TMI Blog2018 (7) TMI 1556X X X X Extracts X X X X X X X X Extracts X X X X ..... - Decided in favour of assessee. - ITA No.247/Coch/2017 - - - Dated:- 23-7-2018 - Shri Chandra Poojari, AM And Shri George George K, JM For The Appellant : Sri.M.Raghunathan S For The Respondent : Sri. Santam Bose ORDER Per George George K., JM This appeal at the instance of the assessee is directed against Commissioner of Income-tax s order dated 27.03.2017. The relevant assessment year is 2009-2010. 2. The solitary issue that was argued, was whether order passed u/s 263 of the Income-tax Act, 1961 was barred by limitation? 3. Brief facts of the case are as follows: 3.1 The assessee is a company engaged in the business of software development services. For the assessment year 2009- 2010 the return of income was filed on 30.09.2009 declaring a total income of ₹ 77,95,261. The assessee in the return of income had claimed deduction u/s 10B of the I.T.Act. Intimation u/s 143(1) of the I.T.Act was received by the assessee-company on 28.09.2010. Thereafter draft assessment order was issued u/s 144C of the I.T.Act disallowing the deduction u/s 10B of the I.T.Act and interest expenses on funds advanced. In response to the draft assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. 1.2 On facts and in the circumstances of the case, the learned CIT has erred in not considering the fact that the Appellant is not in receipt of the order under section 143(3) (dated 26 April 2013 as p Department records). In absence of the same, the valid order for revision would be the intimation dated 22 January 2011 issued under section 143(1) of the Act. In such an instance, the learned CIT failed to consider that the time limit for passing the revision order under section 263 of the Act (i.e. 2 years from the end of the financial year in which the order sought to be revised was passed) had already lapsed. 1.3 Without prejudice to paragraph 1.2 above, the learned CIT has failed to consider that even if the order under section 143(3) dated 26 April 2013 is presumed to be in force-the time limit for revision of such order would have expired by 31 March 2016. 1.4 In view of the above grounds, the dates of intimation / order received by the Appellant, has been tabulated below for reference. Particulars Date of intimation /order Last date by which the order should have been passed under section 263(2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 08 and 2008-09 and is not assessable in A Y 2009-10. Hence, the contention of the learned CIT that the order is erroneous and prejudicial to the interests of revenue on this count also, is incorrect in law. Ground No.3 - Without prejudice, the impugned order issued by the CIT under section 263 is not justified 3.1 On facts and in the circumstances of the case and in law, the learned CIT has wrongly assumed that the AO has not applied his mind in the case of taxability of service tax amounts of INR 2,74,43,077 under section 43B of the Act, taxability of prior period income of INR 1,75,37,448 and the consequential tax holiday benefits available to the Appellant under section 10A / 10B of the Act. 3.2 Without prejudice to the above grounds, the learned CIT has erred in not considering the fact that the Appellant is eligible for tax holiday benefits under section 10A / 10B of the Act. The CIT has failed to consider that any disallowance or addition which increases the profits and gains of the Appellant for A Y 2009-10 would have a cascading effect on the tax holiday benefits available under section 10A / 10B of the Act. The same is in line with the CBDT circular 37/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment order, the reassessment order cannot be considered for the time limit purpose u/s 263(2) of the I.T.Act. Now let us examine this contention of the assessee with the facts of the instant case and the case laws on the subject. 5.1 The assessment which was completed u/s 143(3) of the I.T.Act was reopened by issuance of notice u/s 148 of the I.T.Act (notice dated 14.06.2013). At the request of the assessee, the Assessing Officer vide his letter dated 06.08.2013 had communicated the reasons recorded for reopening the assessment for assessment year 2009-2010. The reasons recorded for reopening the assessment is on account of the reimbursement income received from certain entities does not form part of the total income since it is not derived from eligible business, and therefore, was not entitled to the claim of deduction u/s 10B of the I.T.Act. The reasons for reopening as listed out by the Assessing Officer in his letter dated 06.08.2013 reads as follows:- 2. For the period relevant to the AY 2009-10, in the case of US Technology International (P) Ltd., total reimbursement income received is as under:- US Technology Resources (P) Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion provided u/s 263(2) of the I.T.Act would begin to run from the date of original order of assessment and not from the date of reassessment order. The relevant finding the Hon ble Apex Court reads as follows:- ( Para 15) We, therefore, are clearly of the opinion that keeping in view the facts and circumstances of this case and, in particular, having regard to the fact that the Commissioner of Income-tax exercising his revisional jurisdiction reopened the order of assessment only in relation to lease equalisation fund which being not the subject of the reassessment proceedings, the period of limitation provided for under sub-section (2) of section 263 of the Act would begin to run from the date of the order of assessment and not from the order of reassessment. The revisional jurisdiction having, thus, been invoked by the Commissioner of Income-tax beyond the period of limitation, it was wholly without jurisdiction rendering the entire proceeding a nullity. 5.4 Similar view was taken by the Hon ble Bombay High Court in the case of CIT v. ICICI Bank Ltd. [(2012) 19 taxmann.com 142 (Bombay)]. In the case considered by the Hon ble Bombay High Court, an order of ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 147 will not alter that position. Explanation 3 only enables the Assessing Officer, once an assessment is reopened, to assess or reassess the income in respect of any issue, even an issue in respect of which no reasons were indicated in the notice under section 148(2). This, however, will not obviate the bar of limitation under section 263(2). Where the jurisdiction under section 263(1) is sought to be exercised with reference to an issue which is covered by the original order of assessment under section 143(3) and which does not form the subject-matter of the reassessment, as in the instant case, limitation must necessarily begin to run from the order under section 143(3). Before concluding it must also be taken note of that the second order of reassessment dated 26-3-2002 has been set aside by the Tribunal. An appeal against the order of the Tribunal is pending before this Court for admission. However, this appeal is considered independently and it is concluded that the invocation of the jurisdiction under section 263 was barred by limitation. 5.6 The Hon ble Madras High Court in the case of M/s.Indira Industries v. Pr.CIT [WA No.1092 of 2017 CMP No.15224 of 2017 order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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