TaxTMI 
TaxTMI 
TaxTMI 
2024 (9) TMI 1825
X X X X Extracts X X X X
X X X X Extracts X X X X
....gains of business or profession" after making deductions under all other clauses of section 36(1) which includes the claim of deduction u/s. 36(1)(viia)(c) also?" 3. The facts of the case, in brief, are that the assessee is a Public financial institution, engaged in the business of functioning as a Principal financial institution for promoting, financing and development of MSMEs and to coordinate the functions of institutions engaged in similar activities. The assessee company filed its original return of income on 29-09-2016 declaring total income at Rs. 1552,64,02,200/-.The Assessee filed revised return of income on 31-03-2018 revising income at Rs. 1551,39,88,720/-. In this case, original assessment was completed u/s 143(3) on 28-12-2018 at a total income of Rs. 1646,52,55,744/-. Thereafter, the case was reopened u/s 147 of the Income Tax Act, 1961 and a notice u/s 148 of the Income Tax Act, 1961, was issued to the assessee vide ITBA/AST/S/148/2020-21/1031805240(1) on 26.03.2021. The reasons for reopening of assessment are as under: 1. "In this case, assessment u/s. 143(3) was completed on 28/12/18 assessing the total income at Rs. 1646,52,55,744/-as agai....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the Act, the Assessee filed return of income on 22.04.2021 declaring total income of Rs. 1536,44,28,460/- Thereafter notice u/s 143(2) and u/s. 142(1) were issued to assessee from time to time. Assessee filed objections against reassessment proceedings on 02.08.2021 as under: - "The objections raised by the assessee are being summarized as under: i. The documents filed during the assessment proceedings were verified by the AO by applying his mind and hence there was no tangible material to form a view that income has escaped the assessment. ii. It is a clear case of change of opinion. iii. The AO has no power to review, he has the power to reassess The assessee relied upon following case laws in support of his contention: * CIT vs. Kelvinator of India Ltd. 320 ITR 561 * CIT vs. Kapil Dev (2009) 177 Taxman 6 (Del) * G.N. Shavo (Wine) (P) Ltd. vs. ITO & Anr (2003) 206 ITR 513 (Cal) * Sita World Travels (India) Ltd. vs. CIT (2005) 274 ITR 186 (Del) * Gujarat Fluoro chemicals Ltd. vs. DCIT (2008) 15 DTR (Guj) * Universal Subscription Agency (P) Ltd. vs. JCIT (2007) 293 ITR 244 (All) * CIT vs. Tirathram Ahuja (HUF) (2008) 6 DTR 335 (Del) * Harya....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y at the stage of finding out whether the reassessment notice is valid is only to see whether there are reasonable grounds for the Income-tax Officer to believe and not whether the omission/ failure and the escapement of income is established. 4. It was held by the Hon'ble Delhi High court in AGR Investment Ltd. v. Addl. CIT 333 ITR 146 that "...... The words 'reason to believe' cannot mean that the 'Assessing Officer' should have finally ascertained the facts by legal evidence. They only mean that he forms a belief from the examination he makes and if he likes, from any information he receives. If he discovers or finds or satisfies himself that the taxable income has escaped assessment, it would amount to saying that he has reason to believe that such an income has escaped assessment..." 5. It was held by the Hon'ble Jurisdictional Allahabad High court in Pankaj Hospital Ltd. v. CIT (2014) 44taxmann.com 230 that The expression 'reason', as the Supreme Court in the case of Asstt. CIT v. Rajesh Jhaveri Stock Broker (P.) Ltd. [2007] 291 ITR 500/161 Taxman 316 has held, means a cause or justification. If the Assessing Officer has a cause or justif....
X X X X Extracts X X X X
X X X X Extracts X X X X
....) (viia). 7. In response to that the assessee vide its reply filed on 07.03.2022 submitted as under: "As per the letter dated 16.07.2021, wherein you have intimated the reasons recorded it is seen that in the assessment order passed on 28.12.2018 the deduction u/s 36(1)(viia) was allowed at Rs. 72,67,53,405/-. Itis pertinent to mention that assessee had claimed deduction u/s 36(1) (viia) to the tune of Rs. 81,67,02,587/- and the very fact that the then Assessing Officer reduced it to Rs. 72,67,53,405/- clearly show that there was application of mind by the then Assessing Officer and if now the Assessing Officer claims that even this calculation was wrong, then it means the Assessing Officer is reviewing the order of earlier Assessing Officer or it is a case of change of opinion, which is not permissible in law. For this proposition the assessee relies on the jurisdictional High Court of Bombay order in the case of Aventis Pharma Ltd. Vs. Asst. CIT (2010) 323 ITR 570 (Bom), wherein the Hon'ble Court held as under: - "There is merit in the submission which has been urged on behalf of the assessee that there was no tangible material before the Assessing Office....
