2017 (7) TMI 1189 - HC - Income Tax

High Court of Bombay: Units II & III are independent for Section 10A benefits. Reassessment invalid for 2004-2005. Lower authorities' judgments set aside.

The High Court of Bombay ruled in favor of the assessee, holding that Unit II and Unit III were independent units entitled to benefits under Section 10A ... Reopening of assessment - assessee was not entitled for deduction under Section 10A - Held that:- As we have already held in appeal filed by the Revenue for the assessment year 2005-2006 [2017 (8) TMI 130 - BOMBAY HIGH COURT] that Unit II and Unit III are entitled for benefit under Section10A of the Act, for the reasons recorded in the said judgment, the substantial question of law, as framed, will have to be answered in favour of the assessee and the ground for reopening itself be set at naught. Appeal is allowed. Issues:1. Validity of reopening assessment for Assessment Year 2004-2005.2. Entitlement of deduction under Section 10A of the Act for Unit II and Unit III.3. Substantial question of law regarding the validity of reopening assessment and consequent reassessment.Analysis:Issue 1: Validity of reopening assessment for Assessment Year 2004-2005The Assessing Officer reopened the assessment for the year 2004-2005 on the grounds that the assessee was not entitled to deduction under Section 10A of the Act. The reopening fell within the four-year period. The Commissioner and the Tribunal both dismissed the appeals filed by the assessee. The Tribunal, while acknowledging the reassessment within the stipulated timeframe, directed the Assessing Officer to examine whether Unit II and Unit III were set up as independent units by the assessee.Issue 2: Entitlement of deduction under Section 10A of the Act for Unit II and Unit IIIIn a subsequent judgment for the assessment year 2005-2006, it was held that Unit II and Unit III were indeed independent units entitled to deduction under Section 10A of the Act. Consequently, the substantial question of law framed by the appellant regarding the validity of reopening the assessment and the denial of benefits for Unit II and Unit III was answered in favor of the assessee.Issue 3: Substantial question of law regarding the validity of reopening assessment and consequent reassessmentThe judgment for the assessment year 2005-2006, where it was established that Unit II and Unit III were eligible for benefits under Section 10A of the Act, led to the allowance of the appeal. The judgments of the Assessing Officer, Commissioner of Income Tax (Appeals), and the Tribunal were quashed and set aside. The reopening proceedings were also quashed and set aside in light of the findings regarding the eligibility of Unit II and Unit III for deductions under Section 10A.In conclusion, the High Court of Bombay held that Unit II and Unit III were independent units entitled to benefits under Section 10A of the Act. The reassessment proceedings were deemed invalid, and the judgments of the lower authorities were set aside, ultimately allowing the appeal in favor of the assessee.