TaxTMI 
TaxTMI 
2025 (4) TMI 1628
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....unsel for the appellants are to the effect that the learned Judge ought not to have allowed the Writ Petitions insofar as the proceedings for re-assessment have been validly initiated in respect of the subject Assessment Years. The necessity for re-assessment arose from the fact that there had been excess deduction claimed by the assessee under Section 80IB of the Act, as well as other issues. 3. The Writ Petitions had been grossly pre-mature insofar as what had been assailed were only notices under Section 148 relating to reassessment and hence, such a challenge ought not to have been entertained. Though the Assessee had preferred to challenge only the Notices, the re-assessments had, in fact, been completed at the time when the writ petitions had been filed. 4. The procedure for re-assessment under the Income Tax Act, has been elucidated by the Supreme Court in the case of GKN Driveshafts (India) Ltd v Income Tax Officer [(2002) 125 Taxman 963 (SC)] to state that upon receipt of a notice, return of income must be filed. The assessee may also seek the reasons based on which the re-assessment had been initiated. 5. Upon receipt of the reasons, which the assessing officer i....
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....)] 6. Commissioner of Income Tax v Premier Automobiles Ltd [(1993) 70 Taxman 495 (Bombay)] 7. Principal Commissioner of Income Tax v ITC Ltd [(2024) 163 taxmann.com 294 (Calcutta)] 8. T.K.Salim v Union of India [(2024) 163 taxmann.com 385 (Kerala)] 10. The submissions of Mr.Eashwar, learned Senior Counsel appearing for Mr.T.Vasudevan, learned counsel on record for the respondent are to the effect that the impugned proceedings for reassessment are bad in law as being barred by limitation and an attempt to re-visit and review the decisions taken under scrutiny. 11. He relies on the following decisions in support of the assessee. 1. Calcutta Discount Co., Ltd v Income Tax Officer and another [41 ITR 191 (SC)] 2. Income Tax Officer v Lakhmani Mewal Das [103 ITR 437 (SC)] 3. Commissioner of Income Tax v Kelvinator of India Ltd [320 ITR 561 (SC)] 4. Commissioner of Income Tax v Kelvinator of India Ltd [256 ITR 1 (Delhi FB)] 5. Commissioner of Income Tax v M/s. Hyundai Motor India Ltd (Tax Case (Appeal) No.1441 of 2010 dated 06.09.2019 (MHC)) 6. Principal Commissioner of Income Tax, 6 Chennai v Vatsala ....
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....Chinchpad a - 4th year Rakholi - 4th year Chinchpada - 5th year Rakholi - 5^th year Date of notice u/s. 148 19.03.2009 19.03.2009 19.03.2009 Whether reasons supplied Yes (Extracted at paragraph No.15) Yes (Extracted at paragraph No.15) Yes (Extracted at paragraph No.15) Date of filing of objections 16.07.2009 16.07.2009 31.08.2009 Date of rejection of objection 13.10.2009 13.10.2009 13.10.2009 Date of reassessment order 13.10.2009 13.10.2009 13.10.2009 TABLE II Contents Name of the Unit Rakholi Chinchpada, (CCR Refinery), Silvasa, Union Territory of Dadra Nagar Haveli Nature of business Manufacturers of Nonferrous metals Manufacturers of Nonferrous metals Nature of relief sought Deduction u/s. 80 IB of the Income Tax Act, 1961 Deduction u/s. 80 IB of the Income Tax Act, 1961 Date of grant of Licence 18.03.1998 07.06.1996 Commencement of production 22.02.1999 01.04.1998 First year of claim 2000-01 1999-00 15. As far as the question of maintainability is concerned, useful reference may be had to the procedure for re-assessment in t....
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....n only. Excess deduction allowed is Rs. 2,18,65,39,372/-. Other income credited to the tune of Rs. 3,26,64,158/- in the separate Profit and Loss account for Chinchipada unit is not eligible for 80IB since it is not derived from manufacturing activity. Thus excess deduction allowed is Rs. 3,26,64,158/-. AY 2003-04: As requested vide letter cited under reference the reasons for reopening the assessment u/s: 148 are as under: i. Assessee has claimed 100% deduction in respect of Rakholi unit of Rs. 13.22 crores and Chinchipada unit of Rs. 404.42 crores and was also allowed whereas the assessee is eligible for 30% deduction only since as per 10CCB filed for AYs 2003-04 in respect or Rakholi Unit, date of commencement of operation is 18.03.1998 (PY 1997-98 and initial year 1998-99 and hence current being 6th year). Similarly, in respect of Chinchipada unit, date of commencement of operation was 07.06.1996 (PY 1996-97 & initial year being 1997-98 and hence current being 7th year). Hence, the assessee is eligible for 30% deduction only. Excess deduction allowed to be brought to tax. ii. In the P & L account for Chinchpada Unit, assessee has cred....
