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TMI Blog2012 (11) TMI 470X X X X Extracts X X X X X X X X Extracts X X X X ..... . DSL Software Ltd. [2011 (10) TMI 423 - KARNATAKA HIGH COURT] The said denial of the benefit runs counter to the spirit of section 10B and it would negate the object with which the amended provision was brought in. The assessee is entitled to the benefit of extension from 5 years to 10 years tax holiday as provided under the amended provision for 10 consecutive years from the date of commencement of production. The order has been passed by the CIT(A) in a non-judicious and arbitrary manner. The order is not only against the law laid down by the Hon’ble High Court but smacks malafide on the part of the CIT(A). As CIT(A) has committed "intellectual dishonesty" extending it to the limit of perversity. The impugned order has burdened the assessee with the avoidable cost of litigation before the Tribunal and harassment. The appeal of the assessee is allowed with costs of Rs.25,000/- - appeal in favour of assessee. - ITA No.586/Mds/2012 - - - Dated:- 27-9-2012 - Shri Abraham P. George, And Shri Vikas Awasthy, JJ. Appellant Rep by: Mr. G. Narayanasamy, CA Respondent Rep by: Mr. S. Dasgupta, J.C.I.T. ORDER Per: Vikas Awasthy: The appeal has been filed by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30.11.2010, the assessee preferred an appeal before the CIT(A). The assessee assailed the assessment order primarily on the following three counts:- i) Reopening of assessment under section 148 beyond four years; ii) Disallowing deduction of Rs. 61,85,982/- under section 10B of the Act; iii) Charging of interest under section 234B and 234C to the tune of Rs. 12,58,667/- The CIT(A) dismissed the appeal of the assessee vide impugned order and confirmed the order of the Assessing Officer by holding that "action of the Assessing Officer in denying deduction under section 10B of the Act to the appellant for the present assessment year 2004-05 for being 11th year is upheld as the same is inconformity with the provisions of law as also the decision of Hon ble Karnataka High Court in the case of CIT Vs. DSL Software Ltd. as discussed above." The CIT(A) also upheld the reopening of assessment under section 147 of the Act and accordingly interest charged under section 234B and 234C was also held to be valid being mandatory and consequential to the findings. 5. Shri G.Narayanasamy appearing on behalf of the assessee submitted that the Assessing Officer has reopened the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 11th year of claim of deduction under section 10B. Since the assessee had started production in the assessment year 1994-95. The A.R. drew our attention to the order of the CIT(A) dated 21.10.2005 relevant to the assessment year 1999-2000 which is at page 10 to 16 of the paper book filed by the assessee. The A.R. submitted that in para 8.5(iii) (iv) which is at page 15 of the paper book, the CIT(A) had observed as under:- "Thus the Assessing Officer has clearly erred in applying the amended provisions to the appellant company which has already exercised its option to avail tax holiday under section 10B of the Act, for a period of five years commencing from the assessment year 1995-96. (iv) As the period of tax holiday was extended from five to ten years by amendment to Income Tax in 1998, the assessee is still eligible to avail tax holiday under section 10B of the Act upto the assessment year 2004-05." The A.R. contended that factual findings given by the CIT(A) in his order relevant to the assessment year 1999-2000 with regard to period of availing benefit under section 10B, where never challenged by the Revenue, thus the findings of the CIT(A) had attained finality. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt year." 10. In the present case, it is not the case of the Revenue that the assessee had not furnished the relevant documents or the information at the time of the assessment. The original assessment order was passed on 29.9.2006. Thereafter, the order was revised by the Assessing Officer on 23.3.2007. Subsequently, after the elapse of four years notice under section 148 was issued to the assessee. The reason for reopening given by the Assessing Officer does not fall within the ambit of the provisions leading to escapement of assessment. In our view it is merely a change of opinion on the part of the Assessing Officer. The Assessing Officer had applied his mind while passing the assessment order and thereafter at the time of passing of revision order. The Revenue has not alleged that the assessee had withheld any material information or document at the time of assessment proceedings which has resulted in the escapement of assessment. The case of the assessee is squarely covered by the judgement of the Hon ble Supreme Court of India in the case of CIT Vs. Kelvinator of India Ltd. (supra) as well as the judgement of the jurisdictional High Court in the case of Sri Sakthi Textiles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee. By reading only particular paragraph (para 8) of the said judgement, the CIT(A) came to the conclusion that the assessee is not entitled to the benefit under section 10B of the Act and held as under: 3.2.2: In view of the above, it is held that since the appellant company admittedly began manufacturing or production in the assessment year 1994-95, the appellant was entitled to deduction upto assessment year 2003-04 only. The present assessment year 2004-05 being the 11th assessment year, the appellant is not entitled to claim deduction under section 10B for this year. With due respect to the decision of the then CIT(A)in the appeal order in appeal and only for assessment year 1999-2000, I beg to differ with him on the issue of entitlement of the appellant to claim deduction under section 10B as I have already given my independent decision on this issue after considering the relevant provision of law and the decision of Hon ble High Court of Karnataka in the case of M/s. DSL Software Ltd. (supra). Therefore, the action of the AO in denying deduction under section 10B of the Act to the appellant for the present assessment year 2004- 05, being the 11th year, is upheld as the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity for want of experience or has overzealously tried to protect the interests of the revenue, which runs counter to the express provision and when the two Appellate Authorities interpret the said provision, point out the law declared by various forums and grant relief to the assessee, we fail to understand how the department has taken a decision to prefer an appeal in this case, where there is absolutely no error in the order passed by the Appellate Authorities. It only shows the lack of application of mind and it is our experience that it is not an isolated case. It seems that the department is filing these appeals mechanically either for the purpose of statistics or to save their skins without application of mind. In the process, a person who is eligible to a tax holiday has not only been denied the benefit, but made him to contest the proceedings in three forums. If the object of extending these benefits is to give added thrust to exports, the assessee is made to unnecessarily waste his time in fighting the dispute in different forums. The only way to bring reason to the department, is by imposing costs, so that appropriate action may be taken against the person who has taken ..... X X X X Extracts X X X X X X X X Extracts X X X X
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