2012 (7) TMI 96 - AT - Income Tax

Tribunal upholds reassessment validity, directs recomputation of profits under Section 80-IA.

The Assistant Commissioner of Income Tax Versus M/s. Samba Publishing Co. (P) Ltd.,

The Assistant Commissioner of Income Tax Versus M/s. Samba Publishing Co. (P) Ltd., - TMI Issues Involved:1. Validity of reopening the assessment under Section 147.2. Eligibility for deduction under Section 80-IA.Issue-wise Detailed Analysis:1. Validity of Reopening the Assessment under Section 147:The Revenue challenged the reopening of the assessment by the Assessing Officer under Section 147. The Commissioner of Income Tax (Appeals) had held that the reopening was invalid as it was based on a change of opinion. The assessee argued that a change of opinion does not constitute valid information for the assumption of jurisdiction under Section 147. The Commissioner of Income Tax (Appeals) supported this view, referencing various High Court and Supreme Court decisions, and concluded that there was no failure on the assessee's part to disclose facts correctly.Upon review, it was found that the assessee claimed a deduction under Section 80-IA, which was initially accepted under Section 143(1). The Assessing Officer later issued a notice under Section 148, stating that the deduction claimed was incorrect due to the non-inclusion of depreciation. The Tribunal concluded that since no assessment under Section 143(3) was made, the issuance of notice under Section 148 could not be considered a change of opinion. Thus, the Tribunal set aside the Commissioner of Income Tax (Appeals)'s order and held that the reassessment proceeding was valid.2. Eligibility for Deduction under Section 80-IA:The Revenue contended that the assessee was not eligible for the deduction under Section 80-IA because the wind energy division resulted in a loss after accounting for depreciation. The Assessing Officer computed the deduction under Section 80-IA by deducting depreciation from the income of the windmill, resulting in a loss, and thus disallowed the deduction.The Commissioner of Income Tax (Appeals) held that the wind energy generators were part of the existing business and not a separate undertaking. The Commissioner emphasized that the provisions of Section 80-IA(5) did not override other subsections and allowed the assessee's claim for deduction.Upon further review, the Tribunal noted that both the assessee and the Commissioner of Income Tax (Appeals) had not computed the profits derived from the eligible business correctly. The Tribunal directed the Assessing Officer to recompute the profits derived from the eligible business, considering all relevant revenues and expenses, including those for captive consumption, and to adjudicate the issue afresh in light of the Jurisdictional High Court's decision in Velayudhaswamy Spinning Mills P. Ltd.Conclusion:The Tribunal concluded that the reassessment proceeding was valid and directed the Assessing Officer to recompute the profits derived from the eligible business under Section 80-IA, considering all relevant factors and providing the assessee with an opportunity for a hearing. The appeal of the Revenue was partly allowed for statistical purposes.Order Pronounced:The order was pronounced on Thursday, the 31st May 2012, at Chennai.