ITD CEMENTATION INDIA LIMITED,MUMBAI vs. THE DEPUTY COMMISSIONER OF INCME TAX, CENTRAL CIRCLE 5(1), MUMBAI, MUMAI

3.2. Thereafter, provisions of section 148A(d) were complied with by passing an order, dated 25.07.2022 and issuing a notice u/s.148 of the same date. Assessee has contested by raising a ground that the notice so issued is barred by limitation apart from raising several other grounds to challenge the legality of re-assessment proceedings and notices issued thereafter. At the outset, we find that this issue has been settled in the case of Union of India and other Vs. Rajeev Bansal [2024] 167 taxmann.com 70 (SC). The Hon’ble Supreme Court had referred to the submissions made on behalf of the Revenue vide para 19 which is relevant and the same is reproduced hereunder:-

“19. Mr N Venkataraman, learned Additional Solicitor General of India, made the following submissions on behalf of the Revenue: a. Parliament enacted TOLA as a free-standing legislation to provide relief and relaxation to both the assessees and the Revenue during the time of COVID- 19. TOLA seeks to relax actions and proceedings that could not be completed or complied with within the original time limits specified under the Income Tax Act, b. Section 149 of the new regime provides three crucial benefits to the assesses: (i) the four-year time limit for all situations has been reduced to three years, (ii) the first proviso to Section 149 ensures that re-assessment for previous assessment years cannot be undertaken beyond six years, and (iii) the monetary threshold of Rupees fifty lakhs will apply to the re- assessment for previous assessment years, c. The relaxations provided under Section 3(1) of TOLA apply "notwithstanding anything contained in the specified Act." Section 3(1), therefore, overrides the time limits for issuing a notice under Section 148 read with Section 149 of the Income Tax Act; d. TOLA does not extend the life of the old regime. It merely provides a relaxation for the completion or compliance of actions following the procedure laid down under the new regime; e. The Finance Act 2021 substituted the old regime for re-assessment with a new regime. The first proviso to Section 149 does not expressly bar the application of TOLA. Section 3 of TOLA applies to the entire Income Tax Act including Sections 149 and 151 of the new regime. Once the first proviso to Section 149(1)(b) is read with TOLA, then all the notices issued between 1 April 2021 and 30 June 2021 pertaining to assessment years 2013-2014, 2014-2015, 2015-2016, 2016-2017 and 2017-2018 will be within the period of limitation as explained in the tabulation below;

Assessme Within 3 Years Expiry of Within six Years Expiry of nt Year (2) Limitation (4) Limitation read (1) read with with TOLA for (4) TOLA for (2) (3) (5) 2013- 31.03.2017 TOLA not 31.03.2020 30.06.2021 2014 applicable 2014- 31.03.2018 TOLA not 31.03.2021 30.06.2021 2015 applicable 2015- 3103.2019 TOLA not 31.03.2022 TOLA not 2016 applicable applicable 2016- 31.03.2020 30.06.2021 31.03.2023 TOLA not 2017 applicable 2017- 31.03.2021 30.06.2021 31.03.2024 TOLA not 2018 applicable f. The Revenue concedes that for the assessment year 2015-16, all notices issued on or after 1 April 2021 will have to be dropped as they will not fall for completion during the period prescribed under TOLA; g. Section 2 of TOLA defines "specified Act" to mean and include the Income Tax Act. The new regime, which came into effect on 1 April 2021, is now part of the Income Tax Act. Therefore, TOLA continues to apply to the Income Tax Act even after 1 April 2021; and h. Ashish Agarwal (supra) treated Section 148 notices issued by the Revenue between 1 April 2021 and 30 June 2021 as show-cause notices in terms of Section 148A(b). Thereafter, the Revenue issued notices under Section 148 of the new regime between July and August 2022. Invalidation of the Section 148 notices issued under the new regime on the ground that they were issued beyond the time limit specified under the Income Tax Act read with TOLA will completely frustrate the judicial exercise undertaken by this Court in Ashish Agarwal (supra).

