TaxTMI 
TaxTMI 
2015 (9) TMI 1048
X X X X Extracts X X X X
X X X X Extracts X X X X
....der: 3.1. That the petitionerassessee filed return of income for AY 200607 claiming exemption under Section 10 A of the Act and submitted the return of the balance of income as total income at Rs. 3,89,982/. It is the case on behalf of the petitioner that in the year 200203, the petitioner started business of software development and export. He obtained import export certificate on 28.11.2002. Thereafter, he obtained letter of permission for the same business as 100% Export Oriented Unit under Software Technology Part (STP) for the development of computer software and IT enabled services on 03.10.2005. Therefore, according to the petitioner, the petitioner was entitled to exempt under Section 10 A of the Act in AY 200607. It is the case on behalf of the petitioner that thereafter AO by letter dated 18.08.2008 issued a notice under Section 142(1) of the Act on various points including details in respect of deduction claimed under Section 10 A of the Act and thereafter the AO accepted the computation of income at Rs. 3,89,982/post 10A deduction and added thereto the disallowance of expenditure of Rs. 79,604/and passed assessment order taxing income at Rs. 4,69,586/. 3.2. That there....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e is no escapement of income chargeable to tax. 4.2. It is further submitted by Shri Shah, learned advocate for the petitioner that as such on the reasons recorded the AO is not justified and / or it is not proper on the part of the AO to reopen the assessment. It is submitted that as such the petitioner assessee was allowed the exemption under Section 10 A of the Act in the first year i.e. AY 200607 which has not been challenged and / or questioned and therefore, the assessee is entitled to exemption under Section 10 A of the Act in the subsequent years and while passing the original assessment orders for AY 200708, 200809, 200910 and 201011 the AO had rightly allowed the exemption under Section 10 A of the Act in the subsequent years. It is submitted that therefore, with respect to subsequent years, it is not open for the AO to contend and / or allege that as the conditions nos. (II) & (III) of subsection (2) of Section 10 A of the Act has not been complied with, the assessee is not entitled to exemption claimed under Section 10 A of the Act. It is submitted that the aforesaid is absolutely and wholly impermissible. It is further submitted that as such in the year 200607 i.e. in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....version into an EOU/EHTP/STP/BTP unit and income tax benefits under Section 10 A and 10 B will be available for plant machinery and equipment already installed. It is therefore, vehemently submitted that formation of opinion by the AO and his reason to believe that the income chargeable to tax has escaped assessment as the petitionerassessee has not fulfilled the conditions no. (II) & (III) of subsection (2) of Section 10 A of the Act and therefore, not entitled to exemption claimed under Section 10 A of the Act is without any basis and / or such formation of opinion has been vitiated. 4.5. It is further submitted that as such while disposing of the objections, neither the AO has dealt with objections raised by the petitioner in detail nor has dealt with case on merits considering the decisions cited in the objections and even circular issued by the CBDT relied upon by the assessee. Making above submissions and relying upon the above decisions, it is requested to allow the present Special Civil Applications and quash and set aside the impugned notices under Section 148 of the Act. 5.0. All these petitions are opposed by Shri Sudhir Mehta, learned advocate for the revenue. It is ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....AO mechanically granted / allowed the deduction / exemption under Section 10 A of the Act and has passed the assessment orders under Section 143(1) of the Act. It is submitted that therefore, reopening is valid and even there is no question of change of opinion arise. In support of his above submissions, he has relied upon the following decisions. (i) Raj Commissioner of Income Tax vs. Mahavir Rubber Works reported in 256 ITR 667 (Raj). (ii) Siemens Information Systems Ltd vs. Assistant Commissioner of Income Tax reported in 343 ITR 188 (Bom). (iii) Assistant Commissioner of Income Tax vs. Rajesh Jhaveri Stock Brokers (P) Ltd reported in 291 ITR 500 (SC). (iv) Inductotherm (India)(P) Ltd vs. M. Gopalan, Deputy Commissioner of Income Tax reported in 356 ITR 481 (Guj). (v) Commissioner of Income Tax vs. Ideal Garden Complex (P) Ltd reported in 340 ITR 609(Mad). (vi) Rhythm Chemicals (P) Ltd vs. Assistant Commissioner of Income Tax reported in 33 Taxman.Com 426 (Guj). (vii) Commissioner of Income Tax III vs. Kiranbhai Jamnadas Sheth (HUF) reported in 39 Taxman. Com 116 (Guj). 5.4. Relying upon the above decisions, it is vehemently submitted that as the original assessmen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Act on the ground that as the assessee has not fulfilled the conditions laid down in clause (II) & (III) of subsection (2) of Section 10 A of the Act, the income chargeable to the tax has escaped assessment. 6.1. Recording of the reasons under Section 147 of the Act for escapement of income while reopening the assessment for AY 200708, which has been communicated to the assessee, reads as under: "In this case, it is found from the records of assessment proceedings for AY 201112, the assessee claimed exemption under Section 10 A of th I.T. Act and the contention that in order to claim exemption u/s. 10 A of the Act the unit should be new and independent unit. The assessee has not complied with the condition laid down in clause (III) of subsection 2 of Section 10 A of the I.T. Act. It was inter alia observed during the course of assessment proceedings for the AY 201112 that the assessee has not fulfilled condition laid down in clause (II) & (III) of subsection 2 of Section 10 A of the I.T. Act, 1961. It is noticed that during FY 200607 relevant to AY 200708, the assessee had claimed exemption u/s. 10A of the I.T. Act of Rs. 3,68,736/. On verification of the record, it is found....
X X X X Extracts X X X X
X X X X Extracts X X X X
....llowed under Section 10 A of the Act. It appears that mechanically and probably as the exemption / deduction under Section 10 A of the Act was allowed in the previous year i.e. in the year 200607 in subsequent years, the same has been permitted to be allowed. In the respective assessment years, there is only intimation under Section 143(1) of the Act, which as per the catena of decisions do not amount to assessment and therefore, the question of change of opinion does not arise. 7.0. In the case of Kiranbhai Jamnadas Sheth (HUF) (supra), the Division Bench of this Court has observed and held that in a case where original assessment of the assessee was accepted under Section 143(1) of the Act without any scrutiny, condition of income having escaped assessment due to failure on the part of assessee to disclose truly and fully all material facts, is not necessarily required to be established and revenue can reopen the assessment beyond four years under Section 147 of the Act even otherwise. 7.1. In the case of Rhythm Chemicals (P) Ltd (supra), the Division Bench of this Court has observed that since the intimation under Section 143 of the Act does not amount to assessment question o....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... found that revenue / department did not doubted / questioned the grant of relief of tax holiday in the earlier year and therefore, it was found that assessee was entitled to continuance of that relief in the subsequent four years. At this stage, it is required to be noted that even in the said decision, the Division Bench also specifically observed that "no doubt, the relief of tax holiday under Section 80J can be withheld or discontinued provided the relief granted in the initial year of assessment is disturbed or changed on valid grounds." Under the circumstances, the said decision would not be applicable to the facts of the case on hand and / or would not be of any assistance to the petitioner assessee. 8.1. Now, so far as reliance placed upon the decision of this Court in the case of Gujarat Narmada Vally Fertilizers Co. Ltd (supra) which has been confirmed by the Hon'ble Supreme Court, by the learned advocate for the petitioner - assessee is concerned, it is required to be noted that on facts it was found that addition which was sought to be made by the AO was not approved by the High Court previously and with respect to the very addition the AO issued the notices for re....