TaxTMI 
TaxTMI 
2016 (9) TMI 819
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....ficer, who after detailed examination of various claims made by the petitioner, framed the assessment under section 143(3) of the Act on 05.03.2013 and accepted the declarations made by the petitioner in the return. 3. To reopen such assessment, the respondent issued the impugned notice. In order to do so, she had recorded following reasons: "1. In this case, the assessee Company engaged in the business of generation and distribution of energy filed its return of income for Asst. Year 2010-11 on 22.09.2010 declaring total income of Rs.Nil/. The return of income was processed u/s. 143(1) of the Act and subsequently the case of the assessee was picked up for scrutiny and the assessment was completed u/s. 143(3) of the Act on 05.03.2013 determining the total income at Rs. Nil. 2. On perusal of the profit and loss account for the F.Y. 200910 relevant to Asst. Year 2010-11, it was noticed that the assessee had arrived profit of Rs. 4,23,47,912/- after considering and debiting the expenditure of Rs. 1,88,41,214/- under the head exceptional items. On verification of the details under the head exceptional item, it was noticed that the assessee had debited these expendi....
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....he total manufacturing cost claimed by the assessee for both electricity and power was Rs. 14,39,26,376/- . Hence, after reducing the cost of electricity the manufacturing cost remained would be Rs. 5,04,91,245/- which was incurred for manufacturing steam. Hence, profit on sale of steam would be Rs. 5,89,17,255/- ( Rs. 10,94,08,500 less Rs. 5,04,91,245/- ). In view of the above, the entire deduction u/s. 80IA was required to be disallowed. 4. In view of the above facts, the undersigned has reasons to believe that the income to the tune of Rs. 6,30,17,888/- chargeable to tax has escaped assessment in the case of the assessee for the assessment year 2010-11 and is required to be reassessed as there was a failure on the part of the assessee to disclose fully and truly all material facts for Asst. Year 2010-11. 5. In view of the above, this is a fit case for reassessment by invoking provisions of section 147 of the Income Tax Act, 1961." 4. Upon being supplied with copy of the reasons, the petitioner, under a letter dated 14.06.2016, raised objections to the notice of reopening. These objections were however rejected by the Assessing Officer by an order dated 23.06....
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....ce in this respect is therefore necessary. With this aspect in mind, we may peruse the reasons recorded by the Assessing Officer more minutely. 8. The first reason pertains to his objection to the assessee claiming deduction of a loss of Rs. 1.88 crores on account of diminution of value of the derivatives. From the record, it emerges that the assessee had entered into an agreement with ICICI bank concerning the investment in derivatives made on 07.06.2007 with a maturity date of 06.06.2014. During the year under consideration, the assessee claimed an expenditure of Rs. 1.88 crores on account of loss due to diminution in value of derivatives which was classified as mark to market loss as on 31.03.2010. According to the Assessing Officer, since the maturity date of assessment was 06.06.2014, this figure of Rs. 1.88 crores, was merely an unascertained liability. She therefore relied on clause 1(c) of explanation to section 115JB of the Act to contend that such expenditure was required to be added back to the income of the assessee for the purpose of computation of booked profit under section 115JB of the Act. Clause( c) of explanation 1 of section 115JB provides that for the purpos....
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.... for deduction under section 80IA(4)(iv) of the Act which would be confined only to sale of power and steam, according to her, would not be covered within such expression since the steam is only an intermediate product and not a final product salable in open market. Though in the reasons recorded, the Assessing Officer has also brought in an element of such steam being sold by the assessee to its sister concern, she has not built any case of the assessee having artificially inflated the price thereof to claim deduction otherwise not justified. 11. In the context of the petitioner's claim of deduction under section 80IA(4)(iv) of the Act on sale of steam, there is no averment by the Assessing Officer that there was any failure to disclose true and full facts. Equally importantly, this claim was examined by the Assessing Officer during the original assessment. Under a notice dated 14.06.2012, the Assessing Officer had asked the assessee to supply various details. Multiple queries were raised, one of them, asking the assessee to justify the claim of deduction under section 80IA of the Act. In response to such query, the assessee under letter dated 01.12.2012, conveyed to the As....