3.3. Thus, it can be seen that, one very important fact which has been stated by the Revenue before the Hon’ble Supreme Court in para 19 (f) wherein the Revenue concedes that for the A.Y.2015-16, all notices issued on or after 1 April 2021 will have to be dropped as they will not fall for completion during the period prescribed under TOLA.

3.4. This issue had come up before Hon'ble Delhi High Court in the case of IBIBO Group Pvt. Ltd. vs. ACIT, WP(C)17639 of 2022, dated 13.12.2024 wherein re-assessment action for Assessment Year 2015- 16 was held to be not sustainable. Hon'ble Court quashed the notice issued u/s.148 as well as order passed u/s. 148A(d), dated 23.07.2022 for Assessment Year 2015-16 by following the decision in the case of Rajeev Bansal (supra).

3.5. In the assessee’s case, since the notice issued u/s.148 is dated 25.07.2022, a period of six years expired on 31.03.2022 and is thus barred by limitation. Accordingly, the notice so issued and assessment completed thereafter u/s. 147 is liable to be quashed, in view of the decision of Hon'ble Supreme Court in the case of Rajeev Bansal (supra) which was followed by Hon'ble Delhi High Court in the case of IBIBO (supra). These observations and findings apply mutatis mutandis to the appeal in the case of ITD ITD Cem Joint Venture for Assessment Year 2015-16 in and 5232/Mum/2024.

"2. Brief details of information collected/received by the AO: ……………It was noticed from assessment order that the assessing officer had added an amount of Rs. 2, 45, 07,479 as provision for foreseeable losses in the normal income of the assessee but it was not considered for addition to income under MAT."

4.1. Based on the above reasons, it is noted that the information available with the ld. Assessing Officer is in respect of addition of provision for foreseeable losses of Rs.2,45,07,479/- to the book profit u/s.115JB. Under the new provisions of section 148 as amended by Finance Act, 2021, ld. Assessing Officer is empowered to issue notice for re-assessment, if there is information with the Assessing Officer, which suggests that the income chargeable to tax has escaped assessment. Furthermore, under the new regime of re-assessment proceedings u/s.148 r.w.s. 147, one of the essential criteria to reopen any assessment proceedings beyond three years, as contemplated u/s. 149 is that escapement of income should be represented in the form of an asset. Explanation to the said section mentions that “asset” shall include immovable property, being land or building or both, shares and securities, loans and advances, deposits in bank account. Addition in respect of provision for foreseeable losses for computing book profit u/s.115JB is not in the form of any asset, more particularly, when in the reasons it is mentioned that this was not considered for addition to income under MAT.

4.2. In this respect, we further note that the amount of foreseeable losses is not an item to be added to the book profit under the provisions of section 115JB of the Act, which we shall deal more elaborately while dealing on the merits of the case. Taking into consideration the above facts in juxtaposition, we find that ld. Assessing Officer initiated the re- assessment proceedings on an incorrect perspective of the information for passing order u/s.148A(d) and issuing notice u/s.

6.1. It was found that assessee has claimed a sum of ₹4,22,02,468/- on account of foreseeable losses. Assessee was asked about the above losses and their allowability. It was submitted that as the assessee is engaged in construction activity, it has executed projects at various places. In some of the contracts, the total cost exceeds the contract value of the project and thus, it has incurred losses. Assessee relied on Accounting Standard (AS) 7 for accounting of construction contracts prescribed by ICAI and stated that the same is allowable. It was further stated that the co-ordinate Bench in assessee's own case has allowed such losses as deduction. Assessee submitted detail project wise working of such losses. The same was-reproduced-on-page-no.10-of- the-assessment-order. Ld. Assessing Officer held that provision for foreseeable losses is not an expenditure incurred in the year under consideration and these are likely losses and therefore, though it may be required to be provided as per AS 7, but same is not allowable under the Act. Therefore, itwas disallowed.

