TaxTMI 
TaxTMI 
TaxTMI 
2018 (8) TMI 1887
X X X X Extracts X X X X
X X X X Extracts X X X X
....herefore both the appeals can be heard and disposed of together. Ld. A.R. did not object to the aforesaid submission of Ld.D.R. We therefore first proceed to dispose of appeals of the Revenue by narrating the facts in ITA No.419/PUN/2016 for assessment year 1999-2000. 2.1. The relevant facts as culled out from the material on record are as under : Assessee is a company stated to be engaged in automation and control industry, who filed its original return of income for A.Y. 1999-2000 on 30.12.2009 showing loss of Rs. 7,40,56,692/- and the tax of Rs. 59,92,462/- was shown payable u/s 115JB of the Act. Thereafter assessment was framed u/s 143(3) of the Act vide order dt.25.02.2002 and the total income was determined at Rs. 10,93,47,716/-. Aggrieved by the order of AO, assessee carried the matter before Ld.CIT(A), who vide order dt.23.05.2003 granted partial relief to the assessee. After giving appeal effect to the order of Ld.CIT(A), the revised total income was determined at Rs. 7,77,36,963/-. Subsequently, rectification order u/s 154 of the Act was passed and the total income was determined at Rs. 7,76,62,230/-. Later, notice u/s 148 of the Act was issued on 26.03.2004 and in re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssessment order can be passed by him. AO did not accept the contentions of assessee. According to AO, the case of assessee was covered by the provisions of Sec.153(3) of the Act and not Sec.153(2A) of the Act as claimed by assessee and therefore assessment as per directions of ITAT can be completed at any time. He thereafter passed order on 07.11.2014 u/s 254 of the Act to give effect to the Hon'ble ITAT's order. Aggrieved by the order of AO, assessee carried the matter before Ld.CIT(A). 5. Before Ld.CIT(A), assessee submitted that the order of the AO dt.07.11.2014 passed to give effect to the order of Hon'ble Tribunal u/s 254 of the Act were time barred in view of the provisions of Sec.153(2A) of the Act. It was assessee's contention that as per the provisions of Sec.153(2A) of the Act, the AO was required to pass fresh assessment order as per ITAT's direction within 1 year from the end of the financial year in which the order of Tribunal was received by Commissioner. It was submitted that since the order of the Tribunal was received by CIT-IV on 04.09.2012 and therefore the order giving effect to Tribunal's order should have been passed before 31.03.2014. In the present case, s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....AO and he was supposed to pass a fresh order within the limit provided by sec. 153(2A) which was /3/2014, Since the order has been passed on 7/11/2014, the same is clearly barred by limitation. Accordingly, the ground taken is allowed." Aggrieved by the order of Ld.CIT(A), Revenue is now in appeal before us. 6. Before us, Ld.D.R. pointing to the grounds raised by the assessee before the Tribunal in ITA Nos.399 & 400/PUN/2004 dt.10.08.2012 for A.Ys. 1999-2000 and 2000-01 submitted that vide ground No.1 assessee had objected to the initiation of proceedings u/s 147 of the Act, vide ground No.2 assessee had challenged the deduction computed u/s 10A of the Act, vide ground No.3, assessee had challenged the computation of deduction u/s 80HHC of the Act and vide ground No.4 assessee had challenged the upholding of interest u/s 234D of the Act. He pointing to the order of Tribunal submitted that ground No.1 with respect to re-opening of the assessment was dismissed by the Tribunal. On Ground No.2 with respect to computation of deduction u/s 80HHC of the Act, the Tribunal at Para 22 of Page 12 of the order had allowed the ground of the assessee. With respect to the ground challenging lev....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d by the Tribunal to the AO for fresh consideration on following points : 1) Nature and type of cost received by assessee as reimbursement from its group Companies. 2) Whether the reimbursement had any profit element in it and whether the profit element falls in the scope of provisions of Sec.10A of the Act, role of profit elements while computing the profit percentage on the cost. 3) Difference in the profiles of assessee and that of comparable cases and why they were not considered by AO. 4) Lack of clarity on the profit margin of 69.96% over the cost vis-à-vis profit margins of 232.49%. 5) The reason for non-considering the figure of comparable cases. 6) Basis for additional 10% leverage granted by the AO to the assessee. Based on the aforesaid directions, the Tribunal has set aside the order of the Ld.CIT(A) for A.Ys. 1999-2000 and 2000-01 on issue of computation of deduction u/s 10A of the Act to the AO for fresh consideration. He therefore submitted that as per the directions of Hon'ble ITAT, the matter was to be considered afresh in the light of relevant data that is available. Pursuant to the directions of ITAT, the AO initiated fresh assessment p....