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2017 (11) TMI 1146
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....the CIT(A) is against the judicial decorum and discipline because the Judgment of Supreme Court referred in 259 ITR page 19 was not followed by the AO as well as by the CIT(A). 5. That the CIT(A) should have appreciated that in the initial year the deduction was allowed cannot be rejected in the subsequent year. 6. That the CIT(A) should have appreciated that the notice was not in the prescribed form, the notice was no notice in the eye of law. 7. That the charging of interest is illegal and against the law. 8. That the cost may kindly be awarded to the appellant." 2. By way of Ground no. 1 to 6, the assessee has challenged the correctness and legality of the reopening of assessment. 3. Facts giving rise to these grounds are that, in this case the assessment u/s 143(3) of the Act was completed on 04-02-2008. Thereafter, an order u/s 154 for the Income Tax Act, 1961(hereinafter referred to as the Act) was passed on 08-02-2010 whereby the deduction claimed by the assessee was withdrawn in view of the Judgment of Hon'ble Supreme Court in the case of M/s Liberty India vs. CIT 317 ITR 218. 3.1 The order passed u/s 154 of the Act was challenge....
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....e judgment of the Hon'ble Supreme Court, that if any objection is being submitted in response to notice, it should be dealt with and decided first, but nothing was done by AO and now matter is before your good-self. In absence of disposing off the objection submitted before the AO, the entire assessment completed by the Assessing Officer became null and void in view of the judgment of Hon'ble Supreme Court delivered in case of G.K.N. Shaft, reported in 259 ITR page 19. This was also argued before the CIT(A) but despite specific submissions, the CIT(A) not thought it fit so as to deal with this submission and summarily rejected. It is, therefore, humbly prayed that order passed by the Assessing Authority as well as the commissioner of Income Tax (Appeal) may kindly be declared illegal and against the law. I also want to submit that there is prescribed proforma for giving notice in each Section and that had been prepared by the Central Board of Direct Taxes. CBDT also prescribed one proforma in case of reassessment u/s 147 of the Income Tax Act i.e. ITNS 34. A copy of the same is being submitted in the Paper Book along with prescribed proforma at page 11 & 12, the notice iss....
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.... of change of opinion. The CIT(A) fails to appreciate and sustained the order. It is also submitted that the reasons for reopening of the assessment may kindly be declared as illegal and against the law. As regards ground no. 3, I want to draw your kind attention towards the fact that there is provision in the constitution u/s 28(i) (iiie). The provision of the Section is still on the statues and the Hon'ble Rajasthan Court adjudicated that this provision is not withdrawn. Therefore, it is still applicable. In this respect, I want to draw your kind attention towards the fact that the Hon'ble Rajasthan High Court has categorically considered amended procedure while delivering the judgment in the case of M/s Saraf Season Udyog reported in 40 TAX WORD 196. In view of the above facts and circumstances, you will observe that this judgment of Rajasthan High Court and cannot be overlooked although the same was overlooked by CIT(A) while passing the order. It is therefore, submitted that this ground may kindly also be considered and allowed. As regards Ground no. 4 is concerned, it is stated that the judgment of Hon'ble High Court and Supreme Court is having the character....
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....fore, the claim is sought to be denied on valid grounds and without disturbing the claim in the initial year because the circumstances in the initial year have not under gone any change." I want to also draw your kind attention towards the judgment delivered by Karnataka High Court in case of ACE multi Axes System Ltd. the relevant portion thereof is being reproduced hereunder: "Industrial growth which is required to be achieved, if two interpretations are possible, the courts have to learn in favour of extending the benefit of deduction to an assessee who has availed the opportunity given to him under law and has grown in his business. Therefore we are of the view, if a small scale industry, in the course of 10 years, stabilizes early, makes further investments in the business and it results in it's going outside the purview of the definition of a small scale industry, that should not come in the way of its claiming benefit under sec. 80IB for 10 consecutive years, from the initial assessment year. Therefore the approach of the authorities runs counter to the scheme and the intent of the Legislature. Thereby - they have denied the legitimate benefit, an incentive....
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....Building, IDPL Veerbhadra, Rishikesh Uttrakhand VS. Smt. Urmila Bhandari Prop. M/s Hotel Narayana Palace, Tapovan Badrinath Marg, Tehri Garhwal, Rishikesh, Uttrakhand 15. The proposition laid down in this judgment applies to the facts of this case. The AO has examined the condition of allowability of the claim u/s 80IC in the initial assessment year of the claims i.e. A.Y. 2005-06 itself in an order passed u/s 143(3) of the Act. This was followed in the subsequent A.Y. These assessments are not disturbed till date. There is no change in the facts and circumstances of the case. Only fresh view, contrary to the earlier view is taken during this impugned Assessment year on the same set of facts and exemption is denied. This cannot be permitted as held by the Jurisdictional High Court in the case of Delhi Patra Prakasham Ltd. (supra). Respectfully following the same, we uphold the order of the Ld. CIT (A) for different reasons." From the perusal of above judgment you will observe that the disallowances of claim of the assessee are against the law. You are requested to kindly accept the appeal of the assessee. As regards ground No. 6....
