TaxTMI 
TaxTMI 
2013 (4) TMI 826
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....that there was a change of opinion on his part while reopening the assessment on 17.03.10, the issue relating to sec.43B was not considered in the earlier assessment and therefore the CIT(A) should have upheld the reopening of assessment at least on this ground." 3. Facts apropos are that assessee is a company promoted as a joint venture by M/s.TIDCO & M/s.ELCOT. Both M/s.TIDCO & M/s.ELCOT are Government of Tamil Nadu undertakings. Assessee is engaged in developing, operating and maintaining information Technology Parks. The name of the park developed, maintained, and operated during the relevant previous year was 'Tidel Park". Assessee is having approval for setting up industrial park by Ministry of Industry, Government of India. CBDT has also notified it as an industrial park under section 80 IA(4)(iii) of the Act. For impugned Assessment Year, assessee filed return declaring an income of ` 76,67,750/-. Deduction of ` 6,73,15,795/- was claimed under section 80 IA (4)(iii) of the Act. Thereafter, assessment was completed on 10.03.06 under section 143(3) of the Act. On 26.03.08, assessee was served with a notice proposing a reopening. Assessee in its reply filed on 17.04.0....
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....ales as business income. The above income should be brought to tax under other sources and the deduction under section 80IA is not allowable on this income. (iii) The Govt of TN allotted land for Tidel Park and ordered payment of consideration of `28.5 crore. Out of the consideration payable the assessee issued equity shares for value of `6.75 crores to TIDCO and the balance of `21.7 crores was converted as loan repayable to TIDCO. The interest payable of `1,94,04,211/- was debited in the P&L account. Non-payment of interest attracts provisions of Sec 43B and accordingly disallowance. 4. Though the assessee objected to the second reopening as well, Assessing Officer chose to proceed with reassessment and completed such reassessment on 31.12.2010 denying deduction claimed under section 80-IA of the Act. In such reassessment, Assessing Officer took a view that deduction under section 80-IA (4)(iii) could be availed only for profits derived from developing, operating and maintaining facilities of the nature mentioned therein and could not be applied for rentals received from property. Assessee did content that during the course of original proceedings itself, details of its c....
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....T(A) submitted that reopening was resorted not only for the purpose of withdrawing the deductions claimed under section 80IA of the Act, but there was a second reason as well. Interest shown as payable to TIDCO was allowed, without considering Sec 43B of the Act. According to him, unless and until the interest shown as outstanding in the accounts to Government or a Government enterprise was paid before the end of the previous year or before the due date of filing the return, claims in this regard could not be allowed. This was never considered by the Assessing Officer at the stage of original assessment or at the stage of first reopening. A.O had allowed the claim in full without verifying, how far assessee had complied with the requirements of Sec.43B. Just because assessee had filed a profit and loss account will not absolve it from its duty to explain how the claim was allowable. Just because A.O could have with due diligence found this out from the records filed by the assessee, would not be a reason to hold that assessee had not failed to make disclosure, sufficient enough to rule out a reopening. Therefore, according to him, the reopening was rightly done and CIT(A) fell in e....
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....d 10.03.06 reproduced hereunder is very relevant. "The assessee company filed its return of income for Assessment Year 2003-04 on 28.11.2003 showing a total income of `76,67,750/-. The return of income was processed under section 143(3) on 30.02.04. The case was selected for regular scrutiny. In response to notice under section 143(2)/142(1) Shri I. Subramanian, Accounts Officer of the company attended. He filed the details called for. He produced books/bills called for and the case is discussed with him. The assessee company is engaged in the business of developing, operating and maintaining Information Technology Park. Government of India notified the assessee company as an Industrial Park for the purpose of 80IA. The assessee company is a public sector undertaking of Govt. of Tamilnadu. The assessee company claimed the entire income as exempt under section 80IA. The issues involved in this case are discussed as under:- " It is clear from the above that the Assessing Officer was aware that the assessee was a company notified by the Government of India as industrial park and had claimed its income exempt under section 80-IA of the Act. 11. Para-2 of the same assessment....