6.2. This issue was held in favour of the assessee in its own case, for Assessment Year 2004-05 in order passed by Coordinate Bench of ITAT, Mumbai in dated 17.05.2013 which was subsequently followed in later years. However, in appeal for Assessment Year 2016-17, the Coordinate Bench decided on the same issue against the assessee. Subsequently, in the appeal for Assessment Year 2017- 18, this issue was decided in favour of the assessee after considering the order passed against the assessee for Assessment Year 2016-17.

6.3. The Coordinate Bench in its appeal for Assessment Year 2017-18 in dated 16.05.2024, elaborately dealt with the observations and findings given against the assessee in appeal for Assessment Year 2016-17 which are extracted below:

14. The learned Departmental Representative vehemently submitted that though in the case of the assessee for earlier years starting from 2004-05 till 2015-16, the co-ordinate Bench has allowed the claim but for A.Y. 2016-17, the coordinate Bench in dated 31st July 2023 has held otherwise. He referred to paragraph no.6 of the order. He submits that the argument of the learned Departmental Representative shows that foreseeable losses have been computed by the assessee on the basis of expenses which were not incurred in the year under consideration but to be incurred in future years for completion of the relevant works contract project. Therefore, it was contended that expenditure is not an ascertained liability for the year under consideration. The learned Departmental Representative further stated that the assessee has not filed any details of expenses which would be incurred in future years and in absence of which, even the estimate was without any foundation or documentary basis. The co-ordinate Bench in paragraph no.6.3, 6.4, held that the claim of the assessee is neither supported by the AS 7 nor allowable under the provisions of the Act, Following the decision of the coordinate Bench in case of L‟Oreal India in claim was rejected. With respect to the earlier decisions of co-ordinate Bench in assessee‟s own case it was held that rule of consistency cannot be a substitute for perpetuating an error. It was further held that the claim of foreseeable losses would be allowable in the year of incurring expenses and not in the year prior to that. It further rejected the contention of the assessee that if the expenses are allowed in the subsequent year without incurring, instead of the year in which the provision is made for foreseeable losses, the coordinate Bench rejected the same stating that unless the expenditure quantified, these arguments cannot be accepted. The co-ordinate bench also did not restore the issue in dispute to the file of the learned Assessing Officer for the reason that there is nothing to verify for this year by ld. AO. Accordingly, the appeal of the Revenue to that extent is allowed. Thus, the learned Departmental Representative submitted that now the issue has been decided by the co-ordinate Bench in favor of the Revenue, all the earlier year decisions in assessee‟s own case are held to be incorrect and therefore, those decisions cannot be followed now. The learned Departmental Representative vehemently submitted that now judicial discipline demands that this order of the co-ordinate Bench that has confirmed disallowance by the learned Assessing Officer should be followed.

losses of ₹4.22 crores were recognized. He explained the chart and the methodology of the provision. He submitted that these losses are neither contingent and nor merely a provision but accounted for on the basis of accepted accounting practices. He referred to the AS 7 issued by the Institute of Chartered Accountants of India on construction contracts and referred to the paragraph no.22 thereof to show that when the outcome of the construction contract can be estimated reliably, then revenue and their expenses thereof should be accounted at the stage of contract activity at the time of reporting date and if there is a loss then it should be recognized as an expense immediately. He further referred to paragraph no.31 of the AS. He also referred to paragraph no.35, wherein it is stated that where the total contract costs will probably exceed the total contract revenue expected loss should be recognized as an expense immediately. He further referred to the fact that these losses are also stated on page no.106 of the paper book. He also referred to the income computation and disclosure standard relating to construction contracts and submitted that it also provides that the contracts which have not been completed up to31st March 2016, shall be recognized as per the method of accounting followed. He further referred to several judicial precedents of the co-ordinate Benches and Hon'ble High Court to support his claim. He submitted that the co-ordinate Bench for A.Y. 2016-17 disagreed with the earlier year‟s orders of the co-ordinate Benches in assessees‟ own case should have referred the matter to the Special Bench if it wishes for any reason to deviate from the same. However, it has been decided against the assessee. He also referred to chart and submitted that the accepted additional cost provided in A.Y. 2017-18 is far less than the additional cost incurred actually by the assessee in subsequent A.Y. 2018-19. To precisely state that the provision of ₹84.52 crores for A.Y. 2017-18 culminated into actual additional cost of ₹119.48 crores thus, excess cost incurred for the provision in A.Y. 2018-19 is ₹34.96 crores. Thus, it is not the case that the claim of the assessee is not supported by robust working or followed by universally accepted account practices and principles. He submits that anyway for this year the decision of coordinate bench which decided issue against the assessee does not apply for the reason that assessee has submitted the various cost which are incurred subsequently by the assessee, which are much higher than the provision and such cost to the extent allowed in this year are not claimed in subsequent year. Therefore, he submits that earlier year decision may be followed, and claim is rightly allowed. He also referred to four volumes of paper books filed.