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.... Mr. Suresh Ojha, learned counsel for the assessee respondent contended that incentives are part of the business income and deduction under Section 80-IB of the Act of 1961 is required to be allowed on the business income and once the export incentives are also part of business income/receipts then deduction under Section 80-IB is required to be allowed on the total profit of the assessee. He also contended that in the case of assessee itself for the assessment year 2005-06 and 2006-07, the ITAT had allowed the claim under Section 80-IB of the Act of 1961 and such assessments have become final as the same has not been challenged by the revenue before this Court, and when the claim has been allowed in the past on same set of facts and material, deductions having been claimed on the same facts, the order of the Tribunal is required to be followed in the light of judgment rendered in the case of Radhasoami Satsang Vs. CIT 1992 AIR 377 (SC) and other judgments. He also contended that when two reasonable constructions are possible then the one which is more favourable to the assessee has to be adopted and relied on the judgment in the case of CIT Vs. Vegetable. Products Ltd., (1973) 88 ....
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....udgment looses the character of a binding nature. The Court has also held as under:- "Coming to the judgment relied on by the Id. Counsel for the Revenue in Shree Engineer's case (supra), we are of the opinion that the answer question no.3 which was referred by the Tribunal has been rendered solely with the reference to the earlier decision of the Court in 'Vishnu Oil and Dal Mills' case (1996) 218 ITR 71 (Raj.) only without noticing the relevant provisions of Section 80A and 80AB and Section 80B(5) and also Section 80HH(9). It may be noticed that the decision in Vishnu Oil and Dal Mills case (1996), 218 ITR 71 (Raj.) dealt with the question whether in computing the gross total income for the purpose of Chapter VI-A requires adjustments of unabsorbed carry forward loss or unabsorbed carry forward depreciation in terms of Part D of Chapter IV or in terms of Chapter VI of the Act, which as seen above has to be computed without taking into account the provisions of Chapter VI-A, but after taking into account the provisions of the Act-whether under Chapter IV or Chapter VI. However, the Court was not dealing with the interaction of the various sections contained in....
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.... of the Ld. CIT (A) by reversing the same and allow this appeal.".... Sd/ Sd/- (Hari Om Maratha) Judicial Member (N.K. Saini) Accountant Member Jaipur Dated 17/12/2013 [Underlining by us] 14. On perusal of Para 2.7 and 2.9 of the Tribunal's order it is clear that the Tribunal finds judgment of Liberty India is per incurium and further found that the issue on facts is debatable and holds that where the issue is debatable it cannot be corrected under Section 154 of the Act of 1961. It is to be noticed that the year under appeal is not an order u/Sec. 154 and the Assessing Officer has passed an order under Section 143 (3) from the stage of passing of the assessment o der and has not passed a rectificatory order under Section 154 of the Act of 1961 which has been considered in the case of Bothra International (supra). 15. We have reproduced Para 2.9 of the order of the Tribunal. and we find that the instant case- is 'not a case of a rectificatory order or mistake apparent from record rather it is a case of regular scrutiny assessment and not an order under Section 154 of the Act of 1961. Therefore, the very foundati....
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....akings and other infrastructure development undertaking on fulfillment of .specified Conditions for a period of 10 or 12 consecutive assessment years from initial assessment year, as the case may be. On perusal of Sec. 80-IB, in our view, it postulates that the deduction u/Sec. 80-IB is available to the eligible industrial undertaking where the gross total income of the eligible assessee includes any "profits and gains derived from any eligible business" referred to in the section (emphasis supplied). What has to be seen is "derived from" and not "attributable to". The expression "derived from" is restrictive as against "attributable to", which is wider. There should be immediate nexus and not distant nexus. In our view DEPB/duty draw back benefits do not form part of net profit of undertaking as they are riot derived from the eligible business but are incentives under a particular scheme. The Hon'ble Apex Court in the case of CIT Vs. Sterling Foods (supra), where the controversy was relating to deduction u/Sec. 80-HH of the Act, had an occasion to consider about the profits from sale of import entitlements, its nature and observed ad-infra:- "We do n....
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....s do not come within first degree source as the said incentives flow from the incentive schemes enacted by the Government of India or from section 75 of the Customs Act, 1962. Hence, according to the Department, in the present cases, the first degree source is the incentive scheme/provisions of the Customs Act. In this connection, the Department places heavy reliance on the judgment of this court in Sterling Foods [1999] 237 ITR 579. Therefore, in the present cases, in which we are required to examine the eligible business of an industrial undertaking, we need to trace the source of the profits to manufacture. (see CIT v Kirloskar Oil Engines Ltd. reported in [1986] 157 ITR 762." The Hon'ble Court analysed Duty Exemption Remission Scheme and held DEPB as an incentive. It held in para 18 as under: "Analysing the concept of remission of duty drawback and DEPB, we are satisfied that the remission of duty is on account of the statutory/policy provisions in the Customs Act/Scheme(s) framed by the Government of India. In the circumstances, we hold that profits derived by way of such incentives do not fall within the expression "profits derived from industrial undertaking" in....
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....nable time. On receipt of reasons, the noticee is entitled to file objections to issuance of notice and the Assessing Officer is bound to dispose of the same by passing a speaking order. In the instant case, as the reasons have been disclosed in these proceedings, the Assessing Officer has to dispose of the objections, if filed, by passing a speaking order, before proceeding with the assessment in respect of the abovesaid five assessment years." From the above observation, it can be inferred that AO was required to dispose of objections by way of speaking order before proceeding with the assessment. Now question arises whether the assessment can be annulled on the ground that the Assessing Officer has not disposed of the objection in the manner he was expected to do. The Hon'ble Bombay High court in the case of Allan Cold Storage Ltd. vs. Income Tax Officer and Others [2006] 287 ITR 1 (Bom), considering the decision of Hon'ble Supreme Court in the case of G.K.N. Driveshaft's (India) Ltd. vs. ITO (Supra) under the identical facts has held as under:- "8. Having noted this scenario, in our view the proper course will be to interfere with the assessment order passed in all ....