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Income Tax Appellate Tribunal, G Bench, Mumbai
Before: Shri Saktijit Dey & Shri Rajesh Kumar
IN THE INCOME TAX APPELLATE TRIBUNAL "G" Bench, Mumbai Before Shri Saktijit Dey, Judicial Member and Shri Rajesh Kumar, Accountant Member ITA No.1586/Mum/2016 (Assessment Year:2008-09) D C I T - 3(2)(1) M/s. Maharashtra Airport Room No. 674, 6th Floor Development Co. Ltd. Aayakar Bhavan, M.K. Road Vs. 12th Floor, World Trade Mumbai 400020 Centre Tower No. 1 Cuffe Parade, Mumbai 400005 PAN –AADCM9623M Appellant Respondent CO No. 45/Mum/2018 (Assessment Year:2008-09) M/s. Maharashtra Airport D C I T - 3(2)(1) Development Co. Ltd. Room No. 674, 6th Floor 12th Floor, World Trade Vs. Aayakar Bhavan, M.K. Road Centre Tower No. 1 Mumbai 400020 Cuffe Parade, Mumbai 400005 PAN –AADCM9623M Cross Objector Appellant in Appeal Revenue by: Shri Abhijit Patankar Assesseeby: Shri Salil Kapoor & Shri Sumit Lal Chandani Date of Hearing: 11.04.2018 Date of Pronouncement: 30.05.2018 O R D E R Per Saktijit Dey, JM The aforesaid appeal of the Department and the cross objection by the assessee are directed against the order dated 11.12.2015 of the Commissioner of Income Tax (Appeals)-8, Mumbai for A.Y. 2008-09.
ITA No. 1586/Mum/2016 – A.Y. 2008-09 2. The basic grievance of the Department in this appeal is against the decision of the learned CIT(A) in holding the assessment order passed
2 ITA No. 1586/M/2016& CO 45/M/2018 Maharashtra AirportDevelopment Co. Ltd. under Section 143(3) r.w.s. 147 of the Income Tax Act (hereinafter “the Act”) as bad in law and void.
The brief facts of the case are, the assessee company, as stated by the Assessing Officer (AO), is engaged in the business of infrastructure development. In pursuance to such activity it has developed a Special Economic Zone (SEZ) in Nagpur district. For the assessment year under dispute assessee filed its return of income on 24.09.2008 declaring Nil income after claiming deduction under Section 80IAB of the Act. The assessment in the case of assessee was completed under Section 143(3) of the Act on 30.11.2010 determining the total income at `8,86,16,552/- after reducing the deduction claimed under Section 80IAB of the Act. Subsequently, the AO, having found that assessee’s claim of deduction under Section 80IAB in respect of income earned from house property has been allowed in the original assessment, was of the view that the said income having not been derived from the business of development of infrastructure was not eligible for deduction under Section 80IAB. Accordingly, he was of the opinion that there is escapement of income due wrong allowance of assessee’s claim under Section 80IAB in respect of house property income. Thereafter, recording reasons AO reopened the assessment under Section 147 of the Act by issuing notice under Section 148 of the Act. During the assessment proceedings AO noticed that in the original assessment proceedings the AO has brought to tax interest income earned of `6,86,16,552/- on the reasoning that such income was not derived from development of infrastructural facilities. Thus, he was of the view, since, the income from house property stands on the same footing as it was not derived from business of development of infrastructure facility, deduction under Section 80IAB in respect of such income cannot be allowed. Accordingly, he added back the amount of `7,96,173/-. Further, the AO held that the grant in aid of `40 crores received from the Government of Maharashtra for development of SEZ is in the nature of revenue receipt, hence has to be brought to tax. Accordingly, he also added back the amount of `40 crores to the income of the assessee. Being
3 ITA No. 1586/M/2016& CO 45/M/2018 Maharashtra AirportDevelopment Co. Ltd. aggrieved with the assessment order so passed assessee preferred appeal before the CIT(A), inter alia, challenging the validity of initiation of proceedings under Section 147 of the Act and the assessment order passed under the said provisions.
The learned CIT(A), after considering the submissions of the assessee and perusing the material on record found that during the original assessment proceedings the AO has made specific enquiries about the assessee’s claim of deduction under Section 80IAB of the Act andafter applying mind to the facts and material brought on record has completed assessment computing admissible deduction under Section 80IAB of the Act. He also noticed, against the decision of the AO with regard to assessee’s claim of deduction under Section 80IAB of the Act in the original assessment order further appeals were filed before the CIT(A) and thereafter before the Tribunal. On perusing the reasons recorded for reopening of assessment the CIT(A) found that the AO has not referred to any fresh tangible material which came to his possession and led him to believe that income has escaped assessment. He observed that once the assessee’s claim of deduction under Section 80IAB was examined and enquired into during the original assessment proceedings and the AO has recomputed such deduction while completing the original assessment, reopening of assessment on very same issue would amount reopening of assessment on mere change of opinion. Thus, relying upon certain judicial precedents learned CIT(A) ultimately held that reopening of assessment under Section 147 of the Act was invalid and accordingly declared the impugned assessment order to be bad in law and void. Aggrieved, Revenue is in appeal before us.
