2015 (9) TMI 1640 - AT - Income Tax

Reopening of assessment - receipt as sales tax benefit under the power policy of the State Government for installing windmills in the Maharashtra State - Sales Tax benefit is not an income derived from the business of the industrial undertaking allowing the same resulted in excess deduction u/s. 80IA which in turn resulted in short levy of tax - Held that - Reasons for the reopening of the completed assessment have been duly considered by the AO while making the original assessment order. Therefore it is clear that no new facts have come to the notice of the AO for reopening a completed assessment. In so far as the claim of the Revenue that sales tax subsidy has no direct nexus with the business of the assessee has already been decided by the Tribunal in assessee s own case 2015 (9) TMI 1639 - ITAT MUMBAI wherein the Tribunal has held that the amount of sales tax subsidy is directly arising from the business of the assessee therefore the decision in the case of CIT Vs Kelvinator of India Ltd. 2010 (1) TMI 11 - SUPREME COURT OF INDIA and the decision CIT Vs ICICI Bank Ltd. 2012 (7) TMI 521 - BOMBAY HIGH COURT have been correctly relied upon by the Ld. CIT(A). We therefore do not find any reason to interfere with the findings of the Ld. CIT(A). - Decided against revenue

Summary

Issues involved: Appeal against quashing of proceedings u/s. 147 of the Income Tax Act for excessive deduction u/s. 80IA.

Analysis:
1. Issue: Quashing of proceedings u/s. 147
- The Revenue contended that the Assessing Officer was justified in invoking Sec. 147 of the Act due to excessive deduction allowed u/s. 80IA, contrary to the decision in Liberty India Vs CIT.
- The Ld. CIT(A) quashed the proceedings u/s. 147, leading to the appeal.
- The Tribunal noted that a similar case was upheld by the Tribunal previously, and the same set of facts should be followed.
- The Departmental Representative objected, highlighting the difference in the reopening period.
- The Tribunal found that the reopening within 4 years was valid. The reopening was based on the receipt of sales tax benefit and excess deduction u/s. 80IA.

2. Issue: Validity of reopening assessment
- The AO treated sales tax benefit as revenue, leading to excess deduction u/s. 80IA and short levy of tax.
- The AO's reasons for reopening were already considered during the original assessment, indicating no new facts.
- The Tribunal previously held that sales tax subsidy directly relates to the business, citing relevant case laws.
- The decisions of the Supreme Court and Bombay High Court were correctly applied by the Ld. CIT(A), leading to the dismissal of the Revenue's appeal and the cross objection by the assessee becoming otiose.

In conclusion, the Tribunal upheld the Ld. CIT(A)'s decision to quash the proceedings u/s. 147, finding the reopening of the assessment valid within 4 years. The Tribunal affirmed that the sales tax subsidy had a direct nexus with the business, in line with previous decisions. The appeal by the Revenue was dismissed, and the cross objection by the assessee was deemed unnecessary.