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2014 (1) TMI 535 - AT - Income TaxValidity of Proceedings Notice u/s 148 - Applicability of Section 115-O to Deduction u/s 80M of the Act Held that - Relying upon Godrej Agrovet Ltd. v. Dy.CIT 2010 (2) TMI 27 - BOMBAY HIGH COURT - The reassessment proceedings to the assessment u/s. 143(3), initiated after the expiry of four years from the end of the relevant assessment year - it could only be by virtue of proviso to section 147, where the income had escaped assessment by reason of failure on the part of the assessee to disclose fully and truly all the material facts necessary for the assessment for the relevant assessment year - The assessee had disclosed all the primary facts in relation to its deduction u/s 80-M - there is nothing to suggest consideration of the applicability or otherwise of section 115-O (5) of the Act in the assessment order - the assessment fails on jurisdiction in view of the non-satisfaction of the primary condition per first proviso to section 147, notwithstanding Explanation 1 - An assessment for A.Y. 2003-04, where sought to be reopened with reference to section 115-O, seeking to withdraw a deduction granted u/s 80-M was found not valid - section 115-O(5) did not restrict the allowability of a claim u/s.80-M Following Castle Investments & Industries Ltd. v. ITO 2008 (7) TMI 598 - BOMBAY HIGH COURT - Decided in favour of Assessee.
Issues involved:
1. Appeal against the Commissioner of Income Tax (Appeals) order for assessment year 2003-04 under section 143(3) of the Income-tax Act, 1961. 2. Disallowance of deduction under section 80-M and application of section 115-O. 3. Reopening of assessment under section 147 based on non-disclosure of primary facts. Analysis: Issue 1: The appeal was filed by the Assessee against the order of the Commissioner of Income Tax (Appeals) for the assessment year 2003-04 under section 143(3) of the Income-tax Act, 1961. The Assessee contested the assessment which was dismissed by the Commissioner of Income Tax (Appeals) on 14.11.2011. Issue 2: The key issue revolved around the disallowance of the deduction claimed under section 80-M and the application of section 115-O. The Assessee claimed a deduction under section 80-M for the dividend received, while the Revenue argued that section 115-O barred any deduction in respect of the amount charged to tax under sub-section (1) of the said provision. The Tribunal analyzed the provisions of both sections and concluded that there was no overlap between the deduction under section 80-M and the tax under section 115-O(1) in the instant case. The Tribunal found that the deduction under section 80-M could not be withdrawn with reference to the tax under section 115-O(1). Issue 3: The reassessment proceedings were initiated under section 147 based on the alleged non-disclosure of primary facts. The Tribunal examined whether the income had escaped assessment due to the failure of the Assessee to disclose all material facts necessary for the assessment. It was found that the Assessee had disclosed all primary facts related to the deduction under section 80-M. The Tribunal concluded that there was no deficiency in the disclosure of material facts by the Assessee, and the assessment failed on jurisdiction. The Tribunal allowed the Assessee's appeal on this ground. In conclusion, the Tribunal allowed the Assessee's appeal, ruling in favor of the Assessee on both jurisdictional and merit-based grounds. The Tribunal held that the assessment for the relevant year was not valid and the deduction under section 80-M could not be withdrawn based on the provisions of section 115-O.
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