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TMI Blog2022 (2) TMI 1401X X X X Extracts X X X X X X X X Extracts X X X X ..... e and in law, the Commissioner of income -tax (Appeals) ['CIT(A)'] erred in upholding the action of the Assessing Officer (AO) in re-opening the assessment under section 148 of the Income-tax Act, 1961 ('the Act'). 2. On the facts and in the circumstances of the case and in law, the CIT(A) erred in upholding the validity of re-opening the assessment under section 148 of the Act in spite of the fact that reassessment under section 147 could not be made after the expiry of four years from the end of the assessment year viz. after 31 March 2011 unless there has been any failure on part of the appellant to disclose fully and truly all material facts necessary for the assessment. 3. On the facts and in the circumstances of the case and in law, the CIT(A) erred in upholding the action of the Assessing Officer ('AO') in not granting deduction under section 80IA of the Act in respect of profit derived from Landfill Project 1 being an eligible infrastructure facility under section 80IA(4) of the Act. 4. On the facts and in the circumstances of the case and in law, the CIT(A) erred in upholding that appellant is not entitled for deduction under section 80IA(4)(i)(b) in respect f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny finding in respect of the ground of appeal relating to allow 10% of interest income as deduction towards expenditure incurred from earning other income. 12. On the facts and in the circumstances of the case and in law, the CIT(A) erred in upholding the action of the AO in disallowing an amount of Rs.25,93,902/- in respect of provision for post closure care expenditure. 13. On the facts and in the circumstances of the case and in law, the CIT(A) erred in upholding the action of the AO in disallowing an amount of Rs.1,06,70,293/- in respect of provision for pit covering expenses. 14. On the facts and in the circumstances of the case and in law, the CIT(A) erred in upholding the action of the AO in adding back the following amount while computing the book profits under section 115JB of the Act. (a) Provision for post closure expenditure Rs. 25,93,902/- (b) Proceeding of pit covering expenses Rs.1,06,70,293/- 15. Without prejudice to ground 14(b), it is submitted that write back of provision for pit covering expenses amounting to Rs.3,07,052/- ought to be excluded while computing book profit u/s 115JB of the Act. The appellant hereby reserves the right to add to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act of Rs.2,04,06,980/-. Grounds on which deduction under section 80IA of the Act was disallowed for the A.Y. 2010-11 is applicable for the A.Y. 2006-07. For claiming eligible condition for deduction under section 80IA of the Act, the assessee was required to enter into agreement with any authorities, Central Government or State Government or Local Authority before developing or operating and maintaining the new infrastructure facilities. The assessee claimed deduction under section 80IA of the Act on land proposal, first of Rs.2.04 crore which though commenced its activities on 01.04.1998, but the assessee entered into agreement with GIDC on subsequent date on 15.05.2002 i.e. after date of commencement. Therefore, the deduction could not be allowed on old existing infrastructure facility. As such, the assessee does not fulfil the requisite condition for claiming deduction under section 80IA of the Act for the year under consideration [2006-07], accordingly, the assessee was served show cause notice for disallowance of such deduction under section 80IA. The assessee filed its detailed reply. The of assessee recorded in para 9 of the assessment order. The assessee in its reply expla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isdiction on to the AO, the reopening assessment under section 147 of the Act, beyond Four years from the end of assessment year, two conditions must be satisfied i.e. (a) that assessing officer must have reason to believe that income chargeable to tax has escaped assessment and (b) same was occasioned on account of either failure on the part of assessee to make a report of his income for that assessment year, or to disclose fully and truly all the material facts necessary for assessment of that year. Both the above conditions precedents must be satisfied simultaneously. The ld.CIT(A) referred various decisions in his order and held that perusal of reasons recorded by the AO reveals that AO has articulated the reasons for reopening the case, has brought out the fact that there was failure on the part of assessee who disclosed fully and truly all material facts necessary for assessment and the fact that he had reason to believe that income of Rs.2.04 crore had escaped assessment. The copy of agreement with GIDC was not provided to the AO during the original assessment has not been challenged by assessee in its submission, therefore, necessary preconditions for reopening were complie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction under section 80IA of the Act. The ld.AR of the assessee submits that copy of ld.CIT(A) dated 01.10.2009 and the order of Tribunal is placed on record. The ld. Senior Counsel for the assessee submits that copy of reasons recorded is also placed on record. The perusal of reasons recorded, which is as mentioned by the ld.CIT(A) in para 5.3 of his order wherein the AO recorded that the assessee entered into agreement with GIDC on 15.05.2002, though the commence its activity on 01.04.1998 and as such, the assessee does not fulfil the requisite condition for claiming the deduction under section 80IA of the Act. The ld. Senior Counsel for the assessee submits that during the during the original assessment, the issue was extensively examined by the AO, furthermore, the assessee before the AO, explained that on consequent to the amendment in the Finance Act w.e.f 2001 in Explanation to clause-(a) of section 80IA(4) of the Act, the assessee is entitled for claim of deduction under section 80IA of the Act for carrying Solid Waste Management Activities. In compliance of provision of section 80IA of the Act, the assessee vide letter dated 09.02.2002 requested GIDC to execute agreement fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of the assessment. 