X X X X Extracts X X X X
X X X X Extracts X X X X
....self, computed the deduction u/s. 36(1) (viii) of the Act after reducing the income not related to long term financing during A.Y. 2014-15. For the sake of consistency, assessee should have followed the same during the relevant year also. Thus, the excess allowance of deduction amounting to Rs. 1,43,07,033/- is being disallowed and added to the total income of the assessee. Penalty proceedings u/s 271(1)(c) of the Income-tax Act, 1961, for furnishing inaccurate particulars of income was also initiated. 9. Aggrieved by the order of the Ld. AO, the assessee filed appeal before the Ld. CIT (A). The Ld. CIT (A) vide the impugned order ITBA/NFAC /S/250/2023-24/1053796425(1) Dated 19/06/2023 has decided as under:- "Decision on Ground No. 1 & 2: 1) The Learned Assessing officer has erred in reopening the assessment completed u/s. 143(3) of the Income Tax Act, 1961, without considering the facts and circumstances of the case. 2) On the facts and circumstances of the case and in law the Ld. AO has erred in making an addition of Rs. 1,43,07,033/- as excess deduction claimed u/s 36(1)(viia), without appreciating the facts and circumstances of the case. The substanti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....3,231/- and as per section 36(1) (viia), the deduction is to be computed before making deduction under this clause and chapter VIA of the Act and so, Ld. A.O. has reduced the 5% of the said amount as deduction u/s 36(1)(viia) before calculating the deduction available to the assessee u/s 36(1)(viii) of the I.T. Act, 1961. The Ld. A.O. has calculated the deduction allowable u/s 36(1)(viii) after reducing the deduction u/s 36(1) (viia) from the total income and disallow the sum of Rs. 1,43,07,033/- as excess allowance of deduction u/s 36(1)(viii). Since, this issue is already decided in the favour of appellant in the earlier assessment year by Hon'ble Jurisdictional ITAT, Mumbai in the appellant's own case in ITA No. 4045/Mum/2011 in which the Hon'ble Jurisdictional ITAT Mumbai has directed the Assessing Officer to calculate the deduction allowed u/s 36(1) (viii) of the Act on the total income before deduction of the amount u/s 36(1)(viia) of the Act. The operational part of the judgment is as follows: "4. The first substantive issue in this appeal is contained in Ground of appeal no. 2 whereby assessee seeks to assail the action of CIT (A) in upholding the r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing to them, the respective provisions were clear and the deduction u/s 36(1) (viii) of the Act has to be calculated after reducing the deduction allowable u/s 36(1)(viia) (c) of the Act from the profits eligible for the benefits of u/s 36(1) (viii) of the Act. In this background, assessee is in appeal before us. Ostensibly, the dispute raised before us stems from the interplay between the provisions of Sec. 36(1)(viia) (c) of the Act vis-a-vis Sec. 36(1) (viii) of the Act. At the time of hearing, the learned representative for the assessee has taken us through the history of assessment on this aspect. Firstly, it is pointed out that similar issue cropped-up in Assessment Year 2010-11 and the CIT (A) allowed the stand of assessee, which has since been accepted by the Revenue as no appeal was filed before the Tribunal. Subsequently, in Assessment Year 2011-12, when similar issue travelled to the CIT(A),assessee's claim was allowed following the decision of CIT (A) in the earlier Assessment Year of 2010-11. The order passed by the CIT (A) for Assessment Year 2011-12 was carried in appeal before the Tribunal by the Revenue, but no Ground was raised against the decision of the C....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... before deduction of the amount allowable under the section. Thus, on this aspect, assessee succeeds." The Hon'ble Jurisdictional ITAT, Mumbai in the appellant's own case, for the earlier assessment year, has clearly mentioned that consistency and uniformity should be ensured in approach on the same issue for the different assessment year. In the assessment year 2010-11, when a similar issue is decided in the favour of appellant by the Ld. CIT (A) has been accepted by the Revenue as no appeal was filed before Tribunal. In the assessment year 2011-12, when the Ld. CIT (A) has decided the appeal in favour of the Appellant, The Revenue has filed an appeal before Tribunal but no ground was raised against the decision of the Ld. CIT(A). This clearly shows that the Revenue has accepted the decision of the Ld. CIT (A) in the earlier assessment years on the same issue and it should be followed in the following assessment years. After considering the facts of the case and the decision of the Hon'ble jurisdictional ITAT, Mumbai in the appellant's case for earlier assessment year it has to be held that calculation of deduction allowable u/s 36(1)(viii) of the Act should ....