Tribunal upholds CIT(A)'s decisions on tax issues, deems reassessment invalid, grants deduction for iron ore manufacturing.

The Tribunal dismissed the revenue's appeals, upholding the CIT(A)'s decisions on various tax issues. The initiation of reassessment proceedings under section 147 was deemed invalid as a mere change of opinion. The assessee was found entitled to deduction under section 10B for engaging in the manufacture of iron ore. The computation of deduction under section 10B was clarified, and additional depreciation on windmills was allowed. The judgment was pronounced on May 31, 2013, in favor of the assessee, with all grounds raised by the revenue dismissed.

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Issues Involved:

1. Validity of Reassessment Proceedings u/s 147.
2. Entitlement to Deduction u/s 10B.
3. Computation of Deduction u/s 10B.
4. Allowability of Additional Depreciation on Windmills.

Summary:

1. Validity of Reassessment Proceedings u/s 147:

The revenue's initiation of reassessment proceedings was challenged on the grounds that no new information had come to the AO's possession. The Tribunal upheld the CIT(A)'s decision, stating that the fact that the assessee was extracting iron ore from its mine and purchasing iron ore was already available on record. The AO's action was deemed a mere change of opinion, not justifying reassessment proceedings u/s 147. Consequently, the initiation of reassessment proceedings was held invalid, and ground No.2 raised by the revenue was dismissed.

2. Entitlement to Deduction u/s 10B:

The AO's contention that the assessee was not entitled to deduction u/s 10B because the purchase of iron ore fines did not undergo any process was rejected. The Tribunal affirmed the CIT(A)'s findings that the assessee was engaged in the manufacture or production of iron ore, including the processing of purchased ROM into iron ore fines and lumps. The AO's presumption that the assessee purchased iron ore fines and not ROM was found to be without basis. The Tribunal upheld the CIT(A)'s decision to allow the deduction u/s 10B, dismissing grounds No.2 to 5 raised by the revenue.

3. Computation of Deduction u/s 10B:

The AO excluded travelling expenses and supervision charges incurred in foreign currency from the export turnover, thereby reducing the deduction u/s 10B. The CIT(A) held that whatever is excluded from export turnover should also be excluded from total turnover, relying on the decision of the Special Bench of the ITAT in Sak Soft 313 ITR 353 (AT). The Tribunal, referencing the Karnataka High Court's decision in Tata Elxsi Ltd. 349 ITR 98 (Kar), affirmed the CIT(A)'s approach, dismissing ground No.6 raised by the revenue.

4. Allowability of Additional Depreciation on Windmills:

The AO disallowed additional depreciation on windmills, arguing it was not admissible under Sec.32(1)(ii) of the Act. The CIT(A), relying on the Madras High Court decision in CIT v. VTM Ltd., 319 ITR 336 (Mad), directed the AO to allow the additional depreciation. The Tribunal upheld the CIT(A)'s decision, noting that the mere claim in the return was sufficient compliance with the requirements of law, and dismissed ground No.7 raised by the revenue.

Conclusion:

All the appeals by the revenue were dismissed, affirming the CIT(A)'s decisions on all issues. The judgment was pronounced in the open court on May 31, 2013.

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