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2022 (11) TMI 774
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....all in guaranteed performance from Suzlon Energy Ltd is liable to tax in the facts and circumstances of the instant case. 3. We have heard rival submissions and perused the materials available on record. We find that assessee company is engaged in the business of raising Iron ore, manufacturing of Nitrogen Gas, Ferro Alloys, Trading of Iron Ore and Ferro Alloys, generation of electricity (Windmill) and Railway Siding for captive use. The original return of income was filed by the assessee company for the A.Y.2009-10 on 30/09/2009 declaring total income of Rs.1345,80,61,460/-. This return was revised by the assessee on 31/03/2011. The assessment was completed u/s.143(3) of the Act on 30/12/2011 determining total income at Rs.1374,99,31,150/-. This assessment was framed on the assessee company by the Assessing Officer in Kolkata as the registered office of the assessee company was situated in 10, Camac Street, Kolkata - 700 017 at that point in time. Later the case of the assessee was transferred from Kolkata to Mumbai jurisdiction vide order u/s.127(2) of the Act dated 30/09/2014 by the Administrative Commissioner of Income Tax of Kolkata. Strangely yet another notice u/s.148 of ....
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....esponse to this notice, the assessee filed a fresh return of income on 31/12/2014 declaring total income of Rs.1348,00,75,711/- which was same as the returned income filed in the revised return on 31/03/2011. The assessment was completed u/s.153C r.w.s. 143(3) of the Act by the ld. AO on 29/03/2016 for the A.Y.2009-10 by determining the total income at Rs.1513,83,22,160/- under normal provisions of the Act and book profits of Rs.1446,88,86,081/- u/s.115JB of the Act. 3.3. This assessment was sought to be revised by the ld. PCIT by invoking his revision jurisdiction u/s.263 of the Act by treating the order passed by the ld. AO as erroneous and prejudicial to the interest of the Revenue on the ground that assessee had received compensation for shortfall in guaranteed performance from Suzlon Energy Ltd amounting to Rs.22,22,18,000/- which was treated as capital receipt by the assessee in the return. According to the ld. PCIT, the said claim of capital receipt was allowed by the ld. AO without looking into the fact that the very same receipt was added by the Assessing Officer in A.Y.2008-09 i.e. in the immediately preceding assessment year. A show-cause notice dated 22/01/2018 was i....
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....safely concluded that there was no incriminating material available with the ld. AO while framing the said search assessment on 29/03/2016 for A.Y.2009-10. Hence, the ld. AO could not have looked into any other item or disturb the concluded assessment already framed for A.Y.2009-10 in the hands of the assessee. This action of the ld. AO is directly in consonance with the decision of the Hon'ble Jurisdictional High Court in the case of Continental Warehousing Corporation reported in 374 ITR 645. Hence, no error could be attributed in the order of the ld. AO in this regard warranting revision u/s.263 of the Act by the ld. PCIT. The assessee also placed reliance on yet another decision of the Hon'ble Jurisdictional High Court in the case of CIT vs. Sinhgad Technical Education Society reported in 378 ITR 84 which was approved by the Hon'ble Supreme Court reported in 397 ITR 344. (iii) Order passed u/s.153C r.w.s. 143(3) of the Act dated 29/03/2016 is not prejudicial to the interest of the Revenue in view of the fact that the compensation received by the assessee company from Suzlon Energy Ltd was directly and undoubtedly connected with its business of generating power which qu....
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....ome Tax Act, 1961, by issuing Notice u/s 148 of the Income Tax Act, 1961. v) Subsequently, assessment order u/s 153C read with 143(3) of the Income Tax Act, 1961, was finalised by the then Assessing Officer, DCIT, Central Circle 1(4), Mumbai, on 29.03.2016, assessing income at Rs. 1513,83,22,160/-. vi) The Principal CIT, Central-1, Mumbai, passed an Order u/s 263 of the Income Tax Act, 1961, on 22.03.2018, in respect of the assessment order u/s 153C read with 143(3) of the Income Tax Act, 1961. Vide this Order the Principal CIT, set aside the assessment order dated 29.03.2016, with the direction to pass fresh assessment order after giving reasonable opportunity of being heard to the Assessee. vii) The Assessee being aggrieved by the assessment order u/s 153C read with 143(3) of the Income Tax Act, 1961, dated 29.03.2016, filed Appeal u/s 246A of the Income Tax Act, 1961, before the CIT(A), Mumbai. The Ld.CIT(A)-47, Mumbai, vide Order dated 26.12.2017 decided the Assessee's Appeal. The Order giving effect to the Order of CIT(A) was passed on 12.04.2018 revising the income to Rs.1396,87,41,577/-. viii) In consequence of Order u/s 263 of the Inc....
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....Income, because the provisions of Section 139(5) of the Income Tax Act, 1961, provides for revising a Return of Income under the circumstances when it is discovered that any omission or any wrong statement has been made in the Original Return of Income. A plain reading of the above, clearly indicates that for filing a revised Return of Income there should have been an omission or any wrong statement that has crept into the original return of income, which means that the mistakes as indicated above are in the nature of "inadvertent errors‟ or "inaccuracies‟. In the instant case no such mistakes by way of omission or wrong statement appears to have been committed in the original Return of Income. In the instant case as evident from Paragraph (I) at page no.3 of the submission made before the Pr.CIT, Central-1, Mumbai, vide letter dated 12.03.2018, during the course of proceedings u/s 263 of the Income Tax Act, 1961, the Revised Return of Income has been filed as per the advice received from the Counsel. Such advice by no stretch of reasoning and imagination can be termed as an omission or wrong statement, as mentioned in Section 139(5) of the Income Tax ....
