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TMI Blog2011 (9) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... d October 2001 declaring income of Rs.138.96 crores. The assessment order under Section 143(3) of the Income Tax Act, 1961 ('Act' for short) was passed on 25th March 2004, assessing the income at Rs.142.85 crores. 3. Thereafter, by a notice dated 29th March 2006 the said assessment was sought to be reopened on the ground that the rate of tax on the long term capital gain of Rs.142.85 crores was erroneously taxed at ten per cent under Section 112(1) of the Act, whereas it should have been taxed at the rate of twenty per cent. The assessee objected to the reopening of the assessment. However, the assessing officer rejected the contention of the assessee and held that the capital gains were liable to be taxed at the rate of twenty per cent. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der for reference :" Tax on longterm capital gains :112 (1) Where the total income of an assessee includes any income arising from the transfer of a longterm capital asset, which is chargeable under the head "Capital Gains", the tax payable by the assessee on the total income shall be the aggregate of ( a) ........... (b) .......... (c) in the case of a nonresident (not being a company), or a foreign company, ( i) ............. (ii) the amount of incometax calculated on such longterm capital gains at the rate of twenty percent;" 3. Therefore, I have reason to believe that the incorrect application of rate of tax has resulted in short levy of tax of Rs.20,05,42,421/including int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isted securities or unit or zero coupon bond, exceeds ten per cent of the amount of capital gains before giving effect to the provisions of the second proviso to section 48, then, such excess shall be ignored for the purpose of computing the tax payable by the assessee." 7. Thus, under Section 112 of the Act the tax payable by a nonresident on longterm capital gains is twenty per cent. However, the proviso to Section 112(1) provides that in cases specified therein the longterm capital gains in excess of ten per cent shall be ignored. In the present case, the assessing officer in the original assessment order, after considering the second proviso to Section 48 of the Act has held that on the long term capital gains income, the assessee is l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see no merit in the above contention, because, that was not the ground on which the assessment was sought to be reopened. The validity of the reopening of the assessment has to be judged on the basis of the reasons recorded for reopening of the assessment. If the reasons recorded do not even remotely suggest that the assessing officer was not justified in invoking the proviso to Section 112 of the Act, it would not be open to the Revenue to justify reopening of the assessment on the grounds which are not recorded in the reasons for reopening the assessment. In the present case, it is relevant to note that in the original assessment order, the assessing officer has specifically referred to the second proviso to Section 48 and thereaf ..... X X X X Extracts X X X X X X X X Extracts X X X X
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