The learned Departmental Representative (D.R.), though, accepted the fact that during the original assessment proceedings the AO has enquired into assessee’s claim of deduction under Section 80IAB, however,he submitted that AO has not specifically examined whether the income derived from house property is eligible for deduction under Section 80IAB of the Act. That being the case, in the original assessment order AO
4 ITA No. 1586/M/2016& CO 45/M/2018 Maharashtra AirportDevelopment Co. Ltd. did not form any opinion with regard to allowability of deduction under Section 80IAB of the Act in respect of house property income. He submitted, the issue which was not touched upon or decided in the original assessment and was considered in the reassessment proceedings, will not lead to change of opinion. He submitted that if the AO acts according to law, reopening of assessment under Section 147 is valid. He submitted that deduction under Section 80IAB of the Act is not legally allowable on house property income. Therefore, the AO was well within his power to reopen the assessment under Section 147 of the Act to deny the benefit wrongly allowed to the assessee. He submitted that tangible material does not mean something new but it also means material on record which was not examined during the original assessment proceedings. Thus, the learned D.R. submitted that the CIT(A) was not justified in holding the impugned assessment order as bad in law and void. In support of his contention the learned D.R. relied upon the following decisions: -
(i) Yuvraj vs. Union of India (2009) 315 ITR 84 (Bom)
(ii) Export Credit Guarantee Corporation of India Ltd. vs. Addl. CIT 350 ITR 651 (Bom)
The learned D.R. submitted, since in the present case the assessment has been reopened within a period of four years, the proviso to Section 147 of the Act is not applicable and the AO retains the power to reopen the assessment without being fettered by the conditions imposed in the said proviso.
The learned A.R. submitted that during the original assessment proceedings the AO had made specific enquiries with regard to assessee’s claim of deduction under Section 80IAB of the Act and called for all relevant information and details. He submitted that after examination and applying her mind to the information called for and material available on record the AO partially disallowed the deduction claimed by the assessee under Section 80IAB of the Act. Drawing our attention to the reasons
5 ITA No. 1586/M/2016& CO 45/M/2018 Maharashtra AirportDevelopment Co. Ltd. recorded for reopening of assessment, copy of which is at page 53 of the Paper Book, the learned A.R. submitted that the reasons clearly reveal that at the time of reopening of assessment the AO had no fresh tangible material to form his belief that income assessable to tax has escaped assessment. He submitted that only on re-examination or reappraisal of the material available on record and examined by the AO during the original assessment proceedings the AO has formed a different opinion and on that basis he reopened the assessment under Section 147 of the Act. The learned A.R. submitted that for reopening the assessment under Section 147 of the Act the AO must have in his possession fresh tangible material. He submitted that without any fresh tangible material coming to possession of the AO he cannot reopen the assessment under Section 147 of the Act in respect of an assessment already completed under Section 143(3) of the Act. He submitted that since, assessee’s claim of deduction under Section 80IAB was enquired into and examined by the AO in the course of original assessment proceedings, the reopening of assessment on the very same issue without any fresh tangible material amounts to change of opinion, hence it is not permissible under the provisions of the Act. He submitted that if there is any mistake or error in the original assessment order the remedy does not lie under Section 147 of the Act which can be utilised under specific conditions and instances, and there are other provisions under the Act to rectify or make good an error made by the AO in the original assessment order. Thus, it was submitted by the learned A.R. that reopening of assessment having been made on a mere change of opinion is invalid. In support of his contention the learned A.R. relied upon the following decisions: -
(i) Asteroids Trading & Investment Pvt. Ltd. vs. DCIT (2009) 308 ITR 290 (Bom) (ii) CIT vs. Asteroids Trading & Investment Pvt. Ltd. 320 ITR St. 24 (SC) (iii) Motilal R. Todi vs. ACIT (2016) 47 ITR (T) 49 (Mum) (iv) Golden Tobacco Ltd. vs. JCIT (2016) 48 ITR (T) 132 (Mum) (v) Indu Lata Rangwala vs. DCIT (2016) 384 ITR 337 (Del)
6 ITA No. 1586/M/2016& CO 45/M/2018 Maharashtra AirportDevelopment Co. Ltd. (vi) CIT vs. Kelvinator of India (2010) 320 ITR 546 (SC) (vii) CIT vs. Kelvinator of India (2002) 256 ITR 1 (Del)
