TaxTMI 
TaxTMI 
2023 (7) TMI 1274
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....s. 115JB was returned at Rs. 2,65,73,22,107/-. The return was subject to regular assessment u/s. 143(3) of the Act vide assessment order dated 05-02-2014 wherein business income was assessed at Rs. 3,09,99,15,987/- and income from other sources was assessed at Rs. 4,06,94,000/- and the same were set off against brought forward loss and unabsorbed depreciation and assessed to Nil income. 2.1. Subsequently, the Assessing Officer noticed that the addition made on account of capital grants and subsidies under normal provisions to the extent of Rs. 4028.91 lakhs remained to be added to the book profit u/s. 115JB and accordingly A.O. initiated reassessment proceedings by issuance of notice u/s. 148 dated 25- 02-2016. The reasons recorded for reopening of the assessment is as follows: "2. It was seen that the assessee had shown capital grant/subsidy of 87,541.25 lakh at the year end. Out of which the assessee had offered only 10% of the grants received from the Central/State Government as revenue receipt and deferred the remaining grant to 10 years. Though, the assessing officer took the view that instead of 10% of the grant, the assessee had to offer 15% of the grant as reven....
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.... the addition made to the book profit on this account. Since, the facts are identical in this year also, I respectfully following the above order of my predecessor, hold that the addition of capital grant and subsidies made under normal provisions at 40,82,91,000/- cannot be made to the book profit u/s 115JB. Hence, the addition made by the AO on this account is directed to be deleted from the book profit computed u/s. 115JB. Thus appellant succeeds in rerspect of ground No. 2." 5. Aggrieved against the same, the Revenue is in appeal before us raising the following Grounds of Appeal: 1. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made in book profit on account of capital grants amounting to Rs. 4082.91 lacs made by the AO without appreciating the fact that the assessee neither credited this grant to the Profit & Loss account directly nor debited the capital assets from the capital grant nor it defer the amount of grant for certain period as provided." 2. The appellant craves leave to add to, amend or alter the above grounds as may be deemed necessary. 6. Per Contra, the assessee filed applicati....
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.... Book-profit under Section 1151B of the Act. Both issues were thus clearly interconnected and were not possible for consideration separately. The fact that the Assessing Officer did not make any similar upward revision of the assessee's book profit under Section 115JB of the Act, that too without citing the reasons, would not mean that he had not examined the issue. 15. The Revenue's contention could as well be that not making such an addition was an error on the part of Assessing Officer. The decision of the Assessing Officer being erroneous, is quite different from the failure of the Assessing Officer to notice a certain element of taxability. The former would have to be rectified through the process of revision or suo motu by the Commissioner [Appeals]; if one filed by the assessee. The latter may give rise to reopening of the assessment, subject to fulfillment of other conditions. In the present case, particularly when the assessee itself had carried the issue of upward revision in the normal computation of income the Commissioner as well could have in such appeal itself suo motu or if so urged by the Revenue, made amends, if there was any error in the order of....
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....gh Ltd. issue was relating to penalty where quantum addition was confirmed by the CIT(A) and the assessee has accepted the same whereas in the present case the issue involved is reopening of assessment u/s. 147. Further, in second case law relied upon the reopening was done after 6 years whereas in present case, the case was reopened within 4 years from the end of assessment years. Moreover, while deciding the issue of reopening of assessment the CIT(A) in para 4.1 (Page 10) of his order has categorically given his finding as under: "I found that the AO has recorded detailed reasons in this regard before issuance of the notice u/s. 148 on 25.02.2016. The copy of reasons recorded was also provided to the appellant and the objections filed by the appellant have also been disposed off by a speaking order dated 15.07.2016. Therefore, procedure laid down for reopening of the assessment has been properly followed. It may also be noted that the assessment was reopened within 4 years from the end of the assessment year. The appellant has failed to prove with the documentary evidences that the issue under consideration was examined and adjudicated during the course of the original ....
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....suit-mortgage loan only to the extent of Rs. 59,000/- and odd and there being no appeal by the Bank against the finding that the balance of the Rs. 80,000/- had not gone in discharge of an antecedent debt, the respondent was precluded from putting forward a contention that the entire sum of Rs. 80,000/- covered by Exs. A and B went for the discharge of antecedent debts. We do not see any substance in this objection, because the respondent is entitled to canvass the correctness of findings against it in order to support the decree that has been passed against the appellant." 13. Likewise, in case of S. Nazeer Ahmed v. State Bank of Mysore AIR 2007 SCW 766 it was held and observed as under: "7. The High Court, in our view, was clearly in error in holding that the appellant not having filed a memorandum of cross-objections in terms of Order XLI Rule 22 of the Code, could not challenge the finding of the trial court that the suit was not barred by Order II Rule 2 of the Code. The respondent in an appeal is entitled to support the decree of the trial court even by challenging any of the findings t might have been rendered by the trial court against himself. For support....
