TaxTMI 
TaxTMI 
2014 (10) TMI 178
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....the purpose of rendering its services, the assessee company has a Permanent Establishment in India in terms of Article 5 of DTAA between India and USA in the form of project/site offices. The return of income for the year under consideration was filed by the assessee on 1.12.2006, declaring total income of Rs. 14,78,07,194, In the assessment originally completed under S.143(3) vide order dated 31.12.2008, the income declared by the assessee from the projects started in India after 1.4.2003 at Rs. 1,24,55,756, at the tax rate of 40% as per the provisions of S.44DA of the Act, was accepted by the Assessing Officer, and the same was brought to tax in India. The income of the assessee from the projects started in India before 1.4.2003, however, was determined by the Assessing Officer at Rs. 18,86,95,273 as follows- "...... I. Remuneration Received in Foreign currency Rs. 7,98,89,239 II. Remuneration received in Local currency Rs. 3,78,24,605 III. TDS receipts borne by the clients Rs. 1,80,91,356 Rs. 3,44,809 IV. TDS on taxes received Rs. 5,25,45,264 V. Reimbursable expenditure Rs. 18,86,95,273 ........
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.... the assessee's claim with regard to the amounts incurred over and above the budgeted cost was accepted by the Government agency. He noticed from the record that no such enquiry was ever initiated by the Assessing Officer. He also noted that in the absence of the itemized break up of reimbursed amounts, it was not possible to relate what was the expenditure incurred by the assessee under a particular head and what part of that claim was admitted and reimbursed by the client to the assessee company. He further noted that no current asset in the form of receivable was shown by the assessee, clearly indicating that 'reimbursed receipts' were offered by the assessee on cash basis. According to the learned DIT, this amounted to hybrid method of accounting followed by the assessee, which was inconsistent with the provisions of S.145(1) of the Act. 6. Keeping in view the errors pointed out by him in the order of the Assessing Officer, as narrated above, the learned DIT issued a notice under S.263 of the Act on 21.3.2014, requiring the assessee to show cause as to why the assessment made by the Assessing Officer should not be treated as erroneous and prejudicial to the interests of the ....
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....Rs. 8,67,107 to be made under S.43B on account of service tax payable and in the assessment completed under S.143(3) read with S.147 on 23.11.2011, the said issue alone was considered and decided by the Assessing Officer. He contended that vide his impugned order passed under S.263, the learned DIT has sought to revise the assessment on the issue of income offered by the assessee on account of 'expenses reimbursed' and deduction claimed on account of 'expenses reimbursable'. He contended that since these issues were not involved in the reassessment made by the Assessing Officer under S.143(3) read with S.147, what the learned DIT has actually revised by the impugned order passed under S.263 is the order passed by the Assessing Officer under S.143(3) of the Act on 31.12.2008, and the same therefore, is barred by limitation, as per S.263(2) which provides that no order under S.263(1) shall be made after the expiry of two years from the end of the financial year in which the order sought be revised was passed. In support of this contention, the learned counsel for the assessee placed reliance on the following judicial pronouncements a) Commissioner of Income-tax V/s. M/s. Alagendra....
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....were considered or dealt with in any manner in the assessment completed under S.143(3) read with S.147. 11. In the case of CIT V/s. Alagendran Finance Ltd. (supra), cited by the learned counsel for the assessee, similar fact situation was involved in as much as the claim made by the assessee under the head "Lease Equalization Fund' was accepted by the Assessing Officer in the assessment originally completed under S.143(3) and the said assessment was subsequently reopened only in respect of three items, viz. (1) the expenses claimed for share issue; (2) bad and doubtful debts; and (3) excess depreciation on gas cylinder and good containers. Although the issue relating to assessee's claim in respect of Lease Equalization Fund was not the subject matter of the re-assessment proceedings, the learned Commissioner purported to invoke his revisional jurisdiction in terms of S.263 of the Act and directed the Assessing Officer by an order dated 29th March, 2004 to check and assess the lease rental from lease equalization fund, if any, and to bring to tax the same. In these facts and circumstances of the case, which are similar to the facts involved in the present case, the Hon'ble Suprem....
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....). It was urged that when the Assessing Officer reopened the assessment , the entire assessment was at large, as per Explanation (3) and hence, he ought to have applied his mind to all the issues involved in the case of the assessee. This plea raised on behalf of the Revenue relying on Explanation (3) to S.147 however, was not accepted by the Hon'ble Bombay High Court relying on its decision in the case of Ashoka Buildcon Ltd. V/s. ACIT (supra), wherein it was held after taking into consideration the effect of the said Explanation as under- "Where a reassessment has been made pursuant to a notice under Section 148 the order of reassessment prevails in respect of those items which form part of reassessment. On items which do not form part of the reassessment, the original assessment continues to hold the field. When the Assessing Officer reopens an assessment on a particular issue, it is open to him to make a reassessment on that issue as well as in respect of other issues which subsequently come to his notice during the course of the proceedings under Section 147. The submission of the revenue is that by not passing an order of reassessment in respect of other independent issues....