2013 (8) TMI 764 - AT - Income Tax

Reopening of assessment - Deduction claimed u/s 80IB - CIT held proceeding u/s 147 as valid - Held that - Assessing Officer having nowhere alleged that income chargeable to tax for the relevant Assessment Year has escaped assessment on account of failure or omission on the part of the assessee to disclose truly and fully all material facts necessary for assessment, the impugned notice u/s 148 issued after expiry of period of four years from the end of the relevant Assessment Year is liable to be quashed - assessee furnished all the details relating to its claim for deduction u/s 80IB of the Act and the Assessing Officer thoroughly examined the claim while framing the assessment u/s 143(3) and on being satisfied the claim was allowed. Therefore, in the present case, reopening of the assessment by issuing notice u/s 148 of the Act is definitely a change of opinion which is not maintainable and therefore, the reassessment framed by the Assessing Officer u/s 147 of by issuing notice u/s 148 of the Act after completing the assessment u/s 143(3) of the Act is not valid - Following decision of Commissioner of Income-tax Versus Steel Tubes of India Ltd. 2010 (1) TMI 406 - MADHYA PRADESH HIGH COURT - Decided against Revenue.

Issues Involved:
1. Reopening of assessment under Section 147 of the Income Tax Act, 1961.
2. Disallowance of deduction under Section 80IB on the amount of DEPB/DDB.
3. Allowance of deduction under Section 10BA in respect of income from DDB and insurance on export bills.

Issue-wise Detailed Analysis:

1. Reopening of assessment under Section 147 of the Income Tax Act, 1961:
The assessee challenged the reopening of the assessment under Section 147 on the grounds that it was a mere change of opinion and that no new information had come into possession of the Assessing Officer. The original assessment was completed under Section 143(3) after a detailed inquiry, and the reopening was based on the decision of the Hon'ble Supreme Court in the case of Liberty India. The CIT(A) upheld the reopening, stating that the Assessing Officer had a reasonable belief that income chargeable to tax had escaped assessment. However, the Tribunal found that the reopening was invalid as it was based on a mere change of opinion and was initiated after the permissible time limit. The Tribunal followed its earlier decision in the case of Bothra International, holding that the reassessment was invalid since the original assessment was already completed after thorough scrutiny.

2. Disallowance of deduction under Section 80IB on the amount of DEPB/DDB:
The CIT(A) sustained the disallowance of deduction under Section 80IB on the amount of DEPB/DDB, relying on the Hon'ble Supreme Court's decision in Liberty India, which stated that profit from DEPB/DDB does not form part of the net profit of eligible industrial undertakings for the purpose of Section 80IB. The Tribunal, however, noted that the original assessment was completed after detailed scrutiny and that the reopening was based on a mere change of opinion. As the reassessment was held invalid, the issue of disallowance of deduction under Section 80IB on DEPB/DDB did not survive.

3. Allowance of deduction under Section 10BA in respect of income from DDB and insurance on export bills:
The Department appealed against the CIT(A)'s decision allowing deduction under Section 10BA in respect of income from DDB and insurance on export bills. The CIT(A) followed the Tribunal's decision in the case of Suraj Exports India, which held that DEPB and DDB claims are allowable under Section 10BA. The Tribunal upheld the CIT(A)'s decision, noting that the issue was covered by its earlier decision and that no contrary decision was brought on record by the Department. The Tribunal found no merit in the Department's appeal and dismissed it.

Conclusion:
The Tribunal dismissed the Department's appeals for the assessment years 2003-2004 and 2009-2010 and allowed the assessee's cross-objection for the assessment year 2003-2004. The reassessment under Section 147 was held invalid, and the disallowance of deduction under Section 80IB on DEPB/DDB was not sustained. The deduction under Section 10BA in respect of income from DDB and insurance on export bills was upheld.

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