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TMI Blog2011 (4) TMI 869X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. As decided in CIT vs. Kelvinator India Ltd.[2010 (1) TMI 11 - SUPREME COURT OF INDIA] that after 1st April, 1999 the Assessing Officer has power to reopen the assessment u/s 147 provided the Assessing Officer has reason to believe that the income has escaped assessment and there is a tangible material to come to the conclusion that there is an escapement of income. Mere change of opinion cannot per-se be the reason to reopen the assessment - in favour of assessee. - ITA Nos. 3533, 3534 and 3535/Mum/2010 - - - Dated:- 29-4-2011 - R.S. Syal, V. Durga Rao, JJ. Prasad Bapat for the Appellant Rajeev Agarwal for the Respondent ORDER V. Durga Rao: These appeals pertaining to same assessee are directed against the orders of CIT(A)- for the assessment years 2001-02 and 2003-04. Since identical issues are involved in these appeals, these appeals were heard together and, therefore, a common order is passed for the sake of convenience. ITA No. 3533/Mum/2010 2. The ground raised in this appeal is in respect of section 14A of the Act. 3. Briefly the facts of the case are that the Assessing Officer had disallowed expenses of Rs. 9,94,23,807/- and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. In this appeal the assessee has raised the following ground of appeal:- "The learned CIT(A) erred, in not accepting the appellant's plea that full disclosure was made with regard to non-convertible debentures written off in the amount of Rs. 4,68,34,997/- as irrecoverable as recorded in the original assessment and as such the reopening under section 147 of the Act, 1961 constituted change of opinion which is not permissible as per the latest larger bench decision of Supreme Court in Kelvinator of India Ltd. 8. Briefly the facts of the case are that the assessee filed its return of income on 31/10/2001 declaring total income of Rs. 87,84,10,820/-. Assessment was completed u/s 143(3) of the Act on 26/02/04 determining the total income of the assessee at Rs. 89,23,61,930/-. Thereafter, the Assessing Officer served notice u/s 147 dated 27/07/04 for escaping assessment on the ground that the assessee had claimed a deduction of Rs. 20,15,06,237/- towards write off not charged to PandL A/c, which included an amount of Rs. 4,68,34,997/- against non-convertible debentures and Rs. 99,99,999/- against inter corporate deposits. The balance of Rs. 14,46,71,241/- against main acti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. On the other hand, the learned Departmental Representative has supported the order passed by the Assessing Officer. 11. We have heard the learned representatives of the parties and perused the record. In the present case, the assessment was completed u/s 143(3) of the Act, after considering the material on record. The Assessing Officer reopened the assessment for income escaping the assessment on the ground that the assessee had claimed a deduction of Rs. 20,15,06,237/- towards 'write off not charged to PandL A/c, which included an amount of Rs. 4,68,34,997/- against non-convertible debentures and Rs. 99,99,999/- against inter corporate deposits and the balance of Rs. 14,46,71,241/-. The Assessing Officer held that since the main business of the company was financing for purchase/construction of residential premises, investment in non-convertible debentures was in the nature of investment and did not constitute ordinary course of business. He further held that the assessee had reduce the said amount of Rs. 4,68,34,997/- from the provisions for contingencies, which is not in order. From the above, it is very clear that the Assessing Officer has reopened the assessment on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra), we hereby quash the reopening assessment made by the Assessing Officer u/s 147 of the Act. Accordingly, the ground of appeal raised by the assessee in this regard is allowed. 12. In the result, the appeal of the assessee is allowed. ITA No. 3535/Mum/10 13. The assessee has raised the following grounds of appeal: "1. The learned CIT(A) erred on the facts and in the circumstances of the case and in law, in not accepting the appellant's plea that the provisions of section 14A of the Act, 1961 are not applicable to the tax free dividend and interest income earned by the appellant. 2. Without prejudice to the above ground, the appellant contends that Rule 8D of the Income tax rules was not applicable to the appellant in assessment year under appeal and that it was applicable only prospectively with effect from 24/03/2008." 14. Briefly the facts of the case are that the assessee claimed dividend and interest income from tax free bonds u/s 10(33) and 10(15) of the Act amounting to Rs. 3,39,38,675/- which were exempt from tax. The assessee contended that provisions of section 14A were not applicable in its case as well as the investments of the company had been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Godrej and Boyce Mfg. Co. Ltd., [2010] 328 ITR 81 (Bom.) wherein the Hon'ble Court held as under:- "That the provisions of rule 8D of the Rules which have been notified with effect from March 24, 2008, would apply with effect from assessment year 2008-09. Even prior to assessment year 2008-09, when rule 8D was not applicable, the AO had to enforce the provisions of sub-section (1) of section 14A. For that purpose, the AO is duty bound to determine the expenditure which has been incurred in relation to income which does not form part of the total income under the Act. The AO must adopt a reasonable basis or method consistent with all the relevant facts and circumstances after furnishing a reasonable opportunity to the assessee to place all germane material on the record. The proceedings for assessment year 2002-03 would stand remanded to the AO. The AO should determine as to whether the assessee had incurred any expenditure (direct or indirect) in relation to dividend income/income from mutual funds which does not form part of the total income as contemplated under section 14A. The AO can adopt a reasonable basis for effecting the apportionment. While making that determination, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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