cannot be said that the impugned notice under Section 148 to reopen the assessment for AY 200910 can be said to be without jurisdiction and / or contrary to the provision of Section 147 of the Act. Under the circumstances, present petition challenging the impugned notice under Section 148 of the Act deserve to be dismissed an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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