6.4. After the above detailed consideration, in appeal for Assessment Year 2017-18, the Coordinate Bench gave its observations and findings to distinguish the adverse findings in appeal for Assessment Year 2016- 17 which are extracted below for ready reference:

“016. We have carefully considered the rival contentions and perused the orders of lower authorities. We have also considered the various decisions of coordinate benches in case of the assessee wherein identical claim of the assessee is allowed. We have also been informed that revenue is in appeal against that decision of the coordinate bench before honorable High court and issue is admitted. We have also considered the decision of coordinate bench in case of assessee itself where in it held that earlier orders of coordinate bench are incorrect and claim of the assessee is not allowable. We find that in AY 2016-17 ITAT in dated 26/07/2023 has confirmed disallowance of claim of the assessee for following reason :- i. Foreseeable loss in expenditure claimed as deduction u/s 37(1) of the Act which is yet to be incurred and not incurred during the year, therefore such expenses are not allowable in this year but allowable in the year in which it is incurred. ii. It followed deduction of coordinate bench in M/2021 in case of Loreal India Limited holding that this is not allowable u/s 37(1) of The Act as unascertained liability, thus AS 7 issued by ICAI is also not allowable [ para no 6.4 where extract from that decision is quoted.] iii. Earlier decision of ITAT are not applicable as those deductions does not record a factual finding that whether such expenditure is ascertained liability [ Para 6.4 of the decision }

6.5. Thus, the Coordinate Bench held that per se claim of the assessee towards foreseeable losses is an allowable expenditure. However, it restored the issue before the file of ld. Assessing Officer for the purpose of verification of the claim to quantify it for the purpose of allowing it.

The direction so given for verification and to arrive at quantification is extracted below: “025. However now the issue of quantification arises, on perusal of orders of lower authorities, we do not find that any of the authorities have examined quantification of the claim of the assessee. Assessee has submitted a chart before us where in the loss is stated to be quantified. However, we do not find any back up documents produced before us, so that we can quantify the same. In absence of such complete information available with us, we restore the issue before the ld. AO to grant deduction on the above issue by verifying the claim of the assessee with supporting documents. Assessee is directed to quantify such claim and substantiate before the ld. AO , he may verify the same and allow the claim in accordance with the law.

6.6. Furthermore, we take note of another decision of Coordinate Bench of Chennai in the case of International Seaport Regime (P) Ltd. vs. DCIT [2024] 166 taxmann.com 691(Chennai), which held that provision for expected contract losses computed using Percentage of Completion Method (POCM) is allowable deduction u/s.37(1), if supported by scientific basis and AS-7.

