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M/s. Tamilnadu State Marketing Corporation Ltd. Versus Assistant Commissioner of Income Tax, Company Circle-III (1) , Chennai and Vice-Versa

2012 (10) TMI 1171 - ITAT CHENNAI

Reopening of assessment - Held that:- It is not the case of change of opinion which has resulted in initiation of proceedings under section 147 and 148. Therefore, we uphold the findings of the CIT(A) and dismiss this ground of appeal of the assessee. - ITA Nos.1367 to 1370/Mds/2012 & Stay Petition Nos.92 to 95/Mds/2012, ITA Nos.1525 to 1528/Mds/2012 - Dated:- 30-10-2012 - Dr. O.K. NARAYANAN, VICE-PRESIDENT AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER For The Assessee : Mr. R.Vijayaraghavan, Advocate .....

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by the Revenue impugning the same order of the CIT(A), Chennai. Since in all the appeals/stay petitions common issues are involved, the same are taken up together for adjudication. 2. In ITA Nos. 1367 to 1369/Mds/2012 the assessee has taken additional ground of reopening of assessment under section 147 of the Act. The other common ground in all the appeals is with regard to disallowance of difference in additional special privilege fee payable by the assessee in the relevant previous year under .....

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ning of assessment under section 147. The reasons for reopening furnished by the Assessing Officer for the assessment year 2004-05 are as follows:- For the A.Y.2004-05, you have claimed additional Vend Fee to the tune of Rs. 435, 17,13,674/- which includes enhanced liability towards Special Privilege Fee based on the G.O. passed with retrospective effect, after the closure of the financial year. From the above reason(s), it is evident that income chargeable to tax has escaped assessment and the .....

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me of filing of the return. Whatever information was required to the Assessing Officer during the course of assessment, the assessee had furnished the same. The reassessment proceedings have been initiated only as a result of change of opinion and not by reason of failure on the part of the assessee to disclose any material information. The assessee in support of his contentions has relied on the judgement of the Hon ble Supreme Court of India in the case of CIT Vs. Kelvinator of India Ltd. repo .....

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r had not called for the details in respect of Special Privilege Fee during the original assessment proceedings. The assessee has failed to show that assessee had provided details with reference to amendment in Special Privilege Fee rates at the time of original assessment or the issue was ever considered by the Assessing Officer during the proceeding under section 143(1). Thus, the issue which has been raked up in the reassessment proceedings was never taken up by the Assessing Officer in the p .....

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identical issue has been decided by the coordinate Bench of the Tribunal in the case of the assessee itself in ITA Nos.962/Mds/2010 relevant to the assessment year 2007-08 decided on 18.9.2012. The counsel for the assessee has placed on record a copy of the order of the Tribunal in ITA Nos.962/Mds/2010 & 964/Mds/2011 relevant to the assessment years 2007-08 and 2008-09 wherein the Revenue has also filed cross appeals. The learned D.R. also admitted that the issue has been adjudicated by the .....

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ct (supra) empowers the Tamil Nadu Govt. to impose certain fees and levies qua the liquor rights even with retrospective effect. The rates etc. to be paid are incorporated in the 1983 Rules . We notice that the rates contained in the rules are subject to provisions of the Act. By exercising this legislative authority, the State Govt. preferred to revise the whole sale rates in question with retrospective effect ie. from Rs. 46.35 per litre to Rs. 53.23 w.e.f. 1.4.2005 vide GO dated 25.10.2006. A .....

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relevant financial year. 26. Moreover, the past history also suggests that so far as the levies or fees imposed by the Tamil Nadu State Govt. is concerned, the ld. Co-ordinate Bench (supra) had duly elaborated the scheme of fee etc. prescribed by the State Govt. to be paid by the assessee in reaching to the conclusion that the said fees are nothing but consideration paid by the assessee to the State Govt. in lieu of enjoying exclusive rights of liquor whole sale business. After going through the .....

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Prohibition Act and Rules. The difference between the two instances as we found is that in that case; unlike the instant appeal, the issue therein was regarding the nature of liability ie. whether statutory or contractual. In any case, regardless of the difference between the two cases, still we can safely conclude that the decision of the ld. Co-ordinate bench still throws light in the applicability of Prohibition Act and Rules and also defines the nature of various fees etc. paid by the assess .....

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the character of a statutory liability. 28. Further, we notice that the liability incurred by the assessee is also not a contractual liability as well since no agreement existed between assessee and Tamil Nadu Govt. clearly spelling out that there would be yearly revision of special privilege fee. At the same time, since the special privilege fee stood revised on 20.7.2007 and assessee was yet to finalize his account, so it had no other option but to make a provision (supra) in its profit and lo .....

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ve Assembly of the Tamil Nadu State (supra). Meaning thereby that the GO dated 20.7.2007 has been validity legislated per the spirit of Prohibition Act & Rules . Therefore, the legislative requirements of amendment incorporated in the rules framed under the Prohibition Act stand satisfied. 30. So far as plea of Revenue lifting corporate veil (supra) is concerned, it emerges that although Secretary level officers of Tamil Nadu Govt. are in the assessee s Board of Directors and also its MD is .....

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stitution of India; the special privilege fee has been increased with retrospective effect; without any colorable exercise of power. Hence, we hold that since there is no case for lifting veil. 31. Moreover, it is also clear that on the closing day of A.Y. 2007-08 in question i.e. 0n 31.3.2007, the assessee could not have foreseen increased fee to be levied by the Tamil Nadu Govt. under Prohibition Act and Rules vide GO dated 20.7.2007. That too w.e.f. 01.4.2006 leading to hike of special privil .....

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s and purposes, the earlier special privilege fees rate no more exists. To put it in other words, it stood effaced. There can be no dispute between the parties that this liability is not allowable as a provision for the previous year ended on 31.3.2007, it had to be allowable qua the year ended on 31.3.2008 when actual payment was effective. This, at the best is only an explanation and being a recurring phenomenon, there would not be any revenue loss. In our considered opinion, having allowed th .....

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ed by ld. D.R., we hold that all these were instances where an assessee could not make even a provision during the relevant previous year due to lack of knowledge or awareness of liability even at the time of finalization of accounts and therefore forced to claim the same in the subsequent year. The dictum regarding accrual of liability referable to earlier years as held by various Hon ble Courts cannot be applied where the circumstances are exactly to the contrary. In our view, the case law of .....

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