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....s 80IA of the Income Tax Act, 1961, which will entail into considering the impugned amount as Revenue Receipt and denial of the benefit of deduction u/s 801A of the Income Tax Act, 1961, in respect of the impugned amount of Rs.22,22,18,000/-. This will serve the entire cause of invoking the provisions of Section 263 of the Income Tax Act, 1961. Having made submission about invalidity of Revised Return of Income, the Assessee's claim that the amount of Rs.22,22,18,000/- on account of Compensation for Short Fall in Guaranteed Performance is a capital receipt was not forming the part of assessment record. The Assessee being aggrieved by the Order u/s 263 of the Income Tax Act, 1961, dated 22.03.2018, filed Appeal before the Hon'ble Income Tax Appellate Tribunal, Mumbai. The submissions on the issues taken up by the Assessee before the Hon'ble Income Tax Appellate Tribunal, is made herein under. First Issue Vide Ground No.1 of Form No.36, the Assessee has raised the first issue before the Hon'ble Income Tax Appellate Tribunal that the conditions stipulated for invoking the extraordinary jurisdiction u/s 263 of the Income Tax Act, 1961....
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....on u/s 801A of the Income Tax Act, 1961, of an equivalent amount. Second Issue In the second issue raised vide Ground No.2, 2.1 and 2.2 of Form No.36, the Assessee claims that the provisions of section 263 of the Income Tax Act, 1961, has been invoked beyond the stipulated time prescribed u/s 263(2) of the Income Tax Act, 1961. In support of its contention the Assessee has relied upon ruling of the Hon'ble Supreme Court of India in the case of CIT v/s Alagendran Finance Limited [(2007) 293 ITR 0001] which is cited in the submission made before the Principal Commissioner of Income Tax, Central 1, Mumbai during the course proceedings u/s 263 of the Income Tax Act, 1961. The copy of which forms part of the Paper Book filed before Income Tax Appellate Tribunal. In this regard, on perusal of the aforementioned relied upon ruling of the Supreme Court it is observed that, the assessment was framed by the Assessing Officer in that case u/s 143(3) r.w.s. 147 of the Income Tax Act, 1961, and in the backdrop of this fact, the Hon'ble Apex Court ruled that an issue which was not subject matter of reassessment, limitation under s. 263(2) would run from the dat....
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....e interest of Revenue. As discussed in the comments regarding the Second Issue, the assessment proceedings finalised u/s 153C rw.s. 143(3) of the Income Tax Act, 1961, dated 29.03.2016, are independent proceedings and there should not be conjoint reading of assessment proceedings finalised u/s 143(3) of the Income Tax Act, 1961, on 30.12.2011. Further, as discussed in the opening paragraph of this submission, the so-called revised Return of Income was not a valid Return of Income, and therefore the issue of nature of Compensation for Short Fall in Guaranteed Performancereceived was never part of assessment proceedings finalised on 30.12.2011 and 29.03.2016, before the Assessing Officers. As a result, the Principal Commissioner of Income Tax, Central-1, was very much within the statutory powers vested in him to invoke the provisions of Section 263 of the Income Tax Act, 1961, as the assessment order passed u/s 153C r.w.s. 143(3) of the Income Tax Act, 1961, dated 29.03.2016, was erroneous and prejudicial to the interest of Revenue, as income of Rs.22,22,18,000/- on account of Compensation for Short Fall in Guaranteed Performancewas not subject to tax. Therefore, the objecti....
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....agraphs." 3.6. It is not in dispute that assessee had received compensation for shortfall in guaranteed performance from Suzlon Energy Ltd. This receipt was shown as revenue receipt by the assessee in the return of income. However, during the course of assessment proceedings, the assessee did file revised computation of income and revised return on 31/03/2011 claiming the same to be capital receipt. The ld. AO had taken due cognizance of the said revised return which is evident from the fact that the computation of total income had commenced only from the revised computation of income. Hence, the objection made by the ld. DR in his written submissions supra that assessee could not have revised its return in terms of Section 139(5) of the Act has got absolutely no relevance and we hold that the ld. DR is trying to improve the case of the Assessing officer before this Tribunal which is not permissible in law. It is pertinent to note that the said receipt of compensation for shortfall in guaranteed performance from Suzlon Energy Ltd was also subject matter of adjudication by the Co-ordinate Bench of Jaipur Tribunal in the case of Rajasthan State Mines & Minerals Ltd vs. Asst. Commi....
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....r generation activity carried on by the assessee which is eligible for deduction u/s.80IA of the Act. Hence, it becomes Revenue neutral and consequently, there could be no prejudice that could be caused to the interest of the Revenue in this regard. Hence, the pre-requisite twin conditions of Section 263 cannot be cumulatively satisfied in the instant case and consequently invocation of revision jurisdiction u/s. 263 of the Act on the same is unsustainable in the eyes of law. 3.8. It is pertinent to know that A.Y.2009-10 is a completed assessment as on the date of assumption of jurisdiction u/s.153C of the Act in the hands of the assessee. Admittedly, only incriminating material which was handed over is a petty cash book marked as Annexure A-8 pertains only to A.Y.2011-12 and not relatable to A.Y.2009-10. Hence, the ld. AO was fully justified in not looking into this issue while framing the search assessment on 29/03/2016. Hence, no error could be attributed in his order. Hence, the pre-requisite twin conditions of Section 263 cannot be cumulatively satisfied in the instant case and consequently invocation of revision jurisdiction u/s.263 of the ACT on the same is unsustainable ....