9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2012 (7) TMI 96 - AT - Income TaxChallenge the reopening of the assessment by assessee - assessee contested that the change of opinion would not constitute valid information for assumption of jurisdiction u/s 147 - Held that - Commissioner of Income Tax(Appeals) was not justified in holding that issuance of notice in the instant case was on the basis of change of opinion when it is an admitted fact that no assessment under Section 143(3) was made in the instant case, on the date of issue of notice under Section 148. Keeping in view the facts of the case that Form 10CCB filed during the year, the assessee has installed a wind mill costing Rs.3.02 crores on which depreciation at Rs.1.21 crores was claimed, but as per Schedule E, income from windmill was admitted at Rs. 6,31,000/- which in toto was claimed as deduction under Section 80-IA without taking into account the above depreciation of Rs. 1.21 crores. thus, the issue of notice under Section 148 cannot be held as invalid or on the basis of change of opinion - as decided in ACIT vs. Rajesh Jhaveri Stock Brokers Pvt Ltd 2007 (5) TMI 197 (SC) - in favour of revenue. Eligibility for deduction on under Section 80-IA - Held that - The profit derived from eligible unit is to be computed as if such eligible unit were the only source of income of the assessee during the relevant year,the assessee and CIT(A) has taken only a part of the revenue of the eligible undertaking whereas AO has taken as part of the revenue of the eligible undertaking and entire depreciation and interest ignoring the other expenses of the undertaking, for computing the profit derived from the eligible undertaking - as everybody ignored the value of power generated by the eligible undertaking used by the assessee in its other undertaking where activity of publishing of books were carried out as well as ignoring other expenses incurred for the eligible business except depreciation and interest,it shall be fair and in the interest of justice that the issue should be restored back to the file of the Assessing Officer for proper computation of profit derived from the eligible business.
Issues Involved:
1. Validity of reopening the assessment under Section 147. 2. Eligibility for deduction under Section 80-IA. Issue-wise Detailed Analysis: 1. Validity of Reopening the Assessment under Section 147: The Revenue challenged the reopening of the assessment by the Assessing Officer under Section 147. The Commissioner of Income Tax (Appeals) had held that the reopening was invalid as it was based on a change of opinion. The assessee argued that a change of opinion does not constitute valid information for the assumption of jurisdiction under Section 147. The Commissioner of Income Tax (Appeals) supported this view, referencing various High Court and Supreme Court decisions, and concluded that there was no failure on the assessee's part to disclose facts correctly. Upon review, it was found that the assessee claimed a deduction under Section 80-IA, which was initially accepted under Section 143(1). The Assessing Officer later issued a notice under Section 148, stating that the deduction claimed was incorrect due to the non-inclusion of depreciation. The Tribunal concluded that since no assessment under Section 143(3) was made, the issuance of notice under Section 148 could not be considered a change of opinion. Thus, the Tribunal set aside the Commissioner of Income Tax (Appeals)'s order and held that the reassessment proceeding was valid. 2. Eligibility for Deduction under Section 80-IA: The Revenue contended that the assessee was not eligible for the deduction under Section 80-IA because the wind energy division resulted in a loss after accounting for depreciation. The Assessing Officer computed the deduction under Section 80-IA by deducting depreciation from the income of the windmill, resulting in a loss, and thus disallowed the deduction. The Commissioner of Income Tax (Appeals) held that the wind energy generators were part of the existing business and not a separate undertaking. The Commissioner emphasized that the provisions of Section 80-IA(5) did not override other subsections and allowed the assessee's claim for deduction. Upon further review, the Tribunal noted that both the assessee and the Commissioner of Income Tax (Appeals) had not computed the profits derived from the eligible business correctly. The Tribunal directed the Assessing Officer to recompute the profits derived from the eligible business, considering all relevant revenues and expenses, including those for captive consumption, and to adjudicate the issue afresh in light of the Jurisdictional High Court's decision in Velayudhaswamy Spinning Mills P. Ltd. Conclusion: The Tribunal concluded that the reassessment proceeding was valid and directed the Assessing Officer to recompute the profits derived from the eligible business under Section 80-IA, considering all relevant factors and providing the assessee with an opportunity for a hearing. The appeal of the Revenue was partly allowed for statistical purposes. Order Pronounced: The order was pronounced on Thursday, the 31st May 2012, at Chennai.
|
