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2021 (3) TMI 889
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....ection 80IA of the Rs. 23,37,65,504/- in respect of various power generation units. 2.2 The return of income was processed under Section 143(1) of the Act. 2.3 The case of the assessee was selected for scrutiny and notice under Section 143(2) of the Act was issued on 21.08.2012 and subsequently, notices under Section 142(1) of the Act dated 11.04.2013 and 26.08.2013 were issued along with detail questionnaire. The assessee company had submitted the explanation about justification of the deduction under Section 80IA and also furnished Form No. 10CCB in respect of all Power Generation Unit being the report of CA, as required under Section 7 of the 80IA of the Act. The Assessing Officer passed a detailed scrutiny order under Section 143(3), wherein, he disallowed Rs. 3,65,25,780/- from the total claim made under Section 80IA of Rs. 23,37,65,504/- for generation of power consumed by other units. The assessee company preferred an appeal against the assessment order including the disallowance of Rs. 3,65,25,860/-. The Appellate Authority i.e. the Commissioner of Income Tax (Appeals), allowed the Appeal and delete the addition of Rs. 3,65,25,860/-, which was disallowed by the Assess....
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.... deduction on profit on sale of electricity and steam both in respect of following units: Units Power Steam Total Percentage Proportion Power iii total Sale (%) Percentage Proportion of Steam in total sale (%) Profit claimed Eligible for units as per Form 10CCB Profit Allowable for claim u/s 80IA (excluding Proportionate proportion of steam) Excess Allowed Gas Turbine Power Generation undertaking 287283588 96989683 384273271 74.76 25.24 4109629 30723621 10372588 Gas based Power Generation undertaking Vareli 17414167 16885627 191027094 91.16 8.84 568918 518629 50289 Rolls RoveI Gas Power Generation Undertaking 219895015 53065093 272960108 80.56 19.14 61946527 49903748 12042779 Rolls RoyesII Gas Power Generation Undertaking 219895015 530655093 272960108 80.56 19.44 61946527 49903748 12042779 Rolls RoyesIII Gas Power Generation Undertaking 276098703 53205396 331304099 83.14 16.66 63041097 52536522 10504575 Total 1446708486 229006474 18812539 18812539 40881115 As the wor....
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....ction u/s. 80IA to the tune of Rs. 23,37,65,504 resulting into excess claim to the extent of Rs. 47,59,030/. The assessee had charged the transfer value of Rs. 4.80 per unit at the time of transferring the same to its other unit claiming the same as market value based on tariff chart of Madhya Gujarat Vidyut Company Limited, erstwhile Gujarat Electricity Board (MGVCL). The said rate had two identifiable separate components of different nature viz. Energy Charges @ Rs. 4.05 per unit and Time use charges @ Rs. 0.75 per unit. The time use charge component was disallowed for working of 80IA and transfer value was taken at Rs. 4.05. As a result the amount of Rs. 3,65,25,860 (23,37,65,504/4.80 x 0.75) was disallowed from deduction u/s. 80IA and the claim was restricted to Rs. 19,72,39,644 (Rs. 23,37,65,504 less Rs. 3,65,25,860) u/s. 80 IA of the Act. However, as per Form 10CCB the assessee company was eligible for deduction of Rs. 22,90,06,474 u/s. 80IA which was based on transfer value of Rs. 4.80 per unit. The profit allowable for claim of deduction u/s. 80IA excluding proportionate portion of steam works out to Rs. 18,81,25,359/. Since, the above amount was ....
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....ion that in this case, the issue under consideration were never examined by the AO during the course of regular assessment / reassessment. "This fact is corroborated from the contents of notices issued by the AO u/s.143(3) proceedings. It is important to highlight here that material facts relevant for the on the issue(s) under consideration were not filed during the course of assessment proceedings and the same may be embedded in annual report, audited P & L A/c. Balance sheet and books of account in such manner that it would require due diligence by the A.O. to extract these information. For aforesaid reasons, it is not a case of change of opinion by the A.O. In this case more than four years have lapsed from the end of assessment year under consideration. Hence necessary sanction to issue notice u/s. 148 has been obtained separately of Principal Commissioner of Income Tax as per the provisions of section 151 of the Income Tax Act." 2.5 The assessee company raised its objection vide its communication dated 26.07.2018, namely on the following grounds : (i) No satisfaction of preconditions for invoking the provisions of Section 147; (i....
