TaxTMI 
TaxTMI 
2017 (11) TMI 62
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....1-2012. 3. The Petitioner has also placed on record a copy of the order dated 16th December, 2015 passed by the Assessing Officer ('AO') disposing of objections of the Petitioner against reopening of assessments under Section 147/148 of the Act on the ground of `change of opinion'. 4. The undisputed position is that the Petitioner company is engaged in the business of establishing subsidiaries, making majority or minority investments and/or to promote technical collaborations and to act as a holding company. The Petitioner in paragraph 4 of the petition has stated that the Petitioner company makes strategic investments. Original Assessment proceedings for AY 2010-11. 5. For the AY 2010-2011, the return filed by the Petitioner company had disclosed dividend income of Rs. 20,48,37,585/- which it claimed as exempt from tax under Section 10(34) of the Act. The Assessee had disallowed expenditure amounting to Rs. 9,75,26,937/- for earning the exempt income under Section 14A of the Act for AY 2010-11. 6. The return was taken up for scrutiny assessment after issue of notice under Section 143(2) of the Act. In terms of notice dated 16th May, 2012 under Section 142(1) of ....
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....nvestments 11,582,908,669 8,923,821,953 Current Assets, Loans and Advances 218,130,657 196,786,639 Deferred Tax Asset 181,144 Average Value 11,801,382,848 9,120,631,305 10,461,007,077 Total disallowance Total Expenses 171,277,589 Less: Interest Expenses to earn Interest Income 5,937,096 165,340,493 Less: Expenses for Consultancy 13,085,569 Less: Expenses which is disallowed as per Provisions of PGBP 152,254,924 Donation 50,000 Provision for diminution in the value of Investment 53,891,189 Provision for Leave Encashment 311,096 Loss on Sale of Investment 178,403 Gratuity Provision 272,448 Interest Paid on TDS 24,851 Less: Expenses Incurred directly for investments 54,727,987 97,526,937 73,566,653 23,960,284 8. After examining the aforesaid information and details, the assessment order for AY 2010-11 dated 18th February, 2013 was pas....
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....s Fixed Assets 380,948 162,378 Investments 11,359,310,551 11,529,017,479 Current Assets, Loans and Advances 649,670,082 218,130,657 Deffered Tax Asset 181,144 12,009,361,581 11,747,491,657 Average Value 11,878,426,619 Total disallowance Total Expenses 251,139,740 Less: Interest Expenses to earn Interest Income 44,402,599 206,737,141 Less: Expenses for Consultancy & others 32,397,824 174,339,317 Less: Expenses which is disallowed as per Provisions of PGBP Donation 1,300,000 Provision for diminution in the value of Investment 43,841,819 Provision for Leave Encashment 745 Loss on Sale of Investment Gratuity Provision 490,436 Less: Interest Expenses un allocated 45,633,000 128,706,317 121,581,256 7,125,060 Operating Non-Operating Section 14A (Rule 8D) Total Income (X) 120....
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....8,56,759/-. On scrutiny of records it was found that an amount of Rs. 2,68,94,092/- has escaped assessment on account of incorrect computation of disallowance u/s 14A of the I.T. Act, 1961. It was noticed that the assessee had claimed deduction of Rs. 20,48,37,585/- on account of Dividend income and disallowed expenditure amounting to Rs. 9,75,26,937/- u/s 14A. Further scrutiny revealed that the assessee had major income from Dividend and had investments of Rs. 8,92,38,21,953/-(as on 31.03.2009) and Rs. 11,52,90,17,479/- (on 31.03.2010) respectively. The total disallowance u/s 14A r/w Rule 8D should be amounted to Rs.12,44,21,029/-, however assessee restricted it to Rs. 9,75,26,937 /in contravention to Section 14A of the I.T. Act, 1961. Hence it resulted in underassessment of income Rs. 2,68,94,092/- (Rs.12,44,21,029- Rs. 9,75,26,937). In this case, it has also been observed that the assessee had itself calculated disallowance u/s 14A amounting to Rs. 12,44,21,029/- but restricted the same to Rs. 9,75,26,967 /-. As Section 14A of the I.T. Act, 1961 r/w Rule 8D does not permit any restriction in this regard and therefore the whole amount of Rs. 12,44,21,029/-, should have b....
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....orrect or wrong calculation which was accepted by the AO. In particular, reliance is placed upon the computation charts submitted by the Petitioner in response to the questionnaire/queries raised, which have been reproduced above. Hence, it is the Revenue's submission that in the present case the assessment proceedings have been validly initiated under the provisions of Section 147 read with Section 148 of the Act and the judgment of the full Bench of the Delhi High Court in the case of Commissioner of Income Tax v. Usha International, (2012) 348 ITR 485 (Del) (hereafter 'Usha International') would support the case of Revenue and not the case of the Petitioner. 15. There could not be a more clear and obvious case of change of opinion. The AO doing the original assessment had focused himself and examined the question of appropriateness of the expenditure which was disallowed by the Assessee under Section 14A of the Act. The AO was aware of the difference between the disallowance of expenditure made by the Assessee in its computation under Section 14A of the Act, and disallowance if made by applying Rule 8D of the Rules. The AO not only raised a specific query but did so twice....
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....orded his reasons. 13. In the second and third situation, the Revenue is not without remedy. In case the assessment order is erroneous and prejudicial to the interest of the Revenue, they are entitled to and can invoke power under Section 263 of the Act. This aspect and position has been highlighted in CIT vs. DLF Powers Limited, ITA 973/2011 decided on 29th November, 2011 and BLB Limited vs. ACIT Writ Petition (Civil) No. 6884/2010 decided on 1st December, 2011. In the last decision it has been observed: 13. Revenue had the option, but did not take recourse toSection 263 of the Act, inspite of audit objection. Supervisory and revisionary power under Section 263 of the Act is available, if an order passed by the Assessing Officer is erroneous and prejudicial to the interest of the Revenue. An erroneous order contrary to law that has caused prejudiced can be correct, when jurisdiction under Section 263 is invoked. 14. Thus where an Assessing Officer incorrectly or erroneouslyapplies law or comes to a wrong conclusion and income chargeable to tax has escaped assessment, resort to Section 263 of the Act is available and should be resorted to. But initiation of reassessment pr....