11. We have considered the rival submission of both the parties and have gone through the orders of authorities below. We have also deliberated on various case laws relied by the ld.CIT(A) in his order as well as various case laws relied by ld.Senior Counsel of the Assessee. There is no dispute that in the computation of total income the assessee claimed deduction under section 80IA. The case was selected for scrutiny and during the scrutiny assessment; the claim of deduction was examined by the assessing officer. The assessing officer disallowed part of the deduction under section 80IA. Being aggrieved, the assessee filed appeal before ld CIT(A). It is matter of fact that the admissibility of claim under section 80IA was not disputed rather a component of income, whether it was derived from eligible business or not was disputed by the lower authorities. Thus, during the original scrutiny assessment, the Assessing Officer examined the claim of deduction under section 80IA of the Act. The case was reopened by assessing officer after recording the reasons of re-opening. The reasons recorded by assessing officer are extracted in para-5.3 in the order of Ld. CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id down that in all the three eventualities it is the appellate decision alone which subsists and is operative and capable of enforcement. That there is no difference in principle and it is not possible to draw any distinction between the first two kinds of orders made by the appellate authority and the third kind of order made by the appellate authority. In law the terms 'affirm' and 'confirm' are synonymous. Both the terms denote notification of a judgment. Therefore, the view expressed by the Tribunal in the impugned order that when the High Court dismisses the appeal by holding that no substantial question of law arises, the High Court does not render any decision is an incorrect proposition and could not be accepted (as per para 16-17. It was also held that when on talks of merger of a judgment, order or a decision of a subordinate court or forum into the judgment, order or decision of a superior court or forum the merger may be of the entire order, i.e., the reasons and the conclusion, or only a part, viz., only the conclusion by a different process of reasoning. In that event what merges is the operative part after the confirmation, reversal or modification, but in any event ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer. 16. Hon'ble Apex Court in CIT Vs Kelvinator of India Ltd (supra) held that the assessing officer has no power to review; he has a power to reassess, but the reassessment has to be based on fulfilment of certain per-condition and if the concept of 'change of opinion' is removed as contemplated on behalf of department, then in the garb of reopening the assessment, review would take place. One must treat the concept of 'change of opinion' as an in-built test check to abuse the power of assessing officer. Hence, after 01.04.1989 the assessing officer has a power to re-open, provided there is 'tangible material' to come to the conclusion that there is escarpment of income from assessment. 17. Now again adverting to the facts of the present case. We find that notice under section 148 of the Act in the present case was issued on 22.03.2013 i.e., after four years from the end of relevant assessment year and there was no failure on the part of the assessee in disclosing fully and truly all necessary for assessment as the assessing officer fully and extensively examined the whole of the claims while finalising the assessment. The Assessing Officer solely relied on the material informa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w infrastructure facility as envisaged under section 80IA(4)(i)(b) of the Act and only operated / material an old infrastructure facility. 4. On the facts and in the circumstances of the case and in law, the CIT(A) erred in observing that the deduction allowed in the initial assessment year i.e. 2006-07 was denied by reopening the assessment without appreciating the fact that the assessment for AY 2006-07 was not reopened under section 147 of the Act. 5. On the facts and in the circumstances of the case and in law, the CIT(A) erred in not appreciating that once deduction under section 80IA was granted in the initial assessment year, it ought to be allowed in the subsequent years for the remaining period. 6. On the facts and in the circumstances of the case and in law, it is submitted that interest earned on delayed payments received from customers amounting to Rs.5,65,953/- ought not to be excluded while computing deduction under section 80IA of the Act. 7. On the facts and in the circumstances of the case and in law, it is submitted that expenditure estimated at 10% of interest earned on fixed deposits, loan and income-tax refund aggregating to Rs.3,12,419/- ought to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing addition on account of disallowance under section 43B of the Act of Rs.2,41,651/-.The Assessing Officer while further taking view that in view of his observation that assessee was not having any agreement with any government, local authority & statutory body. Accordingly, following entire disallowance under section 80IA was disallowed. 