AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2022 (9) TMI 1422
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Assessment Year 2010 - 2011 u/s.143(3) r.w.s.147 of the Income Tax Act, 1961 (hereinafter "the Act") vide his order dated 30.03.2016. 2. The first issue in this appeal of the Assessee is raised against the Commissioner of Income Tax (Appeals) confirming the action of the Assessing Officer in assuming the jurisdiction u/s.147 of the Act r.w.s.148 and reopening the assessment. For this, the Assessee has raised the following Ground Nos.2 to 5, as under: "2. The Commissioner of Income Tax (Appeals) erred in confirming the re-assessment after rejecting the grounds challenging the validity of the assumption of jurisdiction u/s.147 of the Act without assigning proper reasons and justification. 3. The Commissioner of Income Tax (Appeals) f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r's revenue expenditure, whereas according to the Assessing Officer this amount forms part of the indirect expenses of the project and accordingly the same is capital in nature. The Assessing Officer in the re-assessment proceedings noted that the Assessee Company suffers the burden of interest payment and bank changes during the year on borrowals towards sourcing the operations. According to the Assessing Officer, the nature of payment eroded the working capital and other income earned during the year and thereby this liability is an artificial liability. The Assessing Officer also noted that the Assessee Company follows the 'percentage completion method' for the revenue recognition and it has not returned any income from the project durin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....leted any project, as per the Profit and Loss Account. However, the entire Director's remuneration of Rs.25,20,000/- paid has been claimed as current year revenue expenditure. This amount shall form part of the indirect expenses of the project only and hence the entire amount has to be disallowed. 2) A debit of Rs.73,239/- has been effect as being loss from the sale of land. But there is no such sale of land as per the evidences filed. 3) The tax audit report of the Assessee in Form 3CD states that the provisions of Chapter XVIIB have not been compiled with. If that be the case, the claim of project cot incurred during the year for Rs.36,23,80,469/- needs to be examined vis-à-vis Section 40(a)(ia). 4) There is a claim of Rs.....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... not completed any project as per the Profit and Loss Account but had claimed the Directors' remuneration of Rs.25,20,000/- as current year's revenue expenditure. According to the Assessing Officer, this forms part of the indirect expenses of the project only and hence is not allowable. For this reason, the assessment was reopened by the Assessing Officer. We noted that the Hon'ble Madras High Court in the case of TANMAC India Vs. Deputy Commissioner of Income Tax, Circle - I, Pondicherry (supra) has considered an identical situation by following the decision of the Hon'ble Supreme Court in the case of Commissioner of Income Tax Vs. Kelvinator of India reported in [2010] 320 ITR 561 and held that "What is sought to be done by the re-assessm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ncome Tax Vs. Kelvinator of India [2010] 320 ITR 561 / 1867 Taxmann 312 states thus in the context of the 'belief' that should form the basis for a re-assessment. 'We must also keep in mind the conceptual difference between power to review and power to reassess. The Assessing Officer has no power to review, he has the power to reassess. But reassessment has to be based on fulfillment of certain preconditions and if the concept of 'change of opinion' is removed, as contended on behalf of the Department, then, in the garb of reopening the assessment, review would take place. One must treat the concept of 'change of opinion' as in-built test to check abuse of power by the Assessing Officer. Hence, after 1st April, 1989, the Assessing Office....