We have considered rival submissions and perused the material on record. We have also applied our mind to the decisions relied upon. The undisputed facts are that the assessee filed its return of income under Section 139(1) of the Act claiming deduction under Section 80IAB. The return filed by the assessee was selected for scrutiny and in the course of assessment proceedings, the AO through notices issued under Sections 142(1) and 143(2) made enquiries and asked the assessee to furnish various details relating to the claim made in the return of income. Information and material available on record clearly reveal that during the original assessment proceedings the AO made specific enquiry regarding assessee’s claim of deduction under Section 80IAB of the Act. In this regard the AO has called for details of income in respect of which assessee has claimed deduction under Section 80IAB of the Act and after verifying the details AO has also raised objection with regard to assessee’s claim of deduction under Section 80IAB of the Act in respect of interest income and after considering the submissions of the assessee has disallowed assessee’s claim of deduction under Section 80IAB of the Act in respect of interest income of `6,86,16,552/-. As could be seen, against the aforesaid decision of the AO in the original assessment proceedings, assessee went in appeal. Be that as it may, the original assessment order clearly reveals that the AO in the course of original assessment proceedings has made specific enquiry with regard to assessee’s claim of deduction under Section 80IAB and has examined the issue in-depth and, thereafter recomputed the deduction under Section 80IAB of the Act. On a perusal of the reasons recorded for reopening of assessment,which is also incorporated in the impugned assessment order, it is revealed that the AO has not referred to any fresh tangible material coming to his possession revealing escapement of income. From the reasons recorded it is clear that he was of the view that income `7,96,173/- being in the nature of house property income, cannot be treated to be derived from business of development of
7 ITA No. 1586/M/2016& CO 45/M/2018 Maharashtra AirportDevelopment Co. Ltd. infrastructure, hence not eligible for deduction under Section 80IAB of the Act. Thus, it is crystal clear that the AO has no fresh tangible material in his possession while recording his reasons for reopening of assessment. Rather, it is evident that on re-appreciation and re-examination of material available on record during the original assessment proceedings and examined by the AO during the original assessment proceedings, the AO has formed his belief that income has escaped assessment. When from the original assessment order it is evident that the AO has enquired into and examined assessee’s claim of deduction under Section 80IAB of the Act, the Department’s contention that the AO has overlooked the particular aspect of allowability of deduction under Section 80IAB of the Act in respect of house property income is farfetched and unacceptable. It is difficult to accept that in the original assessment the assessing officer has dealt with the issue of claim of deduction under section 80IAB on piecemeal basis by examining some part of it while overlooking the other. Undisputedly, in the present case the deduction claimed by the assessee under Section 80IAB of the Act in the return of income was subjected to scrutiny in the original assessment proceedings and the AO, after proper application of mind, has computed the deduction under the said provision. Thus, the original assessment order passed under Section 143(3) of the Act deserves to be given some sanctity. Merely because reopening of assessment under Section 147 of the Act was before expiry of four years from the end of the relevant assessment year, that by itself will not give licence to the AO to exercise his powers under Section 147 of the Act with impunity even in the absence or lack of fresh tangible material coming to his possession. The issues decided in the original assessment order cannot be reviewed or reopened unless there are strong reasons on the basis of tangible material to do so. In the present case nothing has been brought on record to demonstrate that the AO had tangible material before him to form belief that income has escaped assessment. That being the case the reopening of assessment on the basis of the very same material on which the original assessment was completed after proper enquiry and examination will lead to the conclusion that the assessment has been
8 ITA No. 1586/M/2016& CO 45/M/2018 Maharashtra AirportDevelopment Co. Ltd. reopened under Section 147 of the Act on a mere change of opinion, hence legally impermissible. The decisions relied upon by the learned A.R. including the decision of the Hon'ble Supreme Court in the case of CIT vs. Kelvinator India Ltd. (supra) clearly support this view. As regards the decisions relied upon by the learned D.R. before us, on careful reading of the said decisions we found them to be factually distinguishable, hence not applicable to the facts of the present case. In view of the aforesaid, we uphold the order of the learned CIT(A) on this issue. Grounds raised are dismissed.
In the result, appeal filed by Revenue is dismissed.
CO No. 45/Mum/2018 – A.Y. 2008-09 9. In view of our decision in Department’s appeal in ITA No. 1586/ Mum/2016 hereinabove, the grounds raised in the cross objection have become infructuous, hence dismissed.
In the result, Revenue’s appeal and assessee’s cross objections are dismissed.
Order pronounced in the open court on 30th May, 2018.
Sd/– Sd/– (Rajesh Kumar) (Saktijit Dey) Accountant Member Judicial Member Mumbai, Dated: 30th May, 2018 Copy to: 1. The Appellant 2. The Respondent 3. The CIT(A) -8, Mumbai 4. The CIT- 3, Mumbai 5. The DR, “G” Bench, ITAT, Mumbai By Order //True Copy// Assistant Registrar ITAT, Mumbai Benches, Mumbai n.p.