TaxTMI 
TaxTMI 
2014 (6) TMI 112
X X X X Extracts X X X X
X X X X Extracts X X X X
.... assessee company after apportioning overheads of head office and sales depots on the basis of method prescribed by the decision of Delhi Bench of ITAT in the case of Food Speciality Ltd V/s ACIT reported in 54 ITD 352. In this regard, he noted that the deduction u/s 80IA was allowed to the assessee-company in AYs. 1999-2000, 2000-01 and 2001-02 on the profit of Kanpur unit as worked out after apportioning the overheads of head office and sales depots on the basis of turnover and not on the basis of method adopted by the assessee. He therefore recomputed the profit of the Kanpur unit of the assessee at Rs. 28,45,81,658/- after apportioning the overheads of head office and sales depots on the basis of turnover and restricted the claim of the assessee for deduction u/s 80IA to Rs.8,53,74,497/- in the assessment originally completed u/s 143(3) vide order dated 7.3.2005 . 3. Subsequently, on perusal of the assessment record, it was noticed by the AO that while computing the profit of Kanpur Unit of the assessee company for the purposes of allowing deduction u/s 80IA, the overheads of head office and sales depots were not apportioned on the basis of sales turnover correctly. He, theref....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Remedies Ltd V/s DCIT,201 CTR 193 (Bom), in was contended on behalf of the assessee before the ld. CIT(A) that the reopening of the assessment by the AO merely on the basis of change of opinion was not permissible in law and the assessment completed in pursuance thereof u/s 143 r.w. 147 of the Act was liable to be quashed being invalid. 5. After considering the submissions made by the assessee on the preliminary issue challenging validity of re-assessment made by the AO, the ld. CIT(A) at the outset noted that there was no specific ground raised by the assessee in its appeal on this preliminary issue. He, therefore, held that the objection raised by the assessee on this preliminary issue was not sustainable. Without prejudice to this conclusion, the ld. CIT(A) further proceeded to consider and dealt with the submissions/objections of the assessee on this preliminary issue. In this regard, he held that there was a mistake in allocation of expenses even on the basis of sales turnover adopted in the original assessment order and the AO, therefore, had sufficient reason to believe that the income of the assessee for the year under consideration had escaped assessment. He held that the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n claimed by assessee u/s 80IA of the Act were submitted by the assessee before the AO. She also pointed out that even the statement showing unit-wise profitability was furnished by the assessee before the AO showing therein clearly the basis of allocation of overheads. She invited our attention to page 11 of the assessment order originally completed by the AO u/s 143 (3) to point out that the basis of apportionment of overhead of head office and sales depots to the Kanpur Unit was not accepted by the AO and the profitability of the said unit eligible for deduction u/s 80IA was recomputed by the AO by apportioning the overheads of the head office and sales depots on the basis of turnover. She contended that the issue relating to computation of deduction u/s 80IA in respect of profit of Kanpur unit thus was decided by the AO after applying his mind to the relevant details and documents available on record and the reo-opening of the assessment by the AO on the said issue, without there being any new material coming to his possession, was based on a mere change of opinion. In support of this contention, the ld. counsel for the assessee relied on the case law cited on behalf of the ase....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ee company resulting in excess allowance of deduction u/s 80IA and the assessment therefore was rightly reopened by the AO to correct the said mistake. 12. In order to appreciate the stand of both sides on the preliminary issue, it would be worthwhile to refer to the reasons recorded by the AO which, as given at page 3 of the impugned appellate order, are extracted below: "The assessee filed return of income on 31.10.2002 declaring total income of Rs.29,83,85,660/-. The return was processed u/s 143(1) on 28.2.2003, in the computation of income, the assessee has claimed deduction u/ 80IA of Rs.9,89,72,231/-. In the order passed u/s 143(3) dated 7.3.2005, the claim of the assessee u/s 80IA was restricted to Rs.8,53,74,497/- On further perusal of records, it is seen that the assessee while computing the deduction u/s 80IA has not apportioned the fixed and variable overheads on the basis of sales turnover correctly in respect of Kanpur Factory. The total sales turnover of the assessee is Rs.66104.92 lakhs and that of Kanpur unit is Rs.22142.24 lakhs. On the basis of sales turnover, the fixed and variable expenses to be apportioned are under : Total Actual As per assessment order Dif....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Hon'ble Supreme Court observed that the conceptual difference between power to review and power to reassess should also to be kept in mind and if the concept of "change of opinion" is removed, then, in the garb of reopening the assessment, review would take place. It was held that one must treat the concept of "change of opinion" as an in-built test to check abuse of power by the AO and hence, the AO has power to reopen, provided there is "tangible material" to come to the conclusion that there is an escapement of income from the assessment. 14. In the present case, the issue relating deduction allowable to the assessee u/s 80IA was examined by the AO during the course of assessment proceedings originally completed u/s 143(3) and as explained by the ld. counsel for the assessee from the relevant submissions made before the AO as well as the assessment passed u/s 143(3), the deduction claimed by the assessee us/ 80IA was recomputed by the AO by rejecting the basis adopted by the assessee for apportionment of Overhead of head office and sales depots to the Kanpur Unit and taking turnover as basis for such apportionment. This issue thus was examined and decided by the AO on applic....