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TMI Blog2012 (12) TMI 379X X X X Extracts X X X X X X X X Extracts X X X X ..... uction under Section 80IA of the Act is a mere change of opinion without any tangible material which would not warrant reopening of assessment. The material to reopen the assessment being relied on by the revenue seems to be the order of MERC dated 01.07.2004 which has nothing to the with arriving at profits for purposes of deduction under Section 80IA of the Act but deals with fixing of the power tariff for the consumer and for that purpose takes as one of the ingredients 16% return on investments - no fault can be found with order of the Tribunal dated 14.05.2010 - questions of law as formulated does not raise any substantial question of law - decided in favor of assessee. - Income Tax Appeal No. 6791 of 2010 - - - Dated:- 26-11-2012 - J.P. Devadhar And M.S. Sanklecha, JJ. Appellant Rep. by : Mr. Arvind Pinto Respondent Rep. by : Mr. P.J. Pardiwala, Sr. Counsel with Mr. B.G. Yewale JUDGEMENT Per : M.S. Sanklecha, J : 1. This appeal by the Revenue under Section 260A of the Income Tax Act, 1961 (the Act) challenges the order dated 14.05.2010 of the Income Tax Appellate Tribunal (the Tribunal) relating to the Assessment Year 2001-2002. 2. The order date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tricity from its plant at Dahanu. As a consequence of establishing of plant for generation of electricity the respondent became entitled to deduction under Section 80IA of the Act. 5. For the assessment year 2001-2002, the respondent had filed its return of income, which was assessed on 23.03.2004 under Section 143(3) of the Act. The Assessing officer by order dated 23.03.2004 determined the respondent's income under the normal provision at Rs.38.31crores and under Section 115JB of the Act at Rs.341 crores. The aforesaid income was determined after allowing a deduction of Rs.314 crores in respect of the activity of power generation at Dahanu. 6. On 31.03.2008, a notice was issued by the appellant under Section 148 of the Act to the respondent seeking to reopen the assessment for the assessment year 2001-02. The reasons for the reopening the assessment are recorded as under : In this case, the assessee has filed the return of income for A.Y. 2001-02 on 31.10.2001 declaring total income at Nil and taxable income u/s 115JB at Rs.3,41,86,93,066/. The assessment order u/s 143(3) of the act has been passed on 23.03.2004 assessing the total income under normal provisions of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come filed by the assessee and this fact should also have brought to the notice of the AO during the course of assessment proceedings. Thus, I am of the view that the claim of excess deduction u/s 80IA of the Act is because of failure on the part of the assessee, by not disclosing these facts truly and fully. Maharashtra Electricity Regulatory Commission (MERC) in its order in the case no. 18 of 2003 calculated Clear Profit or Reasonable Rate of return on the assessee's capital for both generation and distribution of power. On perusal of assessee's records for AY 2001-02, it is observed that incorrect computation of profits without taking into consideration the tariff regulation which provides for clear profit and reasonable rate of return on capital base method has resulted in escapement of income to the extent of Rs.177.08 crores, which is worked out as under : Rs. In Crores Reasonable Profit allowed by MERC while calculating tariff 230.00 Net power transferred from generated unit 3231.00 Total sales in license area 5415.00 Pro rata Reasonable profit 137.23 80IA deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77.08 crores had been claimed as an excess deduction and thus escaped assessment. 8. In first appeal, the Commissioner of Income Tax (Appeals) by an order dated 02.06.2009 allowed the respondents appeal by holding that the reopening of the assessment for the assessment year 2001-02 cannot be sustained. The Commissioner of Income Tax(Appeals) held that reopening of assessment was bad in law as the original order of assessment dated 23.03.2004 was a subject matter of appeal on the issue of deduction available under Section 80IA of the Act to its power generation business at Dahanu and disposed of by the Tribunal in its order dated 24.01.2008. Consequently reopening proceedings under Section 147 and 148 were barred. Further there was no failure on the part of the respondent to disclose fully and truly all material facts necessary for the Assessment Year 2001-02. This was particularly so as the order of MERC dated 01.07.2004 was passed after the completion of regular assessment under Section 143(3) of the Act. Further it was held that the issue of the claim for deduction under Section 80IA (8) or (10) of the Act was an issue of interpretation and therefore it was a mere change of opi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... generating plant of the respondent at Dahanu for the purposes of Section 80IA of the Act; (d) the assessment order dated 23.03.2004 passed in regular assessment dealt with the quantification of deduction under Section 80IA in respect of Dahanu plant had merged into the order of Appellate Authorities namely, the Commissioner of Income Tax (Appeals) order dated 2.08.2004 and the Tribunal order dated 24.01.2008. This is so as the appellate authorities had dealt with the determination of profit for the purpose of deduction under Section 80IA of Dahanu generation plant. Consequently, the Assessing Officer now has no jurisdiction to reopen the assessment under Sections 147 and 148 of the Act as provided in view of the 3rd proviso to Section 147 of the Act. 10. We have heard Mr. Pinto Advocate for the revenue and Mr. Pardiwalla Senior Advocate for the respondent. We find that both the Commissioner of Income Tax (Appeals) as well as the Tribunal have arrived at a finding of fact that there has been no failure on the part of the respondent-assessee to disclose full and true particulars at the time of the original assessment leading to the order dated 23.03.2004. The assessment is so ..... X X X X Extracts X X X X X X X X Extracts X X X X
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