TaxTMI 
TaxTMI 
TaxTMI 
2016 (8) TMI 681
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....ed Commissioner of Income-tax (Appeals) erred in upholding the reopening of the assessment when the Revenue's appeal against the order under section 143(3) on the very issue of deduction under section 80-IB was pending before the hon'ble Income-tax Appellate Tribunal. 3. That the learned Commissioner of Income-tax (Appeals) erred in overlooking the fact that in the original assessment, the issue of deduction under section 80-IB of the Income-tax Act had been specifically examined and discussed and in fact the deduction was disallowed and, thus, the reopening was on account of a mere change in opinion and a review of the original assessment was sought to be made in the guise of reassessment. 4. That the assessment order under section 147/143(3) of the Income-tax Act is bad in law as the initiation of proceedings under section 147 itself was invalid. 5. That, in the facts and in the circumstances of the case, the learned Commissioner of Income-tax (Appeals) erred in confirming the disallowance of deduction of Rs. 10,13,238 under section 80-IB of the Income-tax Act." 2. The brief facts of the case are that the assessee filed a return declaring income of Rs. 6,76,085 and....
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....vinator of India Ltd. [2010] 320 ITR 561 (SC) ; (b) CIT v. Central Warehousing Corporation [2015] 371 ITR 81 (Delhi) ; (c) Vodafone South Ltd. v. Union of India [2014] 363 ITR 388 (Delhi) ; (d) Madhukar Khosla v. Asst. CIT [2014] 367 ITR 165 (Delhi) ; and (e) BLB Ltd. v. Asst. CIT [2012] 343 ITR 129 (Delhi). 6. On the other hand, the learned Departmental representative relied upon the order of the learned Commissioner of Income-tax (Appeals) and stated that the lower authorities have passed a well-reasoned order on the basis of the documentary evidences filed by the assessee as well as prevailing law. He further stated that the notice under section 148 has been issued after adopting the prescribed procedure under the law and with tangible material. Therefore, he stated that the question of quashing the reassessment does not arise. Accordingly, he requested that the appeal filed by the assessee may be dismissed. 7. We have heard both the parties and perused the records especially the orders of the Revenue authorities along with the paper book filed by the assessee containing pages 1 to 36 having various documentary evidences. We have also perused the case law cited by the ....
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....trial undertaking, yielding profits and gains. Such profits must have been derived from the industrial undertaking which must itself be the source of that profit. The legal position on interpretation of the term "derived from" was settled by the Privy Council in the case of CIT v. Raja Bahadur Kama khaya Narayan Singh [1948] 16 ITR 325 (PC). In that case, it was pointed out that the word 'derived' is not a term of art. Its use in the definition demanded an inquiry into the genealogy of the product. The question in that case was whether interest in respect of arrears of rent payable for land which was used for agricultural purposes would also be agriculture. The claim on behalf of the assessee was that since the rent was payable for agricultural land, the interest on delayed payment of such rent was also of agricultural character and was not taxable. The hon'ble Supreme Court of India has been following the inter pretation given by the Privy Council in CIT v. Raja Bahadur Kama khaya Narayan Singh [1948] 16 ITR 325 (PC). In the case of Mrs. Bacha F. Guzdar v. CIT [1955] 27 ITR 1 (SC), it was held that where a company deriving income from agriculture declared dividen....
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....ment for duty draw back and did not continue to reach the fact that DDBK arose out of the exports made by the assessee. In the case of Pandian Chemicals Ltd. v. CIT [2003] 262 ITR 278 (SC) the hon'ble Supreme Court held that interest on deposit with electricity board is not derived from industrial undertaking as it was a step removed from the business of industrial undertaking. Thus, in order to qualify for deduction under section 80-IB the income should qualify the above test of being borne out of immediate source of manufacture. The jurisdictional High Court in the case of CIT v. Ritesh Indus tries Ltd. [2005] 274 ITR 324 (Delhi) held that the duty drawback cannot be regarded as the profit or gain "derived" from the industrial undertaking. It may constitute profit or gain of the business by virtue of section 28 but it cannot be construed as profits or gains derived from the industrial undertaking since its immediate and proximate source is not the industrial undertaking but the scheme of duty draw back. The judgment in this case also referred was the decision of apex court in the case of CIT v. Sterling Foods [1999] 237 ITR 579 (SC). The verdict of the hon'ble Supre....
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....IB which had already been disallowed in the original assessment. Thus, there was no income which has escaped assessment. This is also evident from the fact that the total income determined in the original assessment as well as the reassessment is the same, i.e., Rs. 20,64,503. It is a settled law that in the absence of any income escaping assessment, no reassessment can be made. 7.2 We further find that in this case the reassessment seeks to review the original assessment without any fresh or tangible material and was actuated by change of opinion in the original assessment, the Assessing Officer had not just formed an opinion in respect of the deduction under section 80-IB claimed by the assessee but had actually disallowed the same. Moreover, the assessee had disclosed export incentives in its profit and loss account, which formed the basis of the computation of its total income in the original assessment. We note that the Assessing Officer in the reasons recorded has referred to the record as well as case law which were already available at the time of original assessment. No fresh or tangible material came into the hands of the Assessing Officer when reasons were recorded. In ....
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....f certain pre-condition and if the concept of 'change of opinion' is removed, as contended on behalf of the Department, then, in the garb of reopening the assessment, review would take place. One must treat the concept of 'change of opinion' as an in-built test to check abuse of power by the Assessing Officer. Hence, after 1st April, 1989, the Assessing Officer has power to re-open, provided there is 'tangible material' to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief. Our view gets support from the changes made to section 147 of the Act, as quoted hereinabove. Under the Direct Tax Laws (Amendment) Act, 1987, Parliament not only deleted the words 'reason to believe' but also inserted the word 'opinion' in section 147 of the Act. However, on receipt of representations from the companies against omission of the words 'reason to believe', Parliament reintroduced the said expression and deleted the word 'opinion' on the ground that it would vest arbitrary powers in the Assessing Officer. We quote hereinbelow the relevant portion of Circular....