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....order of Commissioner (Appeals) has been preferred under sub-section (1) or subsection (2) by the other party, may, notwithstanding that no appeal had been filed against such an order or any part thereof, within 30 days of the notice, file a memorandum of cross objections verified in the prescribed manner and such memorandum shall be disposed of by the Tribunal as if it were an appeal presented within the period of limitation prescribed under sub-section (3). Therefore, on a plain reading of the provision, it transpires that a party has been granted an option or a discretion to file cross objection. 19. In case a party having succeeded before Commissioner (Appeals) opts not to file cross objection even when an appeal has been preferred by the other party, from that it is not possible to infer that the said party has accepted the order or the part thereof which was against the respondent. The Tribunal has, in the present case, unfortunately drawn such an inference which is not supported by the plain language employed by the provision. 20. If the inference drawn by the Tribunal is accepted as a correct proposition, it would render Rule 27 of the Tribunal Rules redun....
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....A.O. was not made addition u/s. 115JB of the Act. Thus there is no failure on the part of the assessee in disclosing the income to the authorities. Therefore reopening of the assessment even within four years period is also amount to "change of opinion" which is not permissible u/s. 147 of the Act. In this connection, the Ld. Counsel relied upon Jurisdictional High Court in the case of Madhya Gujarat Vij Co. Ltd. Vs. ACIT reported in [2018] 94 taxmann.com 337 wherein it is held as follows: "....14. He finally worked out the assessee's book profit under Section 115JB of the Act at Rs. 3211 Crores. It can thus be seen that the Assessing Officer was of the opinion that instead of 10% of the government subsidy. 15% thereof should be reflected in the assessee's books of account. He accordingly made such additions in the normal computation of assessee's income. While the Assessing Officer was so examining the assessee's treatment to the Government grants and subsidies, he simultaneously also examined the assesses's computation of Book-profit under Section 115JB of the Act. Both issues were thus clearly interconnected and were not possible for consideration se....
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....when reopened, results into considerable hardship to the assessee. The assessment gets reopened not only qua those grounds which are recorded in the reasons, but also with respect to entire original assessment, of course at the hands of the revenue. This obviously would lead to considerable hardship and uncertainty. It is precisely for this reason that even while recognizing such powers, in special requirements of the statute, certain safeguards are provided by the statute which are zealously guarded by the courts. Interpreting such statutory provisions courts upon courts have held that an assessment previously framed cannot be reopened on a mere change of opinion. It is stated that power to reopening cannot be equated with review. 42. Bearing in mind these conflicting interests, if we revert back to central issue in debate, it can hardly be disputed that once the Assessing Officer notices a certain claim made by the assessee in the return filed, has some doubt about eligibility of such a claim and therefore, raises queries, extracts response from the assessee, thereafter in what manner such claim should be treated in the final order of assessment, is an issue on which the....
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....facie doubt raises queries, asking the assessee to satisfy him with respect to such a claim and thereafter, does not make any addition in the final order of assessment, he can be stated to have formed an opinion whether or not in the final order he gives his reasons for not making the addition." 16. In view of such discussion, it is not necessary to examine assessee's remaining two contentions of notices. Respective notices in all the petitions are therefore quashed. Petitions are disposed of accordingly. 8.4. In our considered opinion, the facts in the present case regarding reopening of assessment is squarely covered in favour of the assessee by the Full Bench Judgment of the Delhi High Court which is duly confirmed by Hon'ble Apex Court in the case of Kelvinator of India Ltd. (187 Taxmann.com 312 SC). Further the Jurisdictional High Court in the case of Gujarat Power Corporation after detailed consideration of the various High Court judgments and the Hon'ble Supreme Court of India in the case of Kelvinator of India Ltd. and in the case of Rajesh Jhaveri Stock Brokers Pvt. Ltd. held as follows: ".....48. Before closing this issue, we would like to clarify....
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....otally lost sight of such claims. He in fact took into account the fact that the assessee was claiming exemption on the interest income from the bonds. He, therefore, examined as to what extent expenditure for earning such tax free income should be disallowed. In the order of assessment, he gave detailed reasons why a portion of the expenditure relating to earning tax free interest should be disallowed. 50. In the reasons which the Assessing Officer recorded for reopening the assessment, he based his case on wrong exemption of interest from SSNNL/GIPCL Bonds claimed under section 10(23G). 51. In our opinion, any such reopening would be based on a mere change of opinion. In the reasons, the Assessing Officer started with the words, "from the records, it can be seen that ...". Entire information and the material that the Assessing Officer, therefore, had at his command was reflected from the record itself. This coupled with the fact that in the original assessment, the Assessing Officer examined such claims in detail, would convince us that any reopening of the assessment of same claims on the basis of same material, amounts to a mere change of opinion. The fact tha....