SYNGENE INTERNATIONAL LTD vs. THE PRINCIPAL COMMISSIONER OF INCOME TAX

Whether, on the facts and in the circumstances of the case, the Tribunal thus failed to appreciate that the order passed by the respondent under Section 263 of the Act revising the assessment order passed the Assessing Officer was wholly devoid of jurisdiction and otherwise bad in law and on facts?

Heard Shri. Percy Pardiwalla, learned Senior Advocate for the assessee and Shri. E.I. Sanmathi, learned Standing Counsel for the Revenue.

Briefly stated facts of the case are, Assessment order under Section 143(3) of the Income Tax Act, 19612 was completed for A.Y. 2012-13 on 23.03.2015. A notice under Section 263 of the IT Act was issued by the CIT3 stating inter alia that it was noticed from the records that the deduction under Section 10AA of the IT Act was disallowed in assessee’s own case for A.Ys. 2004-05 to 2009-10. Assessee submitted its reply inter alia stating thus: “As explained above, the Bangalore ITAT for the AY’s 2003-04 to AY 2009-10 has concluded in appellant’s own case that its activities results in manufacture or production of article or thing. The ITAT, vide its order November 23, 2015 (copy of order enclosed as Annexure 2) for the AY 2003-04, 2004-05 and 2007- 08 to AY 2009-10 has given due to relief to Syngene in relation to the above matter. The ITAT has held that Syngene is eligible to claim relief under Section 10B and 10AA of the Act.”

After receiving the above reply, CIT passed his order dated 29.03.2016 recording inter alia that deduction under Section 10AA of the Act was denied to the assessee for A.Ys. 2010-11 and 2011-12. Interestingly, he neither referred to his notice nor the reply submitted by the assessee. The specific case of the Revenue in the notice under Section

Shri. Percy Pardiwalla, learned Senior Advocate submitted that:  the basis on which notice dated 09.03.2016 was issued by the Commissioner was not available when the reply was filed by the assessee. The premise on which the notice was issued was that benefit under Section 10AA of the Act was denied for A.Ys. 2004-05 to 2009-10;

Learned Senior Advocate further submitted that after the ITAT allowed assessee’s appeals for A.Ys. 2004-05 to 2009-10, Revenue challenged the same by filing appeals in this Court for A.Ys. 2004-05 to 2009-10 and the said appeals have been dismissed in I.T.As. No.184/2016, 185/2016, 266/2016, 267/2016, 268/2016, 269/2016 and 289/2016.

Shri. Sanmathi, learned Standing Counsel for Revenue submitted that in the order dated 23.03.2015, the Assessing Officer has not dealt with the aspect of Section 10AA of the Act nor any enquiry been conducted in that behalf. There is no error with the notice and the order passed

We have carefully considered rival contentions and perused the records.

Undisputed facts of the case are, assessee has been given benefit under Section 10AA of the IT Act for A.Ys. 2004-05 and 2009-10 by the ITAT. The said order has attained finality.

Learned Senior Advocate is right in his submission that the basis on which the notice was issued was not in existence as on the date of passing the order by the CIT. In our opinion, the matter ought to have rested there. Interestingly, the CIT referred to the other two orders for the A.Ys. namely 2010-11 & 2011-12 and passed his order. Thus such an action on the part of the Revenue is a result of predetermined disposition by the CIT and punitive intention. We may record that, time and again, the Central Board of Direct Taxes has been issuing several Notifications, Circulars

So far as the contention urged by the Revenue that Assessing Officer in his order dated 23.03.2015 has not dealt with Section 10AA of the Act, we may record that in his order4 giving effect to CIT’s order, the Assessing Officer had all the opportunity to examine the case on its merits. He has merely reproduced the order passed by the CIT in his order. It is indubitable that for the A.Ys. 2004-05 to 2009-10, assessee has been given the benefit of Section 10AA of the Act and that was the basis of notice. In that view of the matter and the fact that in the original Assessment order dated 23.03.2015, benefit has been given and only in the Notice under Section 263 of the Act, the benefit was sought to be denied, we are of

In the light of the above discussion, the following: ORDER (a) Appeal is allowed. (b) Order dated 28.12.2016 for the A.Y. 2012-13 vide Annexure-F passed by the Assessing Officer and the order dated 31.05.2018 in ITA No.906/Bang/2016 vide Annexure-G passed by the ITAT, Bengaluru are set-aside. (c) The questions of law are answered in favour of the assessee and against the Revenue. No costs.