TaxTMI 
TaxTMI 
2014 (7) TMI 180
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....me to time. After verifying the books of account and informations submitted by the assessee, the AO completed the assessment u/s 143(3) of the Act vide order dated 13/12/2010 by determining the income at Rs. 21,60,52,284/- under normal provisions after allowing deduction u/s 80IA of the Act while accepting the book profit of Rs. 160,69,87,353/- u/s 115JB of the Act. The CIT in exercise of power u/s 263 of the Act called for the assessment record of the impugned assessment year and after verifying the same was of the view that assessment order passed for the impugned assessment year is erroneous and prejudicial to the interests of the revenue, since according to the CIT, the AO either has not at all dealt with or not properly dealt with certain issues, which are as under: 1. allowance of employee compensation expenses 2. allowance of carbon emission reduction certificates 3. difference in claim of short term capital gains 4. difference in the amounts shown under liabilities no longer required. 5. allowance of provision made for fringe benefit tax 6. reimbursement of taxes by APTRANSCO 7. Allowance of deduction u/s 80IA of the Act. 3. On the aforesaid premises, the CIT direct....
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.... the learned AR submitted before us that during the scrutiny assessment proceeding, not only the AO has verified all the books of account of the assessee, but, he has also conducted enquiry in respect of all other issues as raised in the show cause notice issued by the CIT. In this context, the learned AR drew our attention to the information submitted before the AO from time to time in course of scrutiny assessment proceeding, which are placed in the paper book. It was, therefore, submitted by the learned AR that the AO having conducted necessary enquiry and completed the assessment after applying his mind to the facts and materials on record exercise of jurisdiction u/s 263 of the Act is not appropriate in this case. It was submitted that only because the AO has not dealt in detail the issues raised in the show cause notice in the assessment order that by itself would not mean that he has not conducted any enquiry or applied his mind to those issues. The learned AR submitted that the AO having conducted appropriate enquiry and the assessee having submitted all information, it is not the duty of the assessee to instruct the AO how to pass an assessment order. If the facts and mate....
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....ssment proceeding assessee had explained before the AO that it has entered into power purchase agreement (PPA) with AP Transco to sale power generated by it. As per the terms of the agreement any advance tax payable by the company for the project covered by the contract would be reimbursed by the AP Transco to the company. In terms with the aforesaid clause, the assessee from time to time raised bills on AP Transco for reimbursement of taxes paid by the company. However, the bills have not been accepted by AP Transco since the inception of the agreement for the reason that Minimum Alternative Tax (MAT) paid by the company is not covered by the agreement. It was submitted that the AP Transco in letter dated 25//08/2006 has made it clear to the assessee that income-tax paid by the company is not eligible for reimbursement as the same is paid under MAT provisions and not under the regular provisions of the Income-tax Act. It was submitted that though for resolving the dispute assessee has taken legal recourse, but, still it is under dispute as the matter is under arbitration as per the direction of the Hon'ble AP High Court. It was submitted that while completing the assessment, AO ha....
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....ear. Learned AR strongly contesting the finding of the CIT submitted, during assessment proceeding the AO specifically enquired into this issue by calling for information from the assessee. It was submitted that the assessee has also furnished detailed reply with necessary evidence as to why it is to be treated as capital receipt. In this context, learned AR drew our attention to the reply dated 03/12/2010 submitted before the AO during scrutiny assessment proceeding, a copy of which is placed at page 270 of the paper book. It was submitted that the AO having conducted necessary enquiry and allowed the deduction after proper application of mind and having taken a view in respect of nature of receipt and which is one of the possible views, the CIT cannot question the order of the AO on this issue only because in his opinion the view taken by the AO is incorrect. Further, it was submitted, as Accounting Standard (AS)-11 on the effects of changes on foreign exchange rates mandates that exchange fluctuation either on settlement or on reporting in balance sheet should be recorded in profit and loss account, assessee has recognized forex gain of Rs. 15,91,74,961 (both realized and unreal....
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....terests of the revenue for non-consideration of certain issues as raised in the show cause notice issued u/s 263 of the Act. However, on a perusal of assessee's replies/informations submitted before the AO from time to time during scrutiny assessment proceeding, copies of which have been placed in the paper book submitted before us by the assessee clearly reveal the fact that the AO has conducted indepth enquiry with regard to all the issues on which the CIT has sought to revise the assessment order. It is further evident that the assessee has not only explained queries raised by the AO, but, has also substantiated it with necessary documentary evidence. Though, it may be a fact that the enquiry conducted by the AO on different issues might not have been reflected in the body of the assessment order, but, that does not mean that the AO has neither conducted any enquiry nor applied his mind to the facts and materials brought on record. Non-mentioning of all the issues on which enquiry was made by the AO in the body of the assessment order does not indicate lack of enquiry or nonapplication of mind. It is quite possible that the AO after considering assessee's reply and other documen....
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....DCIT(supra) while considering this issue has held that gain derived from sale of CERC's being in the nature of capital receipt cannot be considered as income. Therefore, it is the contention of the learned AR that when the receipt itself is not taxable as income the claim of deduction u/s 80IA of the Act in any way would have no impact on the revenue. Having considered the submissions of the parties, we are of the view that the amount received on sale of CERCs being capital in nature as per the decision of the coordinate bench of this Tribunal in case of My Homes Pvt. Ltd., which has been upheld by the Jurisdictional High Court in judgment dated 19/02/2014 in ITTA No. 60 of 2014, it cannot be treated as income of the assessee in the first place. Though, the assessee has treated it as revenue receipt, receipt being in the nature of capital cannot be treated as income. Therefore, even if AO has allowed the deduction on the amount u/s 80IA treating it as revenue income, no prejudice was caused to the revenue. One of the condition for invoking jurisdiction u/s 263 was not satisfied. 10. So far as the reimbursement of advance tax from AP Transco is concerned, on perusal of the order pa....