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M/s. Tamil Nadu State Marketing Corp. Ltd. Versus The Chief Commissioner of Income Tax, The Commissioner of Income Tax, The Joint Commissioner of Income Tax, The Assistant Commissioner of Income Tax

2018 (2) TMI 877 - MADRAS HIGH COURT

Reopening of assessment - Privilege fee paid by the petitioner/Corporation to the State Government to enjoy the exclusive privilege to sell liquor in the State of Tamil Nadu - allowable deduction in terms of Section 37 - change of opinion - Held that:- Impugned reopening proceedings and the consequential assessment orders pertain to the very same assessment years, which were subject matter of appeals before the Tribunal, in which the assessee has succeeded. Thus, for the above reason, hold that .....

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nal has held in favour of the petitioner in respect of the similar issue for the very same assessment year, would the present reassessment amount to a change of opinion is the question to be considered. - Identical issue came up for consideration before the Hon'ble Division Bench of the Karnataka High Court in the case of Karnataka State Beverages Corporation Ltd. vs. Commissioner of Income Tax reported in [2016 (3) TMI 461 - KARNATAKA HIGH COURT] wherein the Court held that privilege fee pa .....

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ard Mr.Vijayaraghavan, learned counsel for the petitioner and Mr.J.Narayanaswamy, learned Senior Standing Counsel for the respondents. 2.The petitioner in these writ petitions is a State owned Corporation called Tamil Nadu State Marketing Corporation Ltd., which has been given the exclusive privilege right to engage in the business of trading/retail vending in liquor within the State of Tamil Nadu. In these writ petitions, the petitioner questions the orders of reopening of assessment passed by .....

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e Hon ble Supreme Court in Deputy Commissioner of Income Tax v. Divya Investment Private Limited, [2007] 15 SCC 99. As such preliminary issue has been raised, I propose to consider the same at the first instance. 4.Admittedly, regular assessment for the subject assessment years were completed and orders have been passed against the petitioner, which were challenged by the petitioner by way of appeals before the ITAT in ITA Nos.1367 to 1370/Mds/2012, and those appeals were allowed by the Tribunal .....

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re passed by the Tribunal dated 18.09.2012 and 30.10.2012 for the very same assessment years in favour of the assessee, the respondent issued notices under Section 148 of the Act stating that he has reason to believe that income, which are assessable/chargeable to tax for the relevant assessment year has escaped assessment within the meaning of Section 147 of the Act. The petitioner by letter dated 02.09.2013, requested for reasons for furnishing the reopening, which were furnished on 14.02.2014 .....

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assessment order. Thus, when the Tribunal has held in favour of the petitioner in respect of the similar issue for the very same assessment year, would the present reassessment amount to a change of opinion is the question to be considered. 7.The case before the Hon ble Supreme Court in Divya Investment Private Limited (supra) relied on by the learned counsel for the Revenue was couched on entirely different set of facts, where the High Court held that the Tribunals view would be binding on all .....

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edings and the consequential assessment orders pertain to the very same assessment years, which were subject matter of appeals before the Tribunal, in which the assessee has succeeded. Thus, for the above reason, I hold that these writ petitions are maintainable. 8.The next aspect to be seen is as to whether the impugned reopening proceedings and the consequential assessment orders are outcome of change of opinion. The manner in which the same has to be considered has been laid down in several d .....

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it is stated that the entire special privilege fee debited to the profit and loss account is not allowable, since it is an application of income and cannot be allowed as deduction under Section 37(1) or under any other provisions of the Act. In fact, for all the assessment years, the assessing officer himself granted partial relief to the assessee by allowing amount paid as special privilege fee as deduction under Section 37(1) of the Act, that is, by extending it for the period during the year .....

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s whether the payment of special privilege fee can be allowed as deduction. The assessing officer held against the assessee and on appeal before the Tribunal, they succeeded. What the assessing officer now seeks to do is to reword his reasons for reopening by stating that the said amount of special privilege fee cannot be debited to the profit and loss account, as it is an application of income. In fact, this issue was considered and it has been decided in favour of the petitioner before the Tri .....

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r/Corporation, to the State Government would be taxable with effect from 01.04.2004 and not prior thereto. It was further held that unreasonable privilege fee payable is also not a ground to hold that it is a device by which the petitioner and the State Government are avoiding payment of tax. In this regard, reliance was placed on the decision of the Hon'ble Supreme Court in the case of Har Shankar v. Deputy Excise and Taxation Commissioner AIR 1975 SC 1121. Ultimately, the Court set aside t .....

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year 2010-11 and held against the assessee. This assessment order has now been set aside by the Tribunal in an appeal filed by the petitioner in ITA No.2866/Madras/2016, which was heard along with other appeals for other assessment years and by order dated 21.08.2017, the Tribunal allowed the assessee's appeal. I find that the Tribunal has taken note of the decisions in Karnataka State Beverages Corporation Ltd. (supra) and that of Har Shankar (supra). Learned Senior Standing Counsel submits .....

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