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TMI Blog2013 (8) TMI 660X X X X Extracts X X X X X X X X Extracts X X X X ..... ses V/s. DCIT [2004 (2) TMI 294 - ITAT DELHI-E] - Decided against Revenue. Deletion of addition made by A.O. - Foreign exchange fluctuations - Held that:- The assessee has furnished the return admitting loss at Rs.9,91,61,190 in the re-assessment proceedings. It is also noticed that the assessment was reopened under S.148 issuing notice on 29.01.2003 for the purpose of bringing to tax the income under the MAT provisions of S.115JA. Since this issue of deduction of foreign exchange claim was also crystalised in the original assessment, and since it was not an issue for reopening the assessment, we are of the opinion that the order of the CIT(A) is justified. Further, the assessee has already offered the same amount as income in assessment year 2002-03 - Decided against Revenue. Deduction u/s. 115JA(2)(iv) - Deduction u/s 80IA - Income from business of power - Held that:- It is the assessee’s income which has various components for working out the purchase price of energy from the assessee by the AP Transco and one of the components was capital cost of the power project. Since the amount accounted for as income was component of the enhanced capital cost which is directly relate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.3,10,20,000/- while computing the income under regular provisions of the Act. 5. The learned CIT(A) also erred in deleting the impugned addition of Rs.9,36,09,75/- as derived from the business of power and grant the deduction u/s. 115JA(2)(iv). 6. The CIT(A) ought not to have held that the additional income derived is also only from the power business on the ground that the details of income earned on account of energy charge, foreign exchange variation recovery is also one of the components of income. 2. We have heard the learned Departmental Representative and the learned counsel in detail and the learned counsel has also placed on record, a paper-book containing 25 pages and also the annual report alongwith statement of details during the course of hearing. The issues involved in this appeal are considered and decided hereunder- 3. The issue in dispute in grounds No.2 and 3 is with reference to exclusion of an amount of Rs.17,75,851 shown as related to other income of Rs.3,52,98,874 from the computation of book profit. The Assessing Officer, while working out the deemed income under S.115JA treated an amount of Rs.3,52,98,854 shown as other income as not earne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... change debt repayment has to be borne by the APSEB(Present AP Transco), any deficiency or gain on account of foreign exchange fluctuation would be to the account of APSEB only. Further, clarification given by the assessee that in the assessment year 2002-03, the assessee had accounted the gain derived on foreign exchange fluctuation as income in that year, which included the impugned addition of Rs.3,10,20,000, was also noticed by the CIT(A), who accordingly directed the Assessing Officer to delete the addition. Revenue is aggrieved. 6. After considering the rival contentions and examining the details on record, we notice that the original assessment in this case was completed under S143(3) by the order dated 30.03.2001, determining the loss of the assessee at Rs.9,37,00,379. The assessee has furnished the return admitting loss at Rs.9,91,61,190 in the re-assessment proceedings. It is also noticed that the assessment was reopened under S.148 issuing notice on 29.01.2003 for the purpose of bringing to tax the income under the MAT provisions of S.115JA. Since this issue of deduction of foreign exchange claim was also crystalised in the original assessment, and since it was not an i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d capital cost. I observe that in the details of income earned on account of energy charges, foreign exchange variation recovery is also one of the components of income. Thus, it could be seen that the additional income derived is also from power business. Therefore, it is to be held that the AO s view that the additional revenue is not from the business of power is misplaced. Therefore, the A.O. is directed to consider the impugned addition of Rs.9,36,09,750 as derived from business of power and grant the deduction u/s. 115JA(2)(iv) in addition to the deduction of Rs.62,55,35,166/- already allowed . 8. After considering the rival submissions, we do not see any reason to interfere with the order of the CIT(A). It is the assessee s income which has various components for working out the purchase price of energy from the assessee by the AP Transco and one of the components was capital cost of the power project. Since the amount accounted for as income was component of the enhanced capital cost which is directly related to sale of energy, we do not see any reason to treat it as other income . The Assessing Officer s objection that it has not been taken to Profit Loss Account is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d company, the Assessing Officer was of the opinion that an amount of Rs.3,40,93,235 has not been offered as income nor credited to the sales revenue, thereby the same amount has escaped assessment. Accordingly, in order to bring the said amount to tax, the Assessing Officer recorded satisfaction to the extent of income-tax receivable of RsS.2.40,45,266 to be treated as income of the assessee, both under the normal provisions and also under S.115JB, a notice under S.148 was issued on 12.7.2006, i.e. after four years from the end of the assessment year. 11. While determining total income at Rs.nil, in the re-assessment, the Assessing Officer made an addition of Rs.3.40 crores to the returned income under the normal provisions on the reason that this amount has accrued in terms of power purchase agreement entered into with the TRANSCO 12. Before the learned CIT(A), it was contended that all the information regarding the income-tax receivable from AP Transco as per the agreement was very much there before the Assessing Officer, while completing the original assessment, and no new information has come into the possession of the Assessing Officer to hold that income has escaped asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment proceedings. On these facts, re-opening of assessment beyond four years, when the original assessment is completed u/ s 143(3) of the I.T. Act, 1961, appellant cannot be upheld in law. The head note in the judgment delivered by the Hon'ble Supreme Court in the case of CIT vs Foramer France [264 ITR 566[SC], reads as under: "Reassessment--Limitation--Law applicable--No failure to file return or to disclose fully and truly all material facts--Notice for reassessment--Issued beyond seven years--Barred by limitation-Income-tax Act, 1961, ss. 143(3), 147, prov. (as amended by Direct Tax Laws (Amendment) Act, 1987). Assessment Pursuant to finding or order Limitation Extension of period- Direction or finding in order passed in appeal, reference or revision- Must be with respect to same assessee and same assessment year Income tax Act, 1961, s.153(3)(ii). Writ--Reassessment--Notice without jurisdiction--Existence of alternative remedy not a bar-- Income-tax Act, 1961, s. 148-Constitution of India, art. 226. From the decision of the High Court (see [2001J 247 ITR 436) that (i) section 147 substituted in the Income-tax Act, 1961, by the D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disclose fully and truly all material facts, cannot be held to be valid. The legal position is further explained in the recent decision of the Hon'ble Andhra Pradesh High Court in the case of Mahalaxmi Motors Ltd. vs DCIT reported in 265 ITR 53, wherein the Hon'ble High Court explaining the same principle has observed as under: As indicated above, in our considered view, the petitioner-assessee had furnished all material facts truly and fully before the assessing authority at the relevant point of time. When once all the information is furnished to the assessing authority, it is (or the assessing authority to decide what inference can reasonably be drawn and what legal inferences have to be drawn ultimately. It is to be noted, where full and true disclosure of facts was made by an assessee, the Department cannot reopen the assessment even if there is loss of revenue or even if legal inference drawn by the assessing authority was erroneous in the first place. Even mere change of opinion by the assessing authority is not enough for reopening the assessment. This view has been reiterated by the Supreme Court in the decisions in CIT v. Hemchandra Kar [1970] 77ITR 1; CIT v. Bh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lied on the order of the CIT(A) 15. After considering the rival contentions, and perusing the paper-book placed before us containing pages 1 to 67 and the original assessment order of the Assessing Officer in this regard, we are of the opinion that the reopening of the assessment after four years from the end of the assessment year is bad in law, as held by the CIT(A). As seen from the satisfaction recorded for initiation of the proceedings, para 1 itself states that assessee company is having a Power Purchase Agreement with the TRANSCO . As per clause 3.4 of the said PPA, the income-tax paid by the assessee company has to be reimbursed by the TRