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TMI Blog2020 (1) TMI 168X X X X Extracts X X X X X X X X Extracts X X X X ..... red by the provisions relating to Transfer Pricing in terms of Chapter X of the Act, forwarded a draft assessment order to the petitioner under cover of forwarding letter dated 30.12.2010. The Authority, had, in the draft order of assessment, rejected the claims of the petitioner under Sections 80IA, 80IB and 10B of the Act. 3. (i) The reasoning set forth as far as rejection under Section 80IA was concerned is that the power generated by the Power Plant set up by the petitioner is utilised captively and not by way of sale to third parties and as such cannot be treated as profit derived, as contemplated in terms of Section 80IA. (ii) As far as the claim under Section 80IB was concerned, the Assessing Authority took the view that the claim related to the 10th year of the relevant unit, i.e., Chinchpada Unit, and hence was liable to be disallowed. (iii) The claim under Section 10B was partly allowed. The disallowance related to the export of copper cathode, which according to the Assessing Authority, did not qualify for deduction under Section 10B, as no new product had emerged from the process undertaken by the petitioner. The Officer opined that copper Anode and copper Cathode be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matters of assessment would be the law that is in force as on the first date of the relevant assessment year only. 9. In the present case, the provision specifically states that it shall be applicable only with effect from 01.10.2009 and the Finance Act under which it has been inserted also does not state that the provision was to be applied retrospectively. Thus the 2013 clarification that has been relied upon by the Department in the counter to the Supplementary affidavit filed is incorrect in its appreciation and interpretation of the settled position of law. 10. He also relies on the judgments of the Supreme Court in J.K.Synthetics Ltd. and others V. Central Board of Direct Taxes and others (83 ITR 335) and Commissioner of Income Tax, Bangalore V. R.Sharadamma ((1996) 8 SCC 388) as well as a decision of the Division Bench of the Madras High Court in the case of Commmissioner of Income Tax V. Prasad Productions (P) Ltd. (179 ITR 147) to bring home the point that, by insertion of Section 144C a new procedure is sought to be inserted in the Income Tax Act and the scheme of assesssment itself stands changed as it vests authority to carry out the assessment, in a completely diffe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at High Court in Commissioner of Income Tax, Vadodara - 2 V. C-Sam (India) (P.) Ltd. (398 ITR 182), which states that the procedure set out under Section 144C is a mandatory procedure and thus, in any case where the said procedure has not been complied with by the Assessing Authority, such assessment would be liable to be set aside. Thus, according to him, reference to Section 144C by the Assessing Authority in the present case is proper. 14. Submissions on merits have also been made by the learned counsels on both sides. 15. As far as Chapter VIA deductions are concerned, learned Senior Counsel for the petitioner points out that the issue relating to deduction under Section 80IA stands covered by a decision of the learned Single Judge of this Court in the case of this very assessee in W.P.No.7400 of 2008 (decision dated 30.09.2010), that has attained finality. Thus the question of deduction under Section 80IA has been decided in favour of the assessee. 16. The second aspect of deduction under Section 80IA is also covered by a decision of the learned Single Judge in the assessees' own case in W.P.Nos.24476 to 24478 of 2009 (dated 19.12.2011), wherein, at paragraph nos.21 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l assessment year" - .......... (iii) in the case of an undertaking engaged in the business of commercial production or refining of mineral oil referred to in sub-section (9), means the assessment year relevant to the previous year in which the undertaking commences the commercial production or refining of mineral oil;" 26. Going by the above definition that the criteria for determining the period of deduction and the percentage of deduction is based on the industrial undertaking beginning to manufacture or produce things, I do not find any legal basis in the contention of the Revenue that the relief has to be worked out from the date of the licence. It may be noted that getting a licence to set up an industrial undertaking is a stage anterior to the commencement of production and hence, the date of licence and the date of commercial production cannot be a simultaneous happening. In the circumstances, I hold that the very basis for initiating the reassessment proceedings suffers from legal infirmity arising from the wrong understanding of a clear provision under Section 80 IB of the Act. On the admitted fact as regards the date of the licence and the date of commercial prod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l have to be undertaken only by the Assessing Officer, subject to my conclusion on the aspect of jurisdiction. 