TaxTMI 
TaxTMI 
2025 (10) TMI 689
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....he Act. Subsequently, the AO reopened the assessment by issuing notice u/s 148 of the Act on 26-05-2008, i.e., within four years from the end of the assessment year. 4. The reasons recorded by the AO for reopening of assessment reads as under:- "Reasons for reopening Larsen & Toubro Ltd.: AY 2004-05 In this case, the assessment was completed u/s. 143(3) on 5.12.2006 determining the total income at Rs. 750,57,02,452/-. 1. It is seen from the records that while computing the deduction u/s 80IA, certain pass through components like Fuel adjustment Charges (FAC), electricity duty, wheeling charges, grid support charges etc. have not been considered for arriving at the market value of the electricity. 2. For the purpose of claiming deduction u/s 80IA, excess profit from the generation of electricity has been shown as against 16% rate return of investment fixed by the Ministry of Power. 3. Various expenditure like interest, commission, brokerage and corporate overheads were not debited on the separate Profit & Loss A/c. of infrastructure project. Further, sales and administrative expenditure is not proportionate to the expenditure debited in c....
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....ils of deduction claimed u/s 80IA of the Act in respect of infrastructure facility developed by the assessee. It was submitted that the assessee has furnished reply annexing the Certificate in Form 10CCB obtained from a Chartered Accountant and also computation of deduction u/s 80IA for each of the project. The Ld A.R referred to pages 262 to 271 of the paper book in this regard. He submitted that the assessee has also furnished the basis of allocation/apportionment of assets, liabilities, income and expenditure for computation of profit of each of the project. It was specifically mentioned that the interest expenses, if any, and corporate IT have not been considered for the purpose of allocation/apportionment. The AO, after considering the reply of the assessee, has allowed the claim for deduction u/s 80IA of the Act in the original assessment proceedings. Accordingly, the Ld A.R submitted that the AO has reopened the assessment in respect of 80IA deduction only on account of change of opinion, that too, without bringing any new tangible material. He further submitted that the first year of claim for deduction u/s 80IA(4) is AY 2003-04. The AO had reopened the assessment of that y....
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....l. From the contentions of Ld D.R, we notice that the revenue felt that there were some gaps in the examination conducted by the AO during the course of assessment proceedings and it appears that the assessing officer has reopened the assessment in order to fill those gaps. Certainly, the reopening of the assessment cannot be done to fill the short fall in the enquiry made during the course of original assessment proceedings, unless any fresh tangible material is brought on record which would warrant such an intervention. We may take support from the decision rendered by Hon'ble Supreme Court in the case of CIT vs. Kelvinator of India Ltd (2010)(320 ITR 561), wherein the Hon'ble Supreme Court held as under:- "Hence, after 1.4.1989, Assessing Officer has power to reopen, provided there is "tangible material" to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief." The Hon'ble Supreme Court also observed that the AO cannot reopen the assessment on mere change of opinion. The requirement of tangible material is also reiterated by Hon'ble Bombay High Court in the case of PCIT vs. NESCO Ltd....
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....ccordingly, this reason would also fail. 9. The last reasoning given in reason No.6 relates to the non-disallowance of claim of prior period expenses of RS. 1.12 crores. The Ld AR submitted that the assessee has duly disclosed this item in its annual report and also the Tax auditor has also disclosed this item in the Tax audit report. The AO did not make any disallowance in the original assessment proceedings, even though it was duly disclosed in the above said documents. He submitted that the prior period expenses are bound to arise year after year in the case of the assessee in view of the large scale of operations carried on by the assessee in various places. Hence it is a recurring issue every year. He submitted that the AO had examined this issue in AY 2003-04 and allowed the claim. He submitted that, in any case, it is a case of timing difference only and if it is not allowed in AY 2004-05, then the same should be allowed in the earlier years. Placing reliance on the decision rendered by Hon'ble Bombay High Court in the case of CIT vs. Nagari Mills Co Ltd (33 ITR 681)(Bom) and the decision of Hon'ble Supreme Court in the case of CIT vs. Excel Industries Ltd (358 ITR 295)(S....