2015 (9) TMI 1639 - AT - Income Tax

Reopening of assessment - denying the deduction u/s. 80IA in respect of the receipts from transfer of sales tax benefits - Held that - In assessee s own case for A.Y 2003-04 to 2006-07 we find that the Tribunal has treated the sale consideration received on the transfer of Sales tax benefits/incentive as a benefit directly arising from the business and therefore the same was treated as a revenue receipt. Coming to the reasons recorded for the reopening of the assessment as mentioned elsewhere in this order the allegation of the Revenue is that the sales tax benefit is not an income derived from the business of the industrial undertaking. This view of the AO is not matching with the decision of the Tribunal in assessee s own case in earlier assessment years as mentioned hereinabove. Once the issue has been thoroughtly examined/scrutinized and has met the higher judicial forum reopening of the assessment based on the same set of facts is nothing but a change of opinion which is not permissible as per the ratio laid down by the Hon ble Supreme Court in the case of Kelvinator of India 2010 (1) TMI 11 - SUPREME COURT OF INDIA . - Decided against revenue

Summary

Issues:
Reopening of assessment under section 147 based on sales tax benefit as revenue receipt.

Analysis:
The appeal by the Revenue was against the order of the Ld. CIT(A)-18, Mumbai regarding the assessment year 2007-08. The Revenue contended that the Ld. CIT(A) erred in quashing the proceedings under section 147 of the Income Tax Act by relying on the decision of the Supreme Court in the case of Kelvinator of India Ltd. The original assessment was conducted under section 143(3) of the Act, where the returned income was assessed, and the Book profit under section 115JB was determined. The assessment was reopened as the assessee received a sales tax benefit for installing windmills in Maharashtra, which the AO treated as revenue despite the claim of it being a capital receipt. The AO reopened the assessment, denying the deduction under section 80IA for the sales tax benefits.

Upon challenging the reopening, the Ld. CIT(A) observed that the AO had discussed the sales tax subsidy issue in the original assessment and allowed the deduction under section 80IA. The Ld. CIT(A) concluded that there was no new information to warrant the reopening and deemed it a change of opinion. Relying on judicial precedents, the Ld. CIT(A) held the AO's action as bad in law. The Revenue appealed this decision.

During the appeal, the Tribunal noted that in previous years, the Tribunal had treated the sales tax benefit as a revenue receipt directly arising from the business. The Tribunal found the AO's view inconsistent with past decisions and considered the reopening as a change of opinion, citing the Supreme Court's ruling in the Kelvinator case. Upholding the Ld. CIT(A)'s decision, the Tribunal dismissed the Revenue's appeal, emphasizing that the reopening based on the same facts was impermissible.

In conclusion, the Tribunal upheld the Ld. CIT(A)'s decision, emphasizing the prohibition against reopening assessments based on a change of opinion. The Tribunal found no merit in the Revenue's grievance and dismissed the appeal, aligning with the decisions of the Supreme Court and the Jurisdictional High Court.

This detailed analysis highlights the key legal arguments, the basis for reopening the assessment, the contentions of both parties, and the Tribunal's decision based on legal precedents and principles.