Case Law Details
From the reasons recorded, it is apparent that the Assessing Officer has reopened the assessment mainly on three grounds. Firstly, that the income referred to in the said ground viz., income from rent, export incentive, advance licence benefit receivable, pass book benefit receivable, exchange rate difference, refund of sales tax, refund of electricity duty, excess provision in respect of earlier years written back, sundry credit balances written back interest income, discount, miscellaneous, which had been taken into consideration for deduction under section 80IA of the Act, does not fall within the purview of “Profit derived from Industrial Undertaking” in view of the decision of the Supreme Court in the case of CIT v. Sterling Foods, 237 ITR 579 (SC) and CIT v. Hindustan Lever Ltd, 239 ITR 297 (SC) and as such the assessee has incorrectly claimed deduction under section 80I/80IA of the Act. Further that deduction under section 80IA is not allowable on “Income from other sources”. The second ground is that the excise refund, duty drawback and cash assistance which have been charged to tax vide section 28(iii((c) were required to be excluded while working out deduction under section 80/80IA of the Act in the light of the aforesaid decisions of the Supreme Court. The third ground is that for deduction under section 80HHC of the Act, 90% of the above income was required to be excluded which had not been done. Moreover, the excise duty paid and collected was not included in the total turnover while calculating deduction under section 80-HHC of the Act.
In the light of the reasons recorded it may be germane to refer to the assessment order framed under section 143(3) of the Act in relation to the year under consideration which indicates that insofar as deduction under section 80HHC of the Act is concerned, the Assessing Officer after due application of mind as per the separate working enclosed as Annexure A with the assessment order giving reasons as per the note computed the allowable deduction under section 80I and 80IA of the Act, the Assessing Officer has placed reliance upon the certificate issued by the Chartered Accountants and allowed deduction of Rs.1,25,603,453/-. Thus, both the issues have been specifically considered by the Assessing Officer while framing the original assessment. Against the order of the Assessing Officer, the assessee had preferred appeal before the Commissioner (Appeals) on various grounds, wherein addition of excise duty refund receivable, duty draw back receivable and cash assistance receivable, the reduction of claim of deduction under section 80HHC of the Act as well as deduction under section 80I and 80IA of the Act were also subject matter of appeal. The Commissioner by an order dated 15.3.2000 allowed some of the grounds of appeal. Thus, the order of the Assessing Officer stood merged with the order of Commissioner (Appeals) and had no independent existence of its own and as such the assessment could not have been reopened in respect of the said items.
Apart from the aforesaid position, a perusal of the statement showing allocation of income and expenses to eligible units and non-eligible units for deduction under section 80I and 80IA of the Act (Annexure “F” to the rejoinder affidavit) clearly shows that the other income to the tune of 100,336,210/- had not been taken into consideration while computing deduction under section 80I and 80IA of the Act. Thus, the reasons recorded proceed on an erroneous factual premise that the other income had been included while allowing deduction under section 80I of the Act. The third ground for reopening viz., that deduction under section 80IA of the Act is not allowable on “Income from other sources” also proceeds on a factually erroneous basis as aforesaid. As regards the second ground for reopening viz., excise duty refund, duty drawback and cash assistance receivable have been charged to tax vide section 28(ii)(c) and were required to be excluded while working out deduction under section 80/80IA , the said issue had been duly considered at the time of framing the original assessment and was also subject matter of appeal before the Commissioner (Appeals).
In the light of the aforesaid discussion it is apparent that the assessment order in respect of the items for which assessment is sought to be reopened has merged with the order of Commissioner (Appeals) and as such has no independent existence and therefore the assessment could not be reopened in respect of the said items, Moreover, the reopening of assessment apart from being based on a factually erroneous premise, is also based upon a mere change of opinion without there being any tangible material to come to the conclusion that there is escapement of income from assessment. Hence in view of the law laid down by the Supreme Court in the case of Commissioner ofIncome-tax v. Kelvinator of India Ltd., (2010) 320 ITR561 (SC) the condition precedent for reopening of assessment has not been fulfilled and as such, the assumption of jurisdiction under section 147 of the Act is not valid. The impugned notice issued under section 148 of the Act, therefore, cannot be sustained.
For the foregoing reasons, the petition succeeds and is, accordingly, allowed. The impugned notice dated 29.03.2001 issued under section 148 of the Act (Annexure-A to the petition) is hereby quashed and set aside. Rule is made absolute accordingly with no order as to costs.
Its a clear case of mere change of opinion as the all the issues were discussed in assessment and no new facts brought on record.