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....t should be disallowed. iii. In the P & L account of Chinchpada Unit, assessee has credited Rs. 14,37,401/- as miscellaneous income. Likewise, in the Profit and Loss account of Rakholi unit Rs. 4,93,931/- was credited as other Income. Since this income does not form part of income from manufacturing activity, deduction u/s. 80IB on this count should be disallowed." 18. The core issue to be considered is as to whether the date of claim of deduction under Section 80IA/IB would be proper or whether the assessments for the periods 2002-03, 2003-04 and 2004-05 required to be re-visited under Section 148 of the Act. 19. It is relevant to note the difference in law as far as assessment years 2002-03 and 2003-04 on the one hand, and 2004-05 on the other is concerned. As far as the first two assessment years are concerned, reassessment proceedings have been initiated beyond the period of four years from the end of the relevant assessment year, thus attracting the application of proviso to Section 147 of the Act which we will presently advert to. 20. For assessment year 2004-05, the re-opening is within the period of 4 years from the end of the relevant assessment year. Hen....
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....e very trigger for these proceedings is a Certificate issued by the Chartered Accountant in respect of the years in question where the Chartered Accountant has, in column 8 in Form 10 CCB stated that the commencement of production of business was on 18.03.1998. In column 9 of Form10 CCB annexed to the return, the initial year of claim is shown to be 2000-01. 24. The assessee has explained that the date of commencement of production ought not to have been 18.03.1998, as that was the date on which the Licence to Work had been granted to operate the Rakholi factory. We find merit in the contention that it is only when the Licence to Work had been granted, would the assessee proceed to install machinery and thereafter commence manufacture. Hence the date of grant of Licence can never normally be the date of commencement of business. Hence, there is a clear error in the date set out in column 8 of Form 10 CCB where the date of commencement of production has been is shown to be the date on which the Licence to Work had been granted. 25. It is nobody's case that the date stipulated in error was motivated. In fact, had it been the intention of the assessee to suppress information or ....
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.... as deduction under Chapter VI A is concerned, in the order of assessment for assessment year 2000-01, the year of claim for Rakholi unit was the first year and for the Chinchpada unit was the second year. 30. The relevant narration in the assessment order is set out below to aid appreciation of the fact that the grant of claim by the Assessing Officer in each year has not been a mechanical act. Less Deduction under Chapter VI A Unit Year Section Deduction CCR Silvasa 2nd 80 IA 170,70,33,942 ACSR Rakohli 1st 80IA 2,84,13,745 173,54,47,687 151,62,40,203 (The deductions under Chapter VI A is restricted to the extent of profits available) NIL 31. The law requires the assessing officer to specifically record in each assessment year, the year for which the claim of the assessee under Section 80IA/IB was being considered. It is in compliance of this, that the assessing officer has been careful and conscious enough to set out the year of claim in the assessment order itself. 32. It is also relevant that those assessment orders, for the previous years, i.e., 2000-01 and 2001-02, remain undis....
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.... Premier Automobiles Ltd (Foot Note Supra (9)), the Bombay High Court decided the interplay between Sections 148 and 154 which issue does not arise from the order of the Writ Court. 39. The judgments in the cases of Pandian Chemicals Limited (Foot Note Supra (4)), Liberty India (Foot Note Supra (5)) and Saraf Exports (Foot Note Supra (6)) are in the context of the phrase 'derived from', perhaps to support the averment in the reasons that deduction under Section 80IA/IB ought not to have been granted in respect of interest income. 40. However, our decision proceeds on the aspect of assumption of jurisdiction by the assessing officer under Section 147 and we have found, in the course of our discussion above that the assumption of jurisdiction by the assessing officer is contrary to the provisions of law. 41. As far as the first two years are concerned, the assessing officer has availed the benefit of larger limitation of 6 years which he is not entitled to, since there has been no untrue or incomplete disclosure by the assessee at the first instance. 42. As far as assessment year 2004-05 is concerned, we find that the grant of deduction is based on the records. There is a....