2019 (1) TMI 1410 - AT - Income Tax

Tribunal upholds CIT(A)'s decision on Section 80IA deduction, quashes assessments reopening. Revenue appeals dismissed.

The Tribunal upheld the CIT(A)'s decision, dismissing the revenue's grounds related to the deduction under Section 80IA of the Income Tax Act. ... Deduction u/s 80IA - assessee-company is engaged in the business of paddy milling and sale of rice and its bi-products, apart from generation of bio-mass - AO has disallowed excess claim made by the assessee under section 80IA and the same is added to the total income of the assessee - Held that:- As decided in assessee own case [2017 (12) TMI 1396 - ITAT VISAKHAPATNAM] it is clear that for the purpose of 80IA, profit of eligible undertaking has to be determined on the basis of actual lending cost of electricity purchased by the assessee from Tamilnadu Electricity Board and the tribunal has come to a conclusion by following the decision in the case of Jindal Steel and Power Ltd. [2007 (6) TMI 308 - ITAT DELHI] and also the case Bombay Bench of the Tribunal in the case of West Coast Paper Mills Ltd. Vs. JCIT [2005 (6) TMI 547 - ITAT MUMBAI]. Reopening of assessment - Held that:- In this year, it is a third round of assessment, whereas for the remaining two assessment years, this is a second round of litigation. By observing the above, the ld. CIT(A) quashed the reopening by following the decision of the Tribunal. Before us, DR has not pointed out any error committed by the ld. CIT(A). He simply relied on the grounds. For the Assessment Year 2009-10 original assessment was completed under section 143(3) on 30/12/2010. Subsequently, the order was revised under section 143(3) r. w. s. 153C and 263 dated 17/05/2013 again assessment was reopened and assessment is completed under section 143(3) r. w. s. 147 of the Act dated 31/08/2016. For the remaining assessment years, assessments were completed under section 143(3) of the Act. Therefore, the CIT(A) came to a conclusion that it is a change of opinion and therefore, notice issued under section 148 of the Act is not valid. We find no reason to interfere with the order passed by the ld. CIT(A). Issues Involved:1. Deduction under section 80IA of the Income Tax Act, 1961.2. Validity of reopening assessments under section 148 of the Income Tax Act.Issue-wise Detailed Analysis:1. Deduction under Section 80IA of the Income Tax Act, 1961:Facts of the Case:The assessee-company, engaged in paddy milling, rice sale, and bio-mass generation, claimed a deduction under section 80IA for profits derived from its power generation undertaking. The company adopted a sale value of Rs. 4.50 per unit for power consumed internally, based on the rate paid by APTRANSCO. However, the Assessing Officer (AO) recalculated the deduction at Rs. 3.25 per unit, the rate APTRANSCO paid to other power plants, resulting in an excess deduction claim of Rs. 85,77,250 being added back to the total income.CIT(A) Decision:The CIT(A) allowed the assessee's appeal, relying on the ITAT Visakhapatnam's decision in the assessee's own case for previous assessment years (2007-08, 2008-09, and 2012-13). The ITAT had upheld the assessee's rate of Rs. 4.50 per unit for internal consumption, dismissing the revenue's appeals.Tribunal's Analysis:The Tribunal upheld the CIT(A)'s decision, reiterating that the coordinate bench had already addressed the issue in the assessee's favor. The Tribunal referenced the case of M/s Eveready Spinning Mills Pvt. Ltd., where it was held that the market value for internal consumption should be based on the actual rate paid by the assessee to the electricity board, not the rate at which power was sold to the board.Conclusion:The Tribunal found no reason to interfere with the CIT(A)'s order, dismissing the revenue's grounds related to the deduction under section 80IA.2. Validity of Reopening Assessments under Section 148:Facts of the Case:The assessments for the years in question were reopened under section 148. The original assessments had been completed under section 143(3) and, for some years, under section 153A and 263. The CIT(A) quashed the reopening, citing it as a mere change of opinion without any tangible material.CIT(A) Decision:The CIT(A) followed the Tribunal's earlier decision, concluding that the reopening was invalid as it was based on a change of opinion.Tribunal's Analysis:The Tribunal agreed with the CIT(A), noting that the revenue had not provided any new material or evidence to justify the reopening. The Tribunal emphasized that the original assessments had already been thoroughly reviewed and revised, making the reopening redundant and invalid.Conclusion:The Tribunal upheld the CIT(A)'s decision to quash the reopening of assessments, dismissing the revenue's grounds on this issue.Final Judgment:The appeals filed by the Revenue were dismissed, and the cross objections filed by the assessee were deemed infructuous and dismissed accordingly. The Tribunal pronounced the order in open court on January 25, 2019.