Particulars Amounts (in lacs) Contract Value A 1,53,202.02 Cumulative Cost incurred till 31.03.2015 B 1,51,756.85 Cumulative Revenue recognized C 1,37,366.29 31.03.2015 Cumulative Loss Recognized till B-C 14,390.54 31.03.2015 7.1. From the above working, it is observed that total loss recognised till 31.03.2015 is of Rs.14,390.54 lakhs which includes foreseeable loss of Rs.1,003.21 lakhs as per AS-7. Assessee had reported cumulative foreseeable loss till 31.03.2014 amounting to Rs.624.53 lakhs. Thus, the differential amount of Rs. 378.68 lakhs (1,003.21- 624.53) was charged to profit and loss account for the year under consideration as foreseeable loss. In this respect, claim of the assessee is that it has already incurred actual cost on the project which it is not able to recover from its client and hence recognised the same as loss of the project. In terms of requirement of AS-7, this loss is required to be disclosed separately as “foreseeable loss on contract” in the profit and loss account. Accordingly, assessee submitted that this loss is not towards any provision for future cost to be incurred but it is the excess of actual cost incurred over the project revenue. Hence, it is not a provision for any unascertained liability but is the actual cost incurred by the assessee till 31.03.2015. This aspect has been elaborately dealt by the Coordinate Bench in the decision for Assessment Year 2017-18 in para 18 which is already reproduced above.

7.2. It is to be noted that on item of loss or expenditure incidental to business may be deducted in computing profits and gains even if it does not fall, within any of sections 30 to 36, , for the tax is on profits and gains computed on ordinary commercial principles. In order to arrive at profits and gains, account must necessarily be taken of all losses incurred by the assessee. Any loss which occurs in carrying on the business and is related to the business operation is entitled to be deducted to arrive at profits and gains of the business u/s.28 of the Act. Section 28 of the Act imposes a charge on the profits or gains of business or profession. The expression "Profits and gains of business or profession" is to be understood in its ordinary commercial meaning and the same does not mean total receipts. What is to be brought to tax is the net amount earned by carrying on a profession or a business which necessarily requires deducting expenses and losses incurred in carrying on business or profession.

7.3. We also note that sections 145 and 145A of the Act provides for computation of income under the head 'profits and gains from business or profession' and 'income from other sources' by applying the "Income Computation and Disclosure Standards (ICDS)'. Since no specific ICDS has been notified for the year under consideration for real estate developers, revenue and cost recognition is governed by the applicable accounting standards. In the matching concept, revenue and income earned during an accounting period is compared with the expenses incurred during the same period. This matching concept has been recognized by the Hon'ble Supreme Court in the case of Taparia Tools Ltd. v. CIT (2015) 55 taxmann.com 361. In view of settled legal position, provisions of section 145 being mandatory in nature, ld. Assessing Officer is bound to assess income of the assessee in accordance with the method of accounting regularly employed except when the case falls in section 145(3) for which the Assessing Officer is required to record satisfaction as contemplated in the said section. In the instant case, assessee maintains accounts on mercantile basis by following PoCM. The said method has been consistently employed by the assessee, fact of which is not in dispute.

7.4. On these observations, since the impugned assessment order has already been held to be bad in law on the legal issue, for the purpose of adjudicating on the merit of the case, we respectfully follow the findings arrived at by the Coordinate Bench in assessee’s own case for Assessment Year 2017-18(supra).

7.5. Considering the facts on records, elaborate discussions made above, both on fact and applicable law and respectfully following the decision of Coordinate Bench in assessee’s own case, as well as in the case of International Seaport Regime Pvt. Ltd. (supra), it is held that assessee is entitled to the claim of foreseeable loss provided in accordance with the AS-7, issued by ICAI. Accordingly, disallowance made by the ld. Assessing Officer is deleted. Ground no.2 raised by the assessee is allowed.

7.6. Since the issue involved in appeal for ITD ITD Cem Join Venture in for the same Assessment Year is identical, our observations and findings above, apply mutatis mutandis. Accordingly, disallowance made in this case is also deleted and ground so raised is allowed. u/s. 115JB while computing book profit to calculate Minimum Alternate Tax (MAT). In this respect, facts are that assessee claimed foreseeable loss of Rs.2,45,07,479/- in accordance with AS-7 applicable to the assessee. Re-assessment proceedings were initiated and concluded by adding this amount of foreseeable loss to the book profit u/s. 115JB which was sustained by ld. CIT(A). Contention of the assessee is that claim of foreseeable loss is not an item to be added to the book profit. According to the assessee, any provision for liability is to be added to the book profit u/s.115JB. According to it, foreseeable loss is the loss which assessee has actually incurred and is not a provision for any liability. Further, Section 115JB provides for adding the loss to the book profit which is the loss of subsidiary. This is not so in the case of assessee. We note that clause (c) of Explanation 1 to section 115JB which provides that amount set aside to provisions made for meeting liabilities, other than ascertained liabilities are to be added for computing book profit under the said section. Thus, what can be added is provisions for unascertained liabilities, i.e., liabilities contingent in nature.

