TaxTMI 
TaxTMI 
2019 (10) TMI 923
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....t on 25.1.2012 computing the total income at 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 or....
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....TPO erred in not undertaking an objective analysis for determining the arm's length price on the shareholder corporate guarantee 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. ....
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....native Tax (no adjustment made to the book profits) and thus the question of income having escaped assessment does not arise. Corporate Tax Matters: 17. The Ld AO/DRP erred in assuming the finance charges for loans taken by the Appellant as capital in nature, without 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 captio....
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....alidity of the reopening and all the relevant details are available on record and no verification of fresh facts is necessary for adjudicating these grounds. As these grounds go to the root of the matter and the validity of reopening is already raised in the regular grounds as ground No.1, we are inclined to admit the same and adjudicate the said ground. 8. One of 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, ....
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.... u/s 10B of the Act. He submitted that the AO having accepted the claim of the assessee on the basis of the material filed by the assessee, cannot initiate the re-assessment proceedings on the basis of the very same material. Therefore, according to him, the re-assessment proceedings are bad in law. 12. The learned DR however, supported the orders of the authorities below. 13. 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 detai....
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.... was considering the case of an assessee where the objections of the assessee were disposed of in the assessment order and therefore, the Hon'ble Gujarat High Court has held that it was not open to the AO to decide the objections to the notice u/s 148 in the assessment order. However, we find that the decision of the Hon'ble Gujarat High Court is not strictly applicable to the case of the assessee. 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 servic....
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.... us, the assessee was given adequate opportunity to file its objections and there is no breach of or violation of principles of natural justice. Hence, this decision is not applicable to the facts of the case before us. Therefore, the additional ground of appeal is rejected. 19. As regards the additional ground No.1.6, the learned Counsel for the assessee submitted that the AO, in the draft assessment order 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 i....
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....he original assessment and also in the draft and final assessment, and therefore, there was no income chargeable to tax that has escaped the assessment and therefore, reopening of the assessment is bad in law. In support of this contention, he placed reliance upon the decision of the Hon'ble Delhi High Court in the case of CIT vs. Nalwa Investment Ltd reported in 327 ITR 543, wherein the additions were made while computing the income 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 com....