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....port and, therefore, not entitled to exemption in relation to exemption under section 10A/10B The court in this case has held as under: "Interest received by the assessee was on deposits made by it in the banks. The mere fact that the deposit was made for the purpose of obtaining letters of credit which were in turn used for the purpose of business of industrial undertaking did not establish a direct nexus between the interest and the industrial undertaking and therefore, the assessee was not entitled to get the benefit of 10A/10B in relation to the interest income. The Madras High Court relied in this case on the following Supreme Court decisions on this issue. (a) Cambay Electric Supply Industrial Co Ltd Vs. CIT (1978)(113 ITR 84)(SC) (b) CIT V Sterling Foods (1999) (237 ITR 579)(SC) (c) CIT V Pandian Chemicals Ltd (2003) 129 Taxman 539 (d) CIT Vs. Tuticorin Alkali & Chemicals & Fertilisers Ltd. The Supreme Court in the above cases clearly held that the word 'derived' has narrower meaning than the word 'attributable to'. The word 'derived' is followed by the word 'from' . This clearly shows that ther....
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.... the properties as owner by a simple lease and was not engaged in leasing of an advanced facility like soft ware park. It is difficult to place a simple lease of property and a lease of a specialized facility with a number of functionalities on the same footing. It is also noteworthy to mention the observations of their Lordships in Chennai Properties and Investments Ltd.(supra). It was observed that the question whether income of leasing out should be treated as income from property or business must be considered in the circumstances of each case. We also find that this position of law has been reiterated by Hon'ble jurisdictional High Court in the case of CIT Vs. M/s.Elnet Technologies Ltd. ( TCA No.2336 & 2623 of 2006 and 2169 of 2008 dated 09.10.12) wherein decision of Hon'ble Jurisdictional High Court in the case of CIT Vs. Chennai Properties and Investments Ltd. was considered. Thus, what comes out clearly is that not only Assessing Officer had applied his mind on the applicability of Sec.80-IA to various categories of income of the assessee, but had also reached a lawful conclusion that assessee was eligible for claiming such deduction, except on some of such categories. ....
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.... of CIT(A). Appeal of Revenue stands dismissed. Since appeal of Revenue is dismissed, Cross objections filed by the assessee has become infructuous. 14. Now the appeal of the Revenue and Cross Objection of the assessee for Assessment Year 2005-06 are taken up. Since C.O. of the assessee assails the reopening, this is considered first. 15. Facts apropos are that assessee had for the impugned Assessment Year claimed deduction under section 80-IA(4)(iii) of the Act. This was allowed in the original assessment under section 143(3) of the Act, completed on 19.12.07. Assessing Officer thereafter issued a notice on 17.03.10 under section 148 proposing a reassessment. Reasons given for such reopening read as under:- " In the assessment completed under section 143(3) deduction under section 80-IA was allowed in excess as below: The assessee has declared income from the following as business income and claimed deduction under section 80 IA. Rent from premises 52,85,43,673 Rent from Auditorium 31,60,823 Rent other 1,83,79,315 Total 55,00,83,811 But the assessee's claim under section 80IA taking the above income and the bu....
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.... the Act. Argument of the assessee was that it had fully disclosed all the information and material necessary for the assessment and Assessing Officer had reached a lawful view that it was eligible for the deduction claimed. According to the assessee, re-opening was based on a mere change of opinion. Reliance was once again placed in the decision of CIT Vs. Kelvinator of India (supra). 19. However, Ld. CIT(A) was not impressed. According to him, Assessing Officer had examined only receipts under the head O & M charges, interest income, Revenue sharing from lessees, other income, rent from Auditorium and rent from others. As per Ld. CIT(A) Assessing Officer had not taken any view on the rent from premises claimed by the assessee as eligible for deduction under section 80IA of the Act. What had come out in a subsequent assessment could very well be a reason for reopening for a preceding year, according to Ld. CIT(A). In his opinion, additional materials were with the Assessing Officer for reaching a conclusion that assessee was not eligible for deduction under section 80-IA of the Act. In this view of the matter, he held that re-opening was validly done. However, on merit....