8.1. In the present case, ld. Assessing Officer has treated the claim of the assessee towards foreseeable losses as unascertained liability. This issue has already been dealt by us in the above paragraphs while dealing with ground no.2 on the claim of provision for foreseeable losses which has been held to be a deduction of normal expense u/s.28 of the Act. Assessee follows mercantile system of accounting and has made the said claim in terms of generally accepted accounting practices by following the requirements of AS-7, which also has been elaborately discussed above. Accordingly, in the given set of facts and detailed discussions made herein above, we find that provision for foreseeable losses cannot be added within the provisions contained in Section 115JB for computing book profit. Accordingly, the addition so made by the ld. Assessing Officer is deleted. Ground raised in this respect is allowed.

9.1. As a cross appeal, Revenue has also challenged the relief granted by ld. CIT(A) to the extent of 97.5% of these very contingency expenses in all the three aforesaid appeals. The issue is common in all these appeals, both by assessee and Department and therefore, we take up these together by considering facts from for Assessment Year 2015-16 in case of ITD Cementation India Ltd.

"Although the total cost figure in the CTC report matches the total cost figure of the books of account, the cost booked under each head is different in the CTC report and the books of account........... (emphasis supplied by underlining)

10.2. Despite the above factual observation, ld. Assessing Officer concluded that the said contingency expense amounting to Rs. 14,76,00,000/- are not recorded in the books of accounts. Further, ld. CIT(A) restricted the said addition to adhoc 2.5% of the contingency expenses disallowed by the Ld. AO which amounts to Rs. 36,90,000/-.

10.3. Ld. Counsel pointed out that the said issue is covered by the order of Coordinate Bench in case of sister concern of the assessee, i.e., ITD Cem India JV for AY 2016-17 (ITA No. 4556/Mum/2024), 2017-18, 2018-19 and 2022-23 dated 22-10-2024 and in case of ITD ITD Cem JV for AY 2016-17 (ITA No. 4618/Mum/2024) dated 25-10-2024. In these orders, the Coordinate Bench deleted the entire ad hoc addition of 2.5% which was sustained by the ld. CIT(A) based on similar CTC reports relating to respective entities, impounded during the course of survey. Relevant extract of the order passed in case of ITD Cem India JV in dated 22.10.2024, is reproduced below for ready reference: "10. The entire addition revolves around the contingency expenditure recorded in the CTC report. As mentioned above, the contingency expenditure is mentioned at the time of preparation of the budget but when the actual figures are known, the same are recorded in the books of accounts. Therefore, it cannot be said that that the contingency figure are not recorded in the books of accounts. In fact, the AO himself admitted this fact at par of his order where he has categorically accepted that the total cost figure in the CTC report matches the total cost figure of the books of accounts.

15. Though the Id. First Appellate Authority has admitted that the entire expenses cannot be disallowed yet, he himself went on to estimate the disallowance which is again not a proper procedure. Once the expenses have been found to be fully recorded in the books of accounts, the same cannot be disallowed only on the whims and surmises of the revenue authorities.

10.4. It was thus, submitted before us to delete the addition of contingency expenses amounting to Rs. 36,90,000/-. Ld. DR in his arguments stated that expenses recorded by the assessee under the head contingency expenses were bogus expenses to generate cash. In his arguments he stated that Standard Operating Procedure (SOP) was not followed by the assessee in relation to certain expenses and summons u/s. 133(6) of the Act were issued to certain contractors which were not complied. Ld. Counsel submitted that ld. Assessing Officer has not shown any correlation between contingency expenses mentioned in the CTC report and parties to whom 133(6) notices were issued. Neither the addition is made on the basis of parties to whom notices u/s.133(6) were issued. It was also submitted that all necessary documents relating to parties to whom 133(6) were issued by the ld. Assessing Officer were duly submitted by the assessee during assessment proceeding and is duly recorded by the ld. Assessing Officer in his assessment order. It was further submitted that non-compliance of SOP which in fact is an internal check of the appellant cannot be the basis for disallowance of expenses incurred and claimed by the assessee.

