TaxTMI 
TaxTMI 
2022 (8) TMI 1095
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....he range of issues, upon which clarifications were sought were wide and the petitioner has drawn my attention to specific queries in the questionnaires touching upon the very issues that figure in the reasons for re-assessment. After considering the detailed submission of the petitioner, an order of assessment dated 24.03.2016 came to be passed under Section 143(3) read with Section 92CA of the Act, at the first instance. 4. Insofar as the petitioner had engaged in international transactions, the transfer pricing officer had also engaged in the determination of arms' length price, and passed a transfer pricing order dated 24.03.2016.While this is so and matters had rested thus, a notice had been under Section 148 on 27.03.2019, four days shy of the last date for limitation, being six years from the end of the relevant assessment year. 5. The petitioner filed a response to the notice, complying to the direction to file a return and sought reasons for reopening. The reasons that had been supplied read as follows: 1.)As seen from the Profit & Loss account, schedule 26 other expenses, towards effect of exchange diff on translation of forward contract, the assessee has de....
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....her expenses debited to the P&L account, the assessee has debited a sum of Rs.674,43,445 towards cost of software licences. As software forms part of intangible assets as per Income tax Act and eligible for depreciation at 25% allowance of entire expenses needs to be reconsidered. The excess allowance of expenditure amounts to Rs.505,82583. 4.) During the year the assessee claimed deduction u/s 10AA, which was recomputed in the Assessment order. Deduction of Rs.1732,61,17,117 has been allowed. In as much as treatment of amalgamation as share transfer arrangement, it will result in withdrawal of exemptions allowed u/s 10AA in respect of units transferred from MIPL/CIPL. The conditions prescribed for claiming deduction u/s 10AA are: (i)It is formed of a business already in existence (ii)It is not formed by transfer of old plant and machinery (more than 20%) As the above conditions u/s 10AA could not be fulfilled in the case if MIPL/CIPL units, hence deduction allowed has to be withdrawn. In the instant case the unit Gurgaon MRX SEZ has been transferred from MIPL in respect of which deduction of Rs.476,46,271 has been claimed. ....
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.... under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year. 7. In normal circumstances, the limitation set out for re-assessment is four years, extendable to six years in cases where a scrutiny assessment has been made at first instance and where the assessing officer is in a position to establish that the alleged escapement of tax has been occasioned on account of failure on the part of the assessee to disclose fully and truly all material facts necessary in the assessment for that assessment year. 8. The ambit of the phrase 'full and true disclosure' has been discussed in extenso by the Hon'ble Supreme Court in the celebrated case of Calcutta Discount Co. Vs. Income Tax Officer [41 ITR 191] to conclude that it would only be primary facts that the assessee would have a responsibility to disclose, and no more. Any facts in addition thereto, or over and above the primary facts, would have to be culled by the assessing officer himself by way of enquiry and verification. 9. In the present case, the petitioner, in support of its submission that the proceedings were barred by limi....
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....ing of order under section 143(3) of the Act and the officer proceeds on the basis of materials sought for, and supplied by the petitioner at the original instance. Moreover, the officer, in the reasons, refers to the disclosure made in Schedule 26 to the financial statements and Note No. 32(C) of the Notes to accounts, both available on record. (10.2) Losses incurred by units located in Special Economic Zones ('SEZ') which were set-off against other taxable income by the Company were initially disallowed in the order passed under section 143(3) of the Act and allowed to be carried forward. The officer proposes, in the reasons, to restrict the carry-forward of losses andset-off of losses, thereby restricting the deduction under section 10AA of the Act, following CBDT Circular No.7 of 2013 dated 16 July 2013. (10.2.1) The petitioner had advanced detailed submissions on the eligibility to set-off of losses incurred by SEZ units against the other taxable income and, in Annexure 5 to its submission dated 10 March 2016, a detailed tabulation of the losses incurred by the SEZ units and the manner of its set-off against other taxable income had been provided. In fact, in Ann....
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....point 3 of the notice under section 142(1) dated 30 November 2015. (10.3.4) The petitioner, had, in its letter dated 10 March 2016 provided the break-up of amounts capitalized towards computer software and reiterated its earlier explanations in annexure 6 to the submission dated 27 July 2015 for claim of depreciation on computer software at 60 percent. Thus, the assessment had thus been completed under scrutiny, after due consideration to the treatment accorded by the petitioner towards software licenses. (10.4) Deduction claimed under section 10AA of the Act by the Gurgaon MrX SEZ unit amounting to INR 476,46,271 is sought to be withdrawn. The officer states that treatment of the amalgamation of MarketRx India Private Limited ('MIPL') and Cognizant India Private Limited ('CIPL') with the Assessee as a share transfer arrangement will result in withdrawal of deduction under section 10AA of the Act. No specific reason is assigned as to why the amalgamation is sought to be treated as a 'share transfer arrangement' in order to withdraw the deduction allowed under section 10AA of the Act for the Gurgaon MrX SEZ unit. (10.4.1) The questionnaire under sect....
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....fits and gains from business or profession' as well as section 115JB of the Act vide its submission filed on 27.07. 2015 and 14.01.2016. Detailed explanations had been made in regard to the investments in shares and mutual funds and appropriate disallowance made under section 14A of the Act in the original assessment. (10.5.2) The order of assessment passed under section 143(3) of the Act had provided detailed reasons at paragraph no.6, in support of a disallowance made under section 14A of the Act read with Rule 8D of the Rules. Thus, the issue of disallowance under section 14A of the Act had been duly taken note of even at the first instance and there has been no suppression or furnishing of untrue particulars. It appears quite clear that the officer is merely attempting to reappreciate existing materials to arrive at a different conclusion. (10.6) The last issue addressed in the reasons, relates to the provision for customer rebate and billed receivables, that, according to the officer, is to be added back to the computation of income. No specific reasons have been assigned for the proposed disallowance. (10.6.1) This issue, as others, had been raised by the Assessi....
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....clear that these issue had not escaped the attention of the assessing authority. 14. As observed in the case of Asia Net Star Communications P Ltd. Vs. ACIT, W.P.No.2532 of 2018 dated 16.04.2019, in an order of assessment the assessing authority would discuss only those issues on which there is a divergence of opinion with the assessee. It is not practical for the assessing authority to refer to and discuss every matter that has engaged his attention prior to formulation of the order as such an order of assessment would run to several reams. 15. Thus, an order of assessment to be crisp and effective has to only detail those issues on which he disagrees with the petitioner and if a query had been raised in regard to a particular issue, that would suffice to demonstrate application of mind in that regard. 16. Mr.Srinivas relies upon the following judgments: (i) Indi-Aden Salt Mfg. & Trading Co. (P.) Ltd. V. Commissioner of Income tax [(1986) 25 Taxman 356 (SC)]; (ii) A.L.A. Firm Vs. Commissioner of Income Tax[ (1991) 55 Taxman 637 (SC)]; (iii) Phool Chand Bajrang Lal Vs. Income Tax Officer [(1993) 69 Taxman 627]; (iv) Sri Krishna (P.) Ltd.....