19. Coming to the aspect of assumption of jurisdiction under Section 144C, the provisions of Section 144C inserted by Finance (No.2) Act, 2009 set out a new and distinct scheme of assessment separate from regular assessment. The object of insertion of Section 144C has been explained in the Explanatory notes to Finance (No.2) Act, 2009 as follows: '45. Provision for constitution of alternate dispute resolution mechanism 45.1 The dispute resolution mechanism presently in place is time consuming and finality in high demand cases is attained after long drawn litigation till Supreme Court. In order to address the concern of the multinational companies and to provide mechanism for speedy disposal of their cases so as to attain finality, a new section 144C is inserted in the Incometax Act to facilitate expeditious resolution of disputes. 45.2 The salient features of the alternate dispute resolution mechanism are as under:- ..... 45.5 Applicability - These amendments have been made applicable with effect from 1st October, 2009, and will accordingly apply in relation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acceptance of the variations to him or if no objections are received within 30 days. Sub-section (4) states that, in any event, the Assessing Officer shall complete the assessment by way of final order of assessment to be passed within one month from the end of the month in which either acceptance from the assessee is received, or the period of filing of objections expires. Sub-section (5) onwards deal with the hearing of the objections before the DRP and sub-section (10), states that every direction issued by the DRP shall be binding on the Assessing Officer. Sub-section (13) thereafter states that upon receipt of the directions of the DRP, the Assessing Authority shall pass an order of assessment in conformity with the directions issued. Thus by virtue of insertion of Section 144C, the legislature has put in place a distinct, new scheme of assessment in regard to a specified class of assessees. 24. The question as to whether the amendment or change brought about by Section 144C is merely procedural or substantive would stand answered by the narration of the Scheme of assessment, as I have noticed above. No doubt, Section 144C prescribes a new procedure for assessment. But can it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s from the court or the Tribunal where they are pending to the court or the Tribunal which, under the new law, gets jurisdiction to try them. 7. The Court then observed that once a reference was validly made to the Inspecting Assistant Commissioner he did not lose the jurisdiction to deal with the matter on account of the aforesaid Amendment Act. It pointed out that the Amending Act does not does not contain any provision that the references validly pending before the Inspecting Assistant Commissioner should be returned without passing any final order if the amount of income in respect of which the particulars have been concealed did not exceed Rupees twenty five thousand. The said circumstance, it held, supported the inference drawn by the Court that the Inspecting Assistant Commissioner continued to have jurisdiction to impose penalty. The Court observed : It is also true that no litigant has any vested right in the matter of procedural law but, where the question is of change of forum, it ceases to be a question of procedure only. The forum of appeal or proceedings is a vested right as opposed to pure procedure to be followed before a particular forum. The right becomes vest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No.5/2010 dated 03.06.2010 reads as under: "45.5 Applicability: These amendments have been made applicable with effect from 1st October, 2009 and will accordingly apply in relation to assessment year 2010-11 and subsequent assessment years. The Dispute Resolution Panel Rules have been notified by S.O. No. 2958 (E) dated 20th November, 2009." In the above extracted Para 45.5 there has been an inadvertent error in stating the applicability of the provisions of section 144C inserted vide Finance (No.2) Act, 2009 that amendments will apply in relation to the assessment year 2010- 11 and subsequent assessment years. Accordingly, para 45.5 is replaced with the following: "45.5. Applicability: Section 144C has been inserted with effect from 1st April, 2009. Accordingly, the Assessing Officer is required to forward a draft assessment order to the eligible assessee, if he proposes to make, on or after the 1st day of October, 2009, any variation in the income or loss returned which is prejudicial to the interest of such assessee. In other words section 144C is applicable to any order which proposes to make variation in income or loss returned by an eligible assessee, on or after 1st Oc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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