11. Following the rule of consistency, since there is no change in factual matrix and the issue has already been elaborately dealt by the Coordinate Bench, as reproduced above, respectfully following the same, we delete the addition so sustained by ld. CIT(A). Since the issue has already been held in favour of the assessee in respect of disallowance of contingency expenses as discussed above, ground raised by the Revenue in its appeal, contesting for the balance 97.5% of the same expenses for which relief was granted by ld. CIT(A) is rendered infructuous. Accordingly ground so raised by Revenue is dismissed. Our above observations and findings apply mutatis mutandis to other two appeals in 5234/Mum/2024 as well as and 5232/Mum/2024.

(emphasis supplied by underlining)

12.1. From the perusal of the above reasons for re-opening recorded by the ld. Assessing Officer, it is pointed out that the information available is only in respect of addition of management consultancy fees of Rs.38,25,000/- paid to AGV Consultants. Re-assessment proceedings were completed by passing the impugned order, wherein addition of Rs.38,25,000/- was made towards management consultancy fees relating to AGV consultants and making further disallowance claim of deduction u/s.80IA amounting to Rs.148,57,76,785/-. On appeal before ld. CIT(A), addition of Rs.38,25,000/- towards management consultancy fees relating to AGV Consultants was deleted. Disallowance of claim of deduction made u/s.80IA was sustained. Assessee is in appeal before the Tribunal on the disallowance of claim of deduction u/s.80IA, however, Department is not in appeal against the deletion of addition in respect of management consultancy fees related to AGV Consultants.

12.2. On this fact, contention of the assessee is that since the addition made by ld. Assessing Officer based on information which led to re- assessment proceedings for issuing notice u/s. 148A(b) has been deleted by the ld. CIT(A) and Department is not contesting the same before the Tribunal, the said information available with the ld. Assessing Officer stands incorrect for the purpose of passing order u/s.148A(d) and issuing notice u/s.148 thereafter, vitiating the entire re-opening proceedings as well as the assessment order passed thereon. On a specific query by the Bench to this fact, nothing cogent was placed on record to counter the contentions made by the assessee. In the given set of facts and circumstances and nothing contrary brought on record, we find that the basis for initiating the re-assessment proceedings was the information on claim of management consultancy fees as an expense relating to AGV Consultants which was held by ld. Assessing Officer as not allowable and taxable in the hands of the assessee. However, the said addition stands deleted by the order of ld. CIT(A) and has attained finality in absence of Department not coming in appeal before the Tribunal.

12.3. We find that in the present facts and circumstances, the legal maxim ‘sublato fundamento cadit opus’ is applicable, meaning thereby – ‘a foundation being removed, the superstructure falls’. Once the basis of a proceeding is gone, the action taken thereon would fall to the ground. Thus, in the absence of such foundation, exercise of reopening the case and making the reassessment stands vitiated. In light of these facts and discussion made above, we are in agreement with the contention made by the assessee and accordingly, hold that the re- opening proceedings stands vitiated, leading the impugned order also as bad in law.

Appeal by Result of the Year appeal 1. 4539/MUM/2024 2015-16 Assessee Allowed 2. 4568/MUM/2024 2016-17 Assessee Allowed 3. 4532/MUM/2024 2019-20 Assessee Allowed 4. 5235/MUM/2024 2015-16 Revenue Dismissed 5. 5234/MUM/2024 2016-17 Revenue Dismissed 6. 4620/MUM/2024 2015-16 Assessee Allowed 7. 5232/MUM/2024 2015-16 Revenue Dismissed