TaxTMI 
TaxTMI 
2011 (12) TMI 60
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....in Tamil Nadu. These WEGs began generating electricity and the electricity so generated was sold to the State Electricity Board. The petitioner it is admitted had been claiming benefit under Section 80IA of the Act in respect of income earned from power generation from the assessment years 2000-2001 onwards. 3. For the assessment year 2003-04, the assessee had filed its return of income on 25.11.2003 and thereafter assessment order under Section 143(3)(c) of the Act was passed on 30.1.2006. The assessee was allowed deduction under Section 80IA to the extent of Rs.1,17,71,062/-. 4. It appears that there was an audit note/objection. The copy of the said audit note has not been placed on record and is also not available on the original file/record produced by the Revenue before us. However, reference to the audit note/objection is made in the counter affidavit. 5. After the audit note/objection, the Assessing Officer recorded the following reasons before issue of notice under Section 148 of the Act:- "11. Reasons for the belief that income has escaped assessment: During the year the assessee filed its return of income for A.Y. 2003-04 declaring an income of Rs. 1,10,17,156/- where....
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....0. 7. The learned counsel for the petitioner submits that the jurisdiction pre-conditions for issue of re-assessment year under Section 148 prescribed under Section 147 are not satisfied in the present case. It is stated that the issue of deduction under Section 80IA was examined at the time of original assessment and when assessment order dated 30.1.2006 was passed. Secondly, it is submitted that in the present case proviso to Section 147 is applicable and, therefore, re-assessment proceedings can be initiated, if there was failure or omission on the part of the assessee to disclose material facts. It is stated that in the present case material facts were disclosed at the time of original assessment. 8. We find merit in the contentions raised by the petitioner. As per the original assessment records, the Assessing Officer vide notice dated 20.12.2004 had asked the petitioner to submit a note on admissibility of deduction under Section 80IA in respect of power generation unit and give complete evidence in this regard. The assessee was asked to file separate balance sheet, profit and loss account for the claim under the said section. The original records for the assessment ....
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....n over other manufacturer' product, in terms of it's yield and life. The assessee company thought it fit to install it's own turbines to demonstrate them to it's prospecting buyers, which was also very much within the main objects as defined in the Memorandum of Association of the Company. The installation of the above said demo units resulted positively, as this step yielded rich dividends to the assessee, resulting into much enhanced income thereafter. There is also no denying a fact, that the assessee's basic and original source of income is earning commission on the sale of wind electric generators, and there is a clear cut nexus between the above said expenditure incurred ( which relates to business promotion activity of the assessee) and the purpose of business carried on by the assessee. Hon'able Delhi High Court in CITV Dalmia Cement (B) Ltd. (2002) 254 ITR 377 ( Delhi) observing the importance of nexus between the expenditure and the purpose of business remarked in it's judgment that once it is established that there was nexus between the expenditure and the purposed of business, the Revenue cannot decide how much is reasonable expenditure, and as such no businessm....
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.... was specifically considered and examined by the Assessing Officer. The assessee was asked to give details and justify the deduction under the said section. 12. It is now well settled that the Assessing Officer cannot re-open assessment on issues which have been examined and considered at the time of original assessment. The Supreme Court in the case of Commissioner of Income Tax v. Kelvinator of India Ltd., (2010) 320 ITR 561 (SC) has held as under: "On going through the changes, quoted above, made to section 147 of the Act, we find that, prior to the Direct Tax Laws (Amendment) Act, 1987, reopening could be done under the above two conditions and fulfilment of the said conditions alone conferred jurisdiction on the Assessing Officer to make a back assessment, but in section 147 of the Act (with effect from 1st April, 1989), they are given a go-by and only one condition has remained, viz., that where the Assessing Officer has reason to believe that income has escaped assessment, confers jurisdiction to reopen the assessment. Therefore, post-1st April, 1989, power to reopen is much wider. However, one needs to give a schematic interpretation to the words "reason to believe....