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 9. We have heard the rival submissions and perused the material on record. The issue in the present appeal of Revenue is whether the time limit prescribed as per Sec.153(2A) of the Act or as per Sec.153(3) of the Act would be applicable for passing the order pursuant to the orders of the Tribunal. It is assessee's case that the provisions of Sec.153(2A) of the Act are applicable and therefore the order giving appeal effect passed by the AO after the end of financial year in which the order was received by CIT is time barred and bad-in-law. On the other hand, it is Revenue's case that the case falls u/s 153(3) of the Act and therefore no time limit has been prescribed for passing the order. 10. We find that Co-ordinate Bench of the Tribunal while passing the order for 1999-2000 on 10.08.2012 has noted the fact that the AO by following the order for A.Ys. 2001-02 and 2002-03 has disallowed the excess claim of deduction u/s 10A of the Act. Ld.CIT(A) following his order for A.Y. 2001-02 had upheld the disallowance made by AO. When the matter for A.Y. 2001-02 and 2002-03 came up before the Tribunal, the Co-ordinate Bench of the Tribunal while deciding the assessee's appeal restored t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....The very expression 'best judgment assessment' imply the judgment of the AO and the said judgment must be supported by the material or data gathered by him for this purpose both from internal as well as the external sources. Thus, we can not approve the 'best judgment assessment' made by the AO and sustained by the CIT(A) in the present form. Therefore, we are of the considered opinion, the AO must make 'best judgment assessment' as per the manner provided in section 144 of the Act and for this we have decided to set aside the order of the CIT(A) for this limited purpose. It goes without saying that the AO must grant reasonable opportunity of being heard to the assessee. Assessee is directed to furnish any and every relevant information to advance his case for making of the best judgment as per the provisions of section 145(3)of the Act. CIT(A) is also directed to consider the existing supreme court judgment in the case of the Liberty India Ltd 317 ITR 218. in the set aside proceedings at the time of deciding the issue relating to if the said reimbursed receipts constitutes 'profits and gains derived from the undertaking from the export of such article o....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... there is a distinction between an 'assessment' that is set aside and an 'assessment order' being set aside. When the assessment on an issue is set aside and the matter remanded, with a direction that the issue has to be determined afresh, Section 153 (2A) of the Act would get attracted. 24. What is important to note is that, along with the insertion of subsection (2A), sub-section (3) underwent a simultaneous change. It was expressly made "subject to the provisions of sub-section (2A)." This meant that Section 153 (3) would thereafter apply only to such cases where Section 153 (2A) did not apply. In other words, in all instances of an AO having to pass a fresh assessment order upon remand where Section 153 (2A) would apply, the AO would be bound to follow the time-limit imposed by sub-section (2A). Where the AO was only giving effect to an appellate order, then Section 153 (3) (ii) of the Act would apply. 25. In the present case, of the seven issues, the assessment in respect of five was set aside and the issues remanded for a fresh determination. Whether the remand was to the TPO or the DRP would not make a difference as long as what results from the remand ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l in ITA No.419/PUN/2016 for A.Y. 1999-2000 and for similar reasons, dismiss the grounds of appeal of Revenue in ITA No.420/ PUN/2016. Thus, the grounds of the Revenue are dismissed. 16. In the result, the appeal of Revenue in ITA Nos.420/PUN/2016 is dismissed. 17. Now we take up assessee's appeal in ITA No.405/PUN/2016 for A.Y. 2001-02. 17.1. Before us, at the outset, Ld.A.R. submitted that assessee's appeal in ITA No.405/PN/2016 for A.Y. 2001-02 and appeal No.406/PN/2016 for A.Y. 2002-03 though are for two different assessment years but the issue involved in both the assessment years are identical except for the assessment years and therefore his arguments will also be common and therefore both the appeals can be heard and disposed of together. Ld. D.R. did not object to the aforesaid submission of Ld.A.R. We therefore for the sake of convenience proceed to dispose both appeals of the assessee by a consolidated order and the facts are taken from ITA No.405/PUN/2016 for A.Y. 2001-02. 18. Before us, Ld.A.R. submitted that in short the facts in A.Ys.2001-02 and 2002-03 are identical to that of A.Ys. 1999- 2000 and 2000-01 to the extent that in these years also it is assessee....