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2022 (5) TMI 107 - AT - Income TaxReopening of assessment u/s 147 - entitlement of the assessee company for deduction u/s.80IA(4)(iv) qua the power generated by its Captive Power Plant (CPP) that was transferred/sold to MSEDCL in lieu whereof the latter would give corresponding credit to the assessee company by reducing the amount from the electricity bill payable by the company - HELD THAT - On a perusal of the order of the CIT(Appeals) we find that it is a matter of fact borne from record that the assessee company had disclosed fully and truly all the material facts that were necessary for framing of its assessment for the year under consideration. Nothing is either discernible from records nor brought to our notice by DR which would show that the facts disclosed by the assessee were either not full or true. In our considered view now when the assessee had fully and truly disclosed all the material facts in its return of income on the basis of which assessment u/s. 143(3) was earlier framed in its case therefore as observed by the Ld. CIT(Appeals) and rightly so notice u/s.148 issued beyond a period of four years from the end of the relevant assessment year i.e. A.Y.2010-11 was clearly barred by limitation and without jurisdiction. We thus in terms of our aforesaid observations concur with the view taken by the CIT(Appeals). Thus the Ground of appeal No.1 raised by the Revenue is dismissed. Disallowance claim for deduction u/s.80IA for the reason that it had by trading surplus power generated to MSEDCL had contravened the provisions of section 80IA - CIT-A allowed the claim - On a perusal of the order of the CIT(Appeals) we find that he had categorically observed that the assessee company has established a separate industrial undertaking viz. power plant for generation and distribution of electricity which was supplied to its own steel plant as well as transferred/sold to MSEDCL. It was observed by him that the aforesaid facts had been examined year after year of the order of the Assessing Officer Addl. CIT CIT(Appeals) and Hon ble ITAT which thereafter had been accepted by the Department as it had chosen not to prefer any further appeal for the assessment year(s) 2006-07 2007-08 2008-09 and 2009-10. Also the CIT(Appeals) had invalidated the view taken by the Assessing Officer that since the assessee company was doing trade by supplying and banking power to MSEDCL therefore it had violated Section 80IA(4)(iv) of the Act for the reason that the power plant was an integral part of the steel plant and was not a separate industrial unit. It was observed by the CIT(Appeals) that as the aforesaid view of the Assessing Officer was glaringly contrary to the facts that were available on record and had been accepted by him in the original assessment order passed u/s.143(3) dated 14.03.2014 therefore the impugned reassessment proceedings were embarked upon a mere change of opinion . We have given thoughtful consideration and are of the considered view that no infirmity arises from the aforesaid order of the CIT(Appeals) qua the issue in hand i.e. entitlement of the assessee for deduction u/s.80IA of the Act on the surplus power transferred to MSEDCL - Decided against revenue.
Issues Involved:
1. Validity of notices issued under Section 148 of the Income-tax Act, 1961 beyond four years from the end of the relevant assessment years. 2. Entitlement of the assessee for deduction under Section 80IA of the Act concerning the surplus power generated and sold to MSEDCL. Detailed Analysis: Issue 1: Validity of Notices Issued Under Section 148 Beyond Four Years The primary contention was whether the notices issued under Section 148 for reopening assessments were valid, given that they were issued beyond four years from the end of the relevant assessment years. The CIT(Appeals) held that the notices were barred by limitation as the assessee had fully and truly disclosed all material facts necessary for the assessment during the original proceedings under Section 143(3). The CIT(Appeals) emphasized that there was no failure on the part of the assessee to disclose material facts, and thus, reopening the assessment beyond four years was not permissible under the law. The Tribunal concurred with this view, citing the proviso to Section 147 and various judicial precedents, including: - Sadhna Nitro Chem Ltd. Vs. A.B. KoliACIT (2014) 368 I.T.R. 505 (Bombay) - Shri Chalthan Vibhag Khand Vs. C.I.T. (2015) 376 I.T.R. 419 (Gujarat) - Calcutta Discount Co. Ltd. (1961) 41 I.T.R. 191 (S.C.) The Tribunal concluded that the notices issued under Section 148 were barred by time and without jurisdiction, thus dismissing the Revenue's appeal on this ground. Issue 2: Entitlement for Deduction Under Section 80IA The second issue was whether the assessee was entitled to a deduction under Section 80IA for the surplus power generated and sold to MSEDCL. The Assessing Officer had disallowed this claim, arguing that the power plant was intended for captive consumption and that selling surplus power to MSEDCL violated the provisions of Section 80IA. However, the CIT(Appeals) found that the assessee had established a separate industrial undertaking for power generation and distribution, which was a distinct entity from its steel manufacturing business. The CIT(Appeals) noted that the assessee's claim under Section 80IA had been consistently allowed in previous years and had attained finality, with no changes in facts or law to justify a different view for the current year. The Tribunal upheld the CIT(Appeals)'s decision, noting that the reopening of the assessment was based on a mere "change of opinion," which is impermissible under the law. The Tribunal referenced several judicial pronouncements to support its decision, including: - Direct Information (P) Ltd. Vs. I.T.O. (2012) 349 I.T.R. 150 (Bom.) - I.T.O. Vs. Technospan India Ltd. (2018) 404 I.T.R. 516 (S.C.) - C.I.T. Vs. Kelvinator of India Ltd. (2010) 320 I.T.R. 561 (S.C.) The Tribunal concluded that the assessee was indeed entitled to the deduction under Section 80IA for the surplus power transferred to MSEDCL and dismissed the Revenue's appeal on this ground as well. Conclusion: Both appeals filed by the Revenue for the assessment years 2010-11 and 2011-12 were dismissed. The Tribunal upheld the CIT(Appeals)'s findings that the notices issued under Section 148 were barred by limitation and that the assessee was entitled to the deduction under Section 80IA for the surplus power sold to MSEDCL. The judgments were pronounced in the open Court on April 29, 2022.
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