AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (4) TMI 871
X X X X Extracts X X X X
X X X X Extracts X X X X
....re has been no failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment for the relevant year (refer first proviso to s. 147) and, further, that no new or tangible material informs the Revenue's case, which ought to be the case, or else it is only a change of opinion which, as is well settled, cannot sustain reassessment (CIT v. Kelvinator of India Ltd. [2010] 320 ITR 561 (SC)), also placing reliance on the order by the Tribunal in the assessee's own case for the two immediately preceding years (in ITA Nos. 1908 & 1909/Mds/2012 dated 18.03.2016/copy on record). 3. We have heard the parties, and perused the material on record. 3.1 The reasons for reopening the assessment, as communicated by the Assessing Officer (AO) (PB pg.5), bears three reasons. We shall, accordingly, examine the assessee's case on merits qua each of them. The tribunal has for the earlier two years allowed the assessee's appeal on the basis of a finding of fact that the assessee had produced all the relevant material. The first reason (PB pg.5) is that the assessee had not adjusted the loss of the STP units at Hyderabad and Gurgaon against the profit from o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Reserve and Surplus' and, further, not availed of deduction under section 35- DD. Surely, if that be the case, no inference as to the receipt being income arises despite the fact that, even as stated in the reason recorded, the merger per se would not lead to any cash exchange between the companies undergoing amalgamation and, thus, to a cash receipt to the amalgamated (assessee) company. Also, the AO can only be regarded as having considered the assessee's replies, so that his decision not to effect any adjustment on this count in assessment implies his satisfaction with the assessee's explanation. The assessee's case is thus unexceptional; the only rider or caveat being that what the assessee has stated in the assessment proceedings is full and true and nothing material has been omitted to be disclosed. The reason is simple; where not so, the condition of the first proviso to s. 147 would stand satisfied and, besides, the satisfaction of the AO on that basis, i.e., incomplete or untrue facts, can hardly be regarded as a valid satisfaction in law so as to attract the charge of 'change of opinion'. Toward this, we find the assessment order records the following, and which stands al....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ccount, so that it is this balance only which could be transferred directly to the Balance Sheet. This only would be in consistence with what is being stated in the Notes to the Accounts. In other words, the assessee's claim is contradicted by its' own accounts as well as it's return of income. The AO is thus justified in holding a honest belief that what is being stated is not correct, and that therefore income had escaped assessment. The condition of the first proviso to section 147 is satisfied. The reassessment notice is accordingly valid on this count. 3.3 The third reason recorded for the reopening of assessment is with reference to Schedules VII and VIII to the Balance Sheet (as at the relevant year-end), which are in respect of 'Loans & Advances' and 'Current Liabilities' respectively. The same bear balances under the account heads 'billing in excess of revenue' and 'revenue in excess of billing' respectively. The reason recorded states that as the assessee is following mercantile method of accounting, the entire income accrued during the year is to be offered as income for that year. There is nothing on record, or referred to, to suggest that the accounts do not reflect ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... income under Chapter-IV of the Act and not at the stage of computing the total income under its' Chapter-VI. The deduction u/s. 10A as allowed in assessment cannot accordingly be interfered with. We decide accordingly. 5. The next issue (raised per Grounds 8 and 9) is the assessability or otherwise in law of the sum of Rs. .750 lacs received by the assessee from OBL as income in the facts and circumstances of the case. In our view, the first aspect that needs to be considered is if it is income. The head of income is of secondary importance, relevant for determining if it is liable for deduction u/s.10A or s. 80 HHE, as the assessee claims in the alternative. Surely, if it is received, as claimed, toward merger expenses, it is only a capital receipt in the assessee's hands. There is however no material to support this. There is in fact even no corroborative evidence as (say) copy of the agreement pursuant to which it was paid; the Board resolution of OBL authorizing the payment or a certificate from it's auditors, etc., to that effect, on record. In fact, where so, the assessee's explanation, claiming it to have incurred merger expenses at Rs. . 717 lacs, stands wholly met, so th....