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ce with the law. Pursuant to the directions of Hon'ble Bombay High Court, fresh assessment proceedings to give effect to the order of ITAT were initiated by the AO. Before AO, it was submitted that the proceedings were time barred in view of the provisions of Sec.153(2A) of the Act. The contention of the assessee was not found acceptable to the AO. He thereafter passed order on 07.11.2014 giving appeal effect to the order of ITAT u/s 254 of the Act wherein he reduced the deduction u/s 10A to Rs. 4,55,99,915/- as compared to the claim of assessee of Rs. 5,69,99,894/-. Aggrieved by the order of AO giving appeal effect to the order of Tribunal, assessee carried the matter before Ld.CIT(A), who rejected the contention of the assessee that the order giving effect to ITAT is time barred and held that the issue of time barring is not applicable as the Hon'ble Bombay High Court has directed the AO to implement the order of ITAT. The relevant finding of Ld.CIT(A) are as under : "5. I have carefully considered the facts of the case as well as submissions made in this regard. In this case, it is seen that combined order of the Tribunal in ITA No.401/PN/2007 and ITA No.402/PN/2007 dated....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... order of Hon'ble High Court has to be read in the context of the grounds raised by Revenue. Since the Hon'ble High Court has not stayed the order of the Tribunal, the view taken by the Revenue Authorities to exclude the period upto the date of order of the Hon'ble Bombay High Court is devoid of merits. Ld.A.R. therefore submitted that in the present case since pursuant to the directions of ITAT, the issue has not been decided by the AO within time limit prescribed u/s 153(2A) of the Act, the order giving effect to ITAT order passed by the AO is bad-in-law. Ld.D.R. on the other hand supported the order of lower authorities and placed reliance on the order of Bombay High Court and submitted that Hon'ble High Court has directed the AO to give effect to ITAT order and pursuant to directions of Hon'ble High Court, AO has passed the order within two months. He thus supported the order of lower authorities. 21. We have heard the rival submissions and perused the material on record. Before us, both the parties have admitted that the issue in the present case is similar to that of A.Ys. 1999-2000 and 2000-01, except for the fact that against the order of the Tribunal, Rev....
X X X X Extracts X X X X
X X X X Extracts X X X X
....(Cl. (i) to ix) where the periods stated therein are to be excluded for computing limitation for the purpose of Sec.153 of the Act. For the present case, Cl.(ii) to Explanation 1 would be relevant. Explanation 1(ii) of Sec.153(2) of the Act states that for computing the period of limitation the period during which the assessment proceedings is stayed by the order or any injunction of any Court shall be excluded. 23. Before us, it is assessee's submission that though the ground for staying the order of Tribunal was raised before the Hon'ble High Court but the Hon'ble High Court did not issue any order granting stay. The aforesaid contention of the assessee has not been controverted by Revenue. In view of these facts, we are of the view that since no stay was granted by Hon'ble High Court, the order giving effect to the Tribunal should have been passed within the time limit prescribed u/s 153(2A) of the Act i.e., before the expiry of one year from the end of the Financial Year in which the order of Tribunal was received by Chief Prl.Commissioner of Income Tax / Commissioner. In the present case, since the order of Tribunal was received by the jurisdictional Commissioner on ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Appellant has suo-moto paid taxes before any enquiry was made by the learned Assessing Officer in respect of provisions for liquidated damages and C forms which inadvertently remained to be offered to tax in the return of income for A.Y. 2007-08." 28. Later, assessee filed additional ground which reads as under : "On the facts and circumstances of the case, the penalty order passed by the AO u/s 271(1)(c) of the Act is bad in law due to nonapplication of mind which is evident from the notice u/s 274 r.w. section 271 of the Act wherein, the limb which is not applicable in the present case for levy of penalty was not struck-off" 29. Before us, at the outset, Ld.A.R. submitted that though the assessee has raised various grounds but the sole controversy is with respect to levy of penalty u/s 271(1)(c) of the Act. 30. Before us, Ld.A.R submitted that while passing the assessment order AO with respect to additions of Rs. 1,32,00,000/- towards provision for liquidated damages, Rs. 2,35,00,000/- towards provision for C forms has recorded that assessee had furnished the inaccurate particulars of income. While passing the penalty order u/s 271(1)(c) of the Act on 31.03.2014 on the....