THE SHIPPING CORPORATION OF INDIA,MUMBAI vs. DCIT-3(4), MUMBAI

ITA 1752/MUM/2024Status: DisposedITAT Mumbai09 January 2025AY 2016-1719 pages
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What did the Tribunal hold?

The Tribunal decided to adjudicate the additional ground of appeal first, which concerned the AO's failure to dispose of the assessee's objections before passing the assessment order. Citing the Supreme Court's decision in GKN Driveshafts (India) Ltd. and subsequent Bombay High Court judgments in Bayer Material Science (P) Ltd. and KSS Petron Private Ltd., the Tribunal held that assuming jurisdiction for reopening without first disposing of the assessee's objections by a speaking order is ultra vires. Consequently, the assessment order dated 30/03/2022, framed under Section 147 read with Section 144B, was held to be without jurisdiction and was set aside. The notice under Section 148 was also set aside. As the reassessment proceedings were quashed on procedural grounds, the Tribunal found it unnecessary to delve into the merits of the other grounds of appeal concerning the mark-up on overheads and foreign fluctuation gain. The additional ground raised by the assessee was allowed.

What were the facts?

The assessee, The Shipping Corporation of India Limited, filed its return for AY 2016-17, which was assessed under Section 143(3). Subsequently, the Assessing Officer (AO) issued a notice under Section 148 to reopen the assessment. The AO's reasons for reopening included alleged under-assessment of income from foreign currency transactions (Rs. 13.24 crore) and reimbursement of overheads for managed vessels (Rs. 35.79 crore). The assessee objected to the reopening, arguing it was based on a change of opinion without new material. The AO proceeded to pass an assessment order under Section 147 read with Section 144B. The assessee appealed to the CIT(A), and the revenue also filed an appeal. The ITAT heard cross-appeals against the CIT(A)'s order.

What were the issues?

1. Whether the reassessment proceedings are valid, given that they were initiated based on a mere change of opinion without new tangible material, as argued by the assessee, and whether the AO erred in upholding the validity of reassessment proceedings, as per the assessee's ground of appeal. 2. Whether the reimbursement of overheads for managed vessels should be treated as profit from core activities, as contended by the assessee, and whether the CIT(A) erred in not treating it as such. 3. Whether the CIT(A) erred in directing the AO to make an addition towards a mark-up calculated at 2.50% on the reimbursement of overheads for managed vessels. 4. Whether the CIT(A) was justified in deleting the mark-up on reimbursement of overheads for managed vessels from the total income, as per the revenue's ground of appeal. 5. Whether the CIT(A) was justified in deleting the foreign fluctuation gain from the total income, as per the revenue's ground of appeal. 6. Whether the AO erred in passing the assessment order without disposing of the objections filed by the appellant, thereby violating the procedure laid down by the Supreme Court in GKN Driveshafts (India) Ltd., making the reassessment proceedings invalid, as per the assessee's additional ground of appeal.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 148,Section 147,Section 144B,Section 115JB,Section 115VP,Section 115V-1(2),Section 115V-1(5)

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Cases cited in this judgment(3)Show list

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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI

Before: SUNIL KUMAR SINGH, HONBLE

For Appellant: Shri Nitesh Joshi & Neha Vikam, A/Rs
Hearing: 06/01/2025Pronounced: 09/01/2025

Heard together (2 matters)

I.T.A. No. 1752/Mum/2024
I.T.A. No. 1970/Mum/2024

Read from the judgment's own cause title. This page is filed under one of them.

PER NARENDRA KUMAR BILLAIYA, AM: I.T.A. No. 1752/Mum/2024 & I.T.A. No. 1970/Mum/2024, are cross-appeals by th

The order continues below.

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