TaxTMI 
TaxTMI 
2019 (10) TMI 923
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....Nil. Thereafter, the AO reopened the assessment by issuance of a notice u/s 148 on 21.3.2013. The assessee requested the AO to supply the reasons for reopening which were supplied to the assessee and the assessee filed its objections to the reopening vide letter dated 19.8.2013. The AO considered that there were international transactions entered into by the assessee and therefore, made a reference to the TPO for determination of the Arms' Length Price of the international transactions. The TPO passed an order u/s 92CA of the Act proposing TP adjustment and accordingly, the AO passed a draft assessment order dated 26.3.2014 disposing of the objections of the assessee and also making the addition of the proposed adjustment. Against the draft assessment order, the assessee filed its objections before the DRP, also raising the question of validity of the reopening of the assessment. The DRP rejected the assessee's objections to the reopening and also passed an order u/s 144C of the Act. The assessee challenged the order of the DRP before the Hon'ble High Court on the ground that he was not served with the copy of the draft assessment order dated 26.3.2014 within time. The Hon'....
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....rantee and making adjustment by determining the benefit to US was as difference in the interest rate of differently rated bonds in the Indian market. CORPORATE TAX MATTERS 8. The Ld. DRP/AO erred in concluding that only the realized foreign fluctuations can be said to be derived from 10B units, thereby eligible for 10B benefit, without appreciating that the reinstated foreign fluctuations also forms part of the income of the undertakings as per the principles of accounting. 9. The Ld. DRP/AO erred in holding the other incomes (i.e., insurance claim, interest on fixed deposits, miscellaneous income) are not to be considered for the purpose of computation of profits eligible for deduction uls 10B of the Act. 10. The Ld. DRP/AO erred in facts and law by concluding the interest expenditure incurred for the purpose of making investments (i.e., acquisition of RCC in USA) is to be allocated to the CPC units without appreciating the separate and specific function of the CPC units vis-a-vis Blending, Trading and Investment Unit. 11. The Ld. DRP/AO erred in disallowing the finance charges amounting to Rs. 17,65,88,101/- by contending it to be not for the purpose of business and sim....
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....out appreciating that the same qualifies as interest under the provisions of the Income-tax Act, 1961 and the Appellant had also deducted tax at source in respect of finance charges. 18. Without prejudice to the above, assuming without admitting, even if the interest and finance charges in relation to global acquisition is considered to benefit the Appellant's business, the same ought to have been apportioned among all the business divisions based on an appropriate allocation key. The Appellant craves leave to add, alter, delete or modify all or any of the grounds of appeal". 4. For admission of additional grounds, the assessee has submitted as under: "Request for admission of Additional Grounds of Appeal - Rule 11 of Income-tax (Appellate Tribunal) Rules, 1963 The facts leading to the raising of the additional ground of appeal are as under: * The captioned appeal is in connection with the final order passed by the Learned Deputy Commissioner of Income-tax, Circle 3(1), following the directions of the Learned Dispute Resolution Panel in relation to the re-assessment proceedings initiated against the Appellant. * Considering the fact that the Appellate had undergone....
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.... the objections of the assessee is that there is no escapement of income, but the re-opening of the assessment is merely based on audit objection. We find that the assessment u/s 143(3) was completed on 25.01.2012 while notice u/s 148 was issued on 21.3.2013. Therefore, the reopening of the assessment is within 4 years from the end of the relevant A.Y. The reasons for reopening also were properly recorded by the AO and on a request by the assessee, the reasons for reopening have also been communicated to the assessee. The assessee has also filed its objections to the reopening. The grievance of the assessee is that the reopening is based on audit objection only. The learned Counsel for the assessee extensively argued that the audit objection cannot be the basis for the reopening of the assessment, while the learned DR, submitted that the audit objection is also material which was available with the AO to make up his mind about the escapement of the income and is not the sole reason for the reopening of the assessment. Therefore, according to the DR, the reopening is validly made. 9. Upon hearing both the parties and on consideration of the material available on record, we find tha....
