2023 (4) TMI 1258 - AT - Income Tax

Tribunal Invalidates Reopening of Assessment, Affirms Deductions, and Orders Recalculation of Interest for Assessee.

The Tribunal ruled predominantly in favor of the assessee, invalidating the reopening of assessment under Section 147 due to a mere change of opinion and ... Reopening of assessment u/s 147 - assessee does not fulfil the conditions for claiming deduction u/s 80IA - HELD THAT:- We find that the assessing officer reopened the case of assessee on the basis of assessment order in AY 2010-11 wherein AO took his view that the assessee does not fulfil the conditions for claiming deduction u/s 80IA. We find that while adjudication the similar grounds of appeal in appeal for AY 2006-07 [2022 (2) TMI 1401 - ITAT SURAT] which was also reopened on identical grounds of appeal, thus we hold that the action of AO for re-opening is not valid as the original scrutiny assessment was the subject matter of appeal before Ld. CIT(A) and again appeal before Tribunal, moreover, the action of Assessing Officer is based on “change of opinion” on similar set of fact. Moreover, it was overreaching to the decisions of the superior authorities on the similar set of fact on similar issues. Therefore, the reopening is held as invalid and subsequent action initiated thereof are void ab initio. Disallowance /eligibly of deduction u/s 80IA in respect of land fill project I, considering the same as new undertaking - HELD THAT:- As decided in [2021 (12) TMI 1292 - ITAT SURAT] the assessee has fulfilled all the conditions as laid down in section 80IA(4) of the Act and was allowed deduction in the earlier assessment years in respect of land fill project No.I in AY 2002-03 that is in the initial year, therefore, deduction under section 80-IA in respect of the infrastructure facility should have been allowed to the assessee. So far as the objection of the Ld. Sr DR for the revenue is concerned that the assessee has made agreement with GIDC only after the claim of the assessee was disallowed by A.O and at the time of establishment of Land fill Project –II, no new establishment came in to existence. The nature of work being done by both the project is identical, therefore, the claim of the assessee based on the backdate agreement cannot be considered. We find that the submissions of revenue is based on the finding of Ld. CIT(A). The assessee has entered into a separate agreement dated 16th October 2012 with GIDC with effect from 12th March 2007 and commenced its Land Fill Project-II in FY 2006-2007 and claimed deduction u/s 80-IA of the Act from AY 2008-09 since the said unit is a separate infrastructure facility. Thus, Land fill II is a distinct and separate undertaking from Landfill I. Assessee appeal allowed. Disallowance of provision made for pit covering expenses as well as inclusion thereof in computing Section 115JB book profits - HELD THAT:- As following the principle of consistency, we direct the AO to follow the order of Tribunal in [2017 (2) TMI 1493 - ITAT AHMEDABAD] and allow / delete the disallowance of provisions of pit covering expenses. Levy of interest u/s 115P - CIT(A) confirmed the action of Assessing Officer for want of evidence - HELD THAT:- As before us, it was vehemently argued that due tax was paid within prescribed period under Section 115-O of the Act. Therefore, we deem it appropriate to restore this issue to the file of Assessing Officer to verify the fact if the assessee has paid dividend distribution tax in time, the assessee be allowed relief on this issue in accordance with law. Issues Involved:1. Validity of Reopening of Assessment under Section 147.2. Eligibility of Deduction under Section 80IA.3. Levy of Interest under Sections 234B, 234C, and 234D.4. Disallowance of Various Expenses.5. Computation of Book Profits under Section 115JB.Summary:1. Validity of Reopening of Assessment under Section 147:The Tribunal held that the reopening of the assessment under Section 147 was invalid as it was based on a mere change of opinion. The original assessment had already scrutinized the claim for deduction under Section 80IA, and there was no failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. This decision was consistent with the Tribunal's earlier rulings in the assessee's own case for AY 2006-07 and AY 2007-08.2. Eligibility of Deduction under Section 80IA:The Tribunal allowed the deduction under Section 80IA for the Landfill Project I and II, holding that once the deduction was allowed in the initial year, it should be allowed in subsequent years unless disturbed in the initial year. The Tribunal also recognized the Incinerator Project as a separate undertaking eligible for deduction under Section 80IA. These decisions were based on consistent rulings in the assessee's own case for earlier assessment years.3. Levy of Interest under Sections 234B, 234C, and 234D:The Tribunal directed the Assessing Officer to recompute the interest under Sections 234B, 234C, and 234D, as these were consequential to the main issues decided in favor of the assessee.4. Disallowance of Various Expenses:The Tribunal allowed the deduction for pit covering expenses and post-closure care expenses, following its earlier decisions in the assessee's own case. The Tribunal also directed the Assessing Officer to allow 10% of the interest income as a deduction towards expenditure incurred for earning other income, consistent with earlier rulings.5. Computation of Book Profits under Section 115JB:The Tribunal held that the disallowances of provisions for pit covering expenses and post-closure care expenses should not be added back while computing book profits under Section 115JB, following its earlier decisions in the assessee's own case.Conclusion:The appeals were largely decided in favor of the assessee, with the Tribunal consistently following its earlier rulings in the assessee's own case for similar issues and facts. The Tribunal's decisions emphasized the principles of consistency and the doctrine of merger, ensuring that once a deduction is allowed, it should not be disturbed in subsequent years unless the initial year's allowance is invalidated.