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.... down by Hon'ble Jurisdictional High Court in the case of CIT Vs. Chennai Properties and Investments Ltd.(supra). Ld. A.O. did not consider the decision of Hon'ble Andhra Pradesh High Court in the case of CIT Vs. Novapan India Ltd. , 236 ITR 746 or the decision of Hon'ble Apex Court in the case of A.L.A. Firm in 189 ITR 285. According to the Ld. D.R., their Lordships in the case of A.L.A. Firm (supra) had held that non-consideration of a jurisdictional High Court decision was good enough a reason for resorting to a reopening. Therefore, according to him, CIT(A) was justified in approving the reopening. 23.We have perused the orders of the lower authorities and heard rival contentions. There is no dispute that for the impugned Assessment Year re-opening was done within a period of four year from the end of the impugned assessment year. Therefore, first proviso to Sec 147, as mentioned by Ld. D.R., does not apply. The only requirement is that A.O. should have a reason to believe that income chargeable to tax had escaped assessment. However, such reason should be a reason that reasonable man will have in the facts and circumstances of the case. Assessee had during the cour....
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....ernment of India as an "Industrial Park" for the purpose of Sec 80-IA of the Act. The assessee company filed its return of income for this Assessment Year on 31.10.2005, declaring a total income of `282052670/- under the provisions of Sec 115JB. The return was processed under section 143(1) on 31.03.2007." 25.Thereafter Assessing Officer had also done a reworking of the deduction claimed by the assessee under section 80-IA of the Act. His views on the claim of deduction made by the assessee under various heads appear at para four of the said assessment order which is reproduced hereunder: "Reworking of deduction under section 80-IA 4.1. For the Assessment Year 2005-06, the assessee has claimed deduction under section 80 IA to the tune of `283264825/-. The assessee has credited the following incomes in its Profit and Loss account: (i) Rent from premises 528543673 (ii) Rent from Auditorium 3160823 (iii) Rent-Others 18379315 (iv) Operating & Maintenance charges 86551361 (v) Interest Income 31817....
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....bsp; 18379315 Total 550083811 In view of the judicial decisions referred in para 4.2. of this order, it is held that the rental income from auditorium and others amounting to `21540138/- cannot be equated as "income from derived from infrastructure project". Hence the same is disallowed for the purpose of computation of deduction under section 80-IA." 26. His view on the claim of sinking fund is also appearing at para five of the assessment order. "Interest from Sinking Fund: 5.1. In the notes of accounts filed along with the return of income, it is seen that the assessee receives certain amounts from the buyers of the building for betterment and maintenance of Tidel Park. This is in the form of non refundable interest free sum equivalent to 1% of the total consideration. The sum so received has been kept as a "sinking fund corpus". The....
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....son for resorting to a reopening, even when reassessment proceedings were initiated within four years period from the end of the impugned Assessment Year. No doubt, Hon'ble Andhra Pradesh High Court in the case of CIT Vs. Novapan India Ltd. (supra) relied on by Ld. D.R, has held that a judgement, which was not available at the time of original assessment, could be a relevant reason for reopening. But here, judgement cited by the D.R, viz. that Hon'ble Jurisdictional High Court in the case of CIT Vs. Chennai Properties and Investments Ltd.(supra) was with regard to the renting out of a property which was not akin to a complex facility in the nature of an industrial park or technology park. Therefore, in our opinion this decision will not help the case of Revenue. 28. As for the decision of Apex Court in the case of A.L.A. Firm(supra) strongly relied on by Ld. D.R, relevant para No.17 is reproduced hereunder: "17. We think there is force in the argument on behalf of the assessee that, in the face of all the details and statement paced before the ITO at the time of the original assessment, it is difficult to take the view that the ITO had not at all applied his mind to the....