24. On appeal before Ld. CIT(A) the action of Assessing Officer was upheld in AY 2006-07. Further aggrieved assessee has filed present appeal before the Tribunal. 25. We have heard the submission of Shri Sourabh N. Suparkar Ld. Senior counsel for the assessee and Shri Abhishek Gautam, Ld. Sr. Departmental Representative (DR) for the Revenue. The Ld. Sr. counsel for the assessee submits that during scrutiny assessment completed vide assessment order dated 29.12.2009 and Assessing Officer examined the entire claim of assessee. The Assessing Officer could not reopen the assessment completed after making full enquiry if the Assessing Officer had reasoned to believe that income has escaped assessment. It is based on mere change of opinion on the same set of fact which was submitted during the course of original scrutiny assessment. The Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A Nos. 1849 & 1867/AHD/2014 for AY 2008-09 dated 27.12.2021. 26. On the other hand, Ld. Sr.DR for the Revenue made similar submission has made in AY 2006-07. 27. We have considered the rival submissions of both the parties and have also gone through the order of authorities below carefully. We have also deliberated on various case law relied by Ld. CIT(A) as well as Ld. Sr. counsel for the assessee at the time of making his submission. We find that there is no dispute that initially assessee filed its return of income for AY 2007-08 on 30.10.2007 declaring income of Rs.22,41,941/-. In the computation of income, the assessee claimed deduction under section 80IA of Rs.1.15 crores. In the statement of profit gain eligible for deduction under section 80IA, the assessee reduced of Rs.22,81,941/- as income from other sources (interest income). The detailed of other interest income, the assessee claimed at Rs.25,38,823/- the assessee reduced the expenses @ 10% of such income thereby claimed 10% of Rs.25,38,823/- i.e., Rs.2,53,882/-, thereby claimed Rs.44,849/- as interest income. On appeal before Ld. CIT(A), the action of Assessing Officer was upheld and on further appeal before Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... examined by Assessing Officer but was a subject-matter of appeal before Ld. CIT(A). The Hon'ble jurisdictional High Court in the case of Cliantha Research Ltd. (supra), wherein the Hon'ble court held that where during the original assessment assessee's claim was processed at length and after calling for detailed submission, the same was accepted, merely because a certain element or angle was not in the mind of Assessing Officer while accepting such a claim, could not be a ground for issuing notice under section 148 for reassessment. Further, the Hon'ble jurisdictional High Court in the case of Sai Consulting Engineers (P) Ltd. (supra) when re-opening of assessment was within the period of four years on the ground that re-opening was nothing but change of opinion on the part of Assessing Officer and that all materials were available before the Assessing Officer which have already scrutinized. Therefore, notice issued within the period of four years from the end of relevant assessment years, issuance of such notice has to be held as nothing but a change of opinion on the part of Assessing Officer. We find that notice under section 148 of the Act in the present case was is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oc expenses for earning income from other source (interest income). On appeal before Ld. CIT(A), the disallowance was upheld. On further appeal before the Tribunal in ITA No.225/Ahd/2010 dated 26.07.2013, the issue was restored back to the file of Assessing Officer to verify the nexus between expense incurred and the interest earned. In pursuance to the direction of Tribunal, the Assessing Officer initiated the fresh proceeding and issued show cause notice to assessee to substantiate the claim. The assessee vide its reply / letter dated 04.01.2015 submitted that the Special Bench of Delhi Tribunal in the case of Lalson Enterprises (2004) 89 ITD 25 (Delhi-Trib.) held that some expenditure might be incurred in earning this income which generally of the case is part of common expenses being 10% ad hoc deduction. The Assessing Officer recorded that no details of actual expenditure incurred is furnished and that the decision of Special Bench in the case of Lalson Enterprises (supra) has been disapproved by Hon'ble Bombay High Court in the case of CIT vs. Asian Star Co. Ltd. in TA No. 200 of 2009 dated 19.03.2010. Accordingly, the assessment order repeated the addition. On appeal bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... curate particulars thereof and accordingly, the question of levying penalty under section 271(1)(c) of the Act did not arise. 4. On the facts and in the circumstances of the case and in law, the Commissioner of income-tax (Appeals) erred in upholding the action of the Assessing Officer in not appreciating the fact that claim for deduction under section 80-IA was made on the basis of the auditor's report under section 80-IA inform 10CCB and accordingly, the said claimfrom deduction is a bona fide claim on which penalty is not leviable. 5. On the facts and in the circumstances of the case and in law, the Commissioner of income-tax (Appeals) erred in upholding the action of the Assessing Officer in not appreciating the fact that the issue of eligibility of deduction under section 80-IA on which the penalty has been levied is a debatable issue on which two opinions exist. 6. On the facts and in the circumstances of the case and in law, the Commissioner of income-tax (Appeals) erred in upholding the action of the Assessing Officer in levying penalty on the ground that the claim of deduction under section 80-IA was not substantiated by evidences and the same leads to the conclusi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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