2014 (4) TMI 895 - HC - Income Tax

High Court upholds reassessment order under Section 80IB for AY 2001-02, dismissing Revenue's appeal

The Commissioner of Income Tax Versus M/s. Flothern Engingeers Pvt. Limited

The reassessment order challenging the deduction claimed under Section 80IB of the Income Tax Act for the assessment year 2001-02 was upheld in favor of ... Validity of re-assessment order u/s 143(3) r.w.s.147 of the Act – Allowability of claim of deduction u/s 80IB of the Act – Contracts for erection, commissioning and pressure die casting Held that:- The original assessment u/s 143(3) of the Act was completed on 22.09.2003, disallowing the claim for deduction u/s 80IB of the Act - if there is any mistake in granting relief to the assessee u/s 80IB of the Act in the order, the only order that could be the subject of Revision would be the order dated 18.05.2005 and not the order passed on 22.09.2003, which was the subject matter of appeal before the Tribunal at the instance of the Revenue on 22.06.2007 and the order of the Tribunal had also attained finality - if the Revenue is questioning the quantum of relief granted to the assessee, the order available for revision would be the order dated 18.05.2005 - this is not subjected to any revision u/s 147 of the Act, the Revenue would not be justified in sustaining its plea on its jurisdiction to revise the order u/s 147 of the Act – Decided against Revenue. Issues:1. Validity of reassessment order based on subsequent Supreme Court decision regarding deduction u/s.80IB.2. Legality of quashing the assessment passed u/s.147 of the Act.Issue 1 - Validity of reassessment order:The case involved the reassessment order made by the Assessing Officer (AO) under Section 143(3) read with Section 147, challenging the deduction claimed under Section 80IB of the Income Tax Act for the assessment year 2001-02. The appellant, engaged in contracts for erection and commissioning, initially filed for the deduction, which was disallowed by the AO in 2003. The Commissioner of Income Tax (Appeals) later allowed the deduction, which was confirmed by the Income Tax Appellate Tribunal in 2007. The AO reopened the assessment in 2005, relying on a Supreme Court decision regarding unabsorbed depreciation. The Commissioner of Income Tax (Appeals) and the Tribunal both ruled in favor of the appellant, emphasizing that the reassessment was a review and not a failure to disclose material facts. The Tribunal rejected the Revenue's appeal, citing relevant case laws and principles, leading to the dismissal of the Revenue's appeal by the High Court.Issue 2 - Legality of quashing the assessment:The second issue revolved around the legality of quashing the assessment passed under Section 147 of the Act. The High Court highlighted that the original assessment disallowing the deduction was completed in 2003, and the subsequent appeal in 2005 allowed the deduction. The Court emphasized that if there was any mistake in the relief granted to the appellant, the order subject to revision would be the one passed in 2005, not the original order from 2003. The Court further noted that the order revising the assessment in 2009 sought to revise the 2003 order, which had merged with the Tribunal's order in 2007, thus attaining finality. The Court concluded that since the order subject to revision was the one from 2005, and not the original 2003 order, the Revenue's plea to revise the assessment under Section 147 was not justified. Consequently, the High Court dismissed the Tax Case (Appeal) filed by the Revenue, with no costs awarded.