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....3. Having regard to the rival contentions and the material on record, we find that during the assessment proceedings u/s 143(3), the AO vide letter dated 9.8.2011 had required the assessee to file certain details. On perusal of the copy of the letter dated 9.8.2011, we find that at Item No.40, the AO had asked the assessee to justify the claim made u/s 10B along with the details of computation in respect of Kin-1 and Kin-2. In response to the same, the assessee filed a reply stating that the details with regard to the claim u/s 10B will be submitted later. Thereafter, there has been correspondence between the assessee and the AO, but we do not find that any information was filed by the assessee justifying the claim of deduction u/s 10B of the Act. Thus, it is clear that the assessee has not given the details of its claim u/s 10B and the AO without taking the same into consideration has allowed the claim of deduction u/s 10B of the Act to the assessee. Thus, it cannot be said that the assessee has given all the details and the AO has considered the same. The assessee's ground that there was no new material on record to justify that there exists a reason to believe that the income h....
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....e. As observed above, the AO had supplied the reasons for reopening of the assessment to the assessee and thereafter, the assessee has raised its objections to the reopening which were disposed of by the AO in the draft assessment order. Admittedly, the draft assessment order is not the final order of the assessment because the assessee is provided with an opportunity to file its objections before the DRP and also had the option of filing a W.P. against the same. Therefore, the AO has not taken away the remedy available to the assessee of challenging the order rejecting the assessee's objections, by disposing of the objections in the draft assessment order. Further, the assessee had filed a W.P before the Hon'ble High Court of Telangana & A.P at Hyderabad, challenging the service of the DRP order after a period of 5 years. However, the assessee did not raise any objection against the findings of the AO in the draft assessment order rejecting the objections of the assessee on the reopening of the assessment. The assessee had the option of raising such a ground before the Hon'ble High Court in the W.P but the assessee has failed to do so for the reasons best known to it. Sinc....
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.... dated 26.3.2014 had made four additions on the issues referred to in the re-assessment notice and computed the total income under the normal provisions at Rs. 34,62,48,597/-, while the income u/s 115JB was Rs. 70,09,87,659/- and there were no additions made to the income computed u/s 115JB of the Act in the re-assessment order and therefore, the income u/s 115JB which was computed at Rs. 70,09,86,659/- was brought to tax. Thus, according to the assessee, the income of the assessee so computed under the normal provisions being less than the income u/s 115JB of the Act and there was no change in the income of the assessee computed in the assessment completed u/s 143(3) in the assessment completed u/s 143(3) r.w.s. 147 of the Act and therefore, there is no escapement of income in the assessment completed u/s 143(3) of the Act. The assessee submitted that the assessment u/s 147 can be reopened only if the income chargeable to tax has escaped the assessment. He submitted that since the income of the assessee in the original assessment as well as the re-assessment u/s 147 of the Act was the income u/s 115JB, the reopening of the assessment u/s 147 is bad in law. He placed reliance upon ....
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....e under the normal provisions but ultimately the assessment was framed u/s 115JB of the Act as the tax payable u/s 115JB was on higher side. In respect of the penalty levied u/s 271(1)(c) under such circumstances, the Hon'ble Delhi High Court held that when the computation was made u/s 115JB of the Act, there was no concealment of income and will not lead to tax evasion also. The learned Counsel for the assessee also placed reliance on the CBDT Circular No.25/2015 dated 31.12.2015 wherein the decision of the Hon'ble Delhi High Court was taken into consideration and it was clarified that prior to 1.4.2016 i.e. before the substitution of Explanation 4 to section 271 of the Act with prospective effect, if any adjustment is made in the income computed for the purpose of MAT, the levy of penalty u/s 271(1)(c) will depend on the nature of the adjustment. Therefore, he prayed for the re-assessment order to be set aside on this ground also. 22. Having regard to the rival contentions and the material on record, we find that at the time of initiating the re-assessment proceedings, the AO has only to be satisfied prima facie that there is escapement of income. He has only to record ....