2016 (12) TMI 1347

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....tion by making additions/disallowance of certain items while computing "book profit" for MAT, which are unconnected with the specific issues for which reassessment was initiated. 4.0 The Assessing Officer erred in holding and learned Commissioner (Appeals) erred in confirming that goodwill written off aggregating to Rs. 25,75,00,000/, determined diminution in value of investments in units of US-64 aggregating to Rs. 64,31,000/- and expenses incurred on amalgamation aggregating to Rs. 23,13,346/-, debited to the audited Profit and Loss Account ought to be added back for ascertaining the "book profit" for computing MAT." 3. In ITA No.1564/Mum/2011 for the assessment year 2002-03, following grounds have been taken by assessee. 1.0 The Assessing Officer erred in issuing notice u/s. 148 and assuming jurisdiction u/s 147 of the Act merely due to change of opinion and learned Commissioner (Appeals) erred in upholding the validity of reassessment notice and proceedings. 1.1 The Assessing Officer erred in law and on facts in issuing notice u/s.148 of the Act based on objections raised by the Audit Department and learned Commissioner (Appeals) erred in law in not adjudicating the i....

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....ssment u/s.147 of the I.T. Act 1961 for A.Y.2003-04 by issue of notice u/s.148 of the I.T.Act, 1961." 7. At the outset learned AR placed on record the order of the Coordinate Bench in case of M/s. Exim Trade Links (I) Pvt. Ltd., ITA No.4266/Mum/2009 dated 08/03/2016 wherein reopening of assessment of similar ground was annulled. We had carefully gone through the order of the Tribunal wherein Tribunal observed as under:- 5. We have considered the rival submissions and perused the materials on records and orders of authorities below. We find that the CBDT on the basis of Volckar committee report sent a memorandum to the AO intimating the list of companies involved in the paying kickbacks to Iraqi Government during supplies made under "Oil for Food Programme and the AO recorded reasons u/s 148(2) of the Act for re-opening the assessment which are extracted below:- "As per office memorandum of CBDT F.No.414/117/2005-IT(Inv) dated 18.11.2005, the assessee company had executed two contracts with government of Iraq under the Oil for Food Programme. In the process of executing the contract , kickbacks in the form of inland transportation fee and after sales services fee were paid by ....

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....re annul and quash the reassessment proceedings and also the consequent order of assessment passed u/s 143(3) /147 of the Act by allowing the appeal of the assessee on technical ground and even on merit the escapement of income cannot attributed to the assessee and therefore the re-opening the assessment under proviso is also wrong and liable to be annulled. The AO is directed accordingly. 8. As the reopening in the assessment year 2003-04 was on the same reasoning, following the decision of the Co-ordinate Bench as discussed above, we annul the reopening so made by the AO. 9. On merit, we also found that Co-ordinate Bench in case of Metro Exporters Pvt. Ltd., in ITA No.2026/Mum/2008 vide order dated 08/06/2016 has deleted the similar disallowance made on account of commission payment after observing as under:- 7. Ground No.5 raised in the present appeal is in respect of commission of export to Iraq. AR of assessee argued that this ground of appeal is also covered in favour of assessee by the order Hon'ble Calcutta High Court in CIT vs. Rajrani Export (AIT 2013-75- High Court) and Co-ordinate Bench of ITAT, Mumbai in NSIL Exports Ltd. vs. DCIT [2014] 44.taxman.com. 246, and Ai....

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....qi Authorities. On the contrary, the assessee has produced the evidence of payment to the agent who is not connected to the Iraqi authorities. Therefore, in the absence of specific finding that the payments were made to the Iraqi Authorities, it cannot be held as illegal payment infraction of law. Even if the assessee fail to prove beyond doubt that the payments in question inconsonance to the service rendered by the agent the same cannot be held as illegal in the absence of any evidence to prove that the assessee intended to pay the amount illegally through agent." Similar view was taken by Co-ordinate Bench of Mumbai Tribunal in Air Pac Exports V/s ACIT [152 ITD 634]-Mum in ITA No. 2981 to 2983/M/2012 for AY-2001-02 to 2002-03 vide order dated 11.06.2014. We have also gone through the order of Co-ordinate Bench of this Tribunal in M/s Cipla Ltd. Vs. DCIT vide order dated 27.09.2009, relied by Ld. DR for Revenue, wherein this Tribunal has taken a contrary view. We have noticed that the order passed in M/s Cipla Ltd. was differentiated by coordinate bench of this Tribunal in NSIL Exports Ltd. (supra) holding that, Cipla was involved in illicit payment made to Iraq Government as ....