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....sessment proceedings initiated is mere a change of opinion on the part of the Assessing officer. In this regard, it was pointed out that the then Assessing Officer had issued notice under Section 142 (1) of the Act for the original assessment made under Section 143(3) of the Act and in response to the notice, the assessee was called for the details/information regarding justification of the claim of deduction under Section 80IA along with complete working of profit and gain eligible for such claim and after considering the explanation and other materials, the claim was partly disallowed to the extent of Rs. 3,65,25,860/- and the addition thereof, was deleted by the Appellate Authority vide order dated 06.07.2015. Thus, in these factual background, the learned counsel submitted that the then Assessing Officer had formed an opinion while passing earlier assessment order and now issuance of notice under Section 148 for the reopening of the assessment on the same material, reviewing the same issue, in the absence of any new tangible material, by the succeeding Assessing Officer cannot be sustained on mere a change of opinion. 6. In view of the above contentions, the learned counsel ....
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....mere a change of opinion on the part of the Assessing Office as the issue already decided in the previous assessment order and (ii) no case can be reopened on account of the reasons recorded by the Assessing Officer which are subject matter of any appeal, reference or revision. 12. It is a settled law that mere a change of opinion cannot be a basis for reopening completed assessment, where, in the previous assessment proceedings the Assessing Office has applied his mind and taken a conscious decision on a particular matter and issue. 13. In the case of CIT Vs. Kelvinator India Ltd (2010) 320 ITR 561 (SC), wherein, it was held that the concept of "change of opinion" must be treated as in-built test to check the abuse power by AO. Hence, after 1.4.1989, the AO has power to reopen an assessment provided there must be a "tangible material" to come to the conclusion that there was an escapement of income from assessment. The relevant paras 5, 6 and 7 reads thus; "5......where the Assessing Officer has reason to believe that income has escaped assessment, confers jurisdiction to reopen the assessment. Therefore, post-1st April, 1989, power to re-open is much wider. However....
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.... by both the parties, it would be useful to refer the original assessment order framed under Section 143 of the Act, vide order dated 30.03.2014, wherein, the issue of excess claim of deduction was dealt with at length in para- 4 of the order. The relevant portion reads thus: "Para4 Impermissibility of claim of deduction under Section 80IA : 4.1 : On verification of computation of income, it is noticed that the assessee had claimed deduction under Section 80IA of the Act to the tune of Rs. 23,37,65,504/for generation of power. The assessee has generated the power and utilized / transferred the same to its other unit. The assessee has charged the transfer value while applying the rate of per unit at Rs. 4.80/claiming it as market value and during the course of assessment proceedings, the assessee was asked to explain why the demand charges and time used charges should not be disallowed from deduction under Section 80IA as these are over and above the energy charge, which is actual sale price of the energy and both charges are not sale price but these are the additional charge. 4.3 The explanation of the assessee that they have submitted statement ....
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....ect of time usage charge component is still pending for disposal before the Second Appellate Authority. Therefore, we are of the firm view that the impugned notice as well as the proceeding are required to be quashed and set aside for the following reasons: (i) The then Assessing Officer while framing the assessment order under Section 143(3), had raised the issue of deduction and in response to issue No. (37), the assessee company had furnished all the details / information along with the complete working of profit and gains eligible for the claim and after considering all the primary materials, disclosed by the assessee company, the erstwhile Assessing Officer assigned cogent reasons and discussed the issue at length and disallowed the claim of deduction to the extent of Rs. 3,65,25,860/- out of total claim of Rs. 23,37,65,504/- stating that deduction is available only in relation to profits and gain derived from the generation of powers. Now on the same set of facts and materials, the Assessing Officer formed the belief about the escapement of assessment which is nothing but mere a change of opinion on the facts which were already before the Assessing Officer while maki....
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....ot be sustained. (e) In Amrit Feeds Ltd Vs. ACIT (2011) 51 BRT 315 (cal.), wherein, it was held that if the AO had questioned the entitlement of assessee to deduction under 80IB in the assessment in question, it was their mistake. All the information regarding the alleged manufacturing process was before them. After the time limit for making assessment or reassessment has long expired, the revenue cannot turn round take recourse to an extraordinary provision which is section 147 and attempt to reopen concluded reassessment. If such exercise is permitted, that would be quite contrary to the intention of the Act. In that case, there would be no finality to any assessment. Then, at any point of time, after expiry of time, the AO can reopen assessment. That would plainly be against the statutory policy. Therefore, the impugned notice and proceedings are quashed and set aside. (f) In ITO Vs. Sirpur Papers Mill Ltd (1978) 113 ITR 393 (AP), it was held that where the assessee discloses his all primary facts to the Income Tax officer and if officer does not draw appropriate inference on the facts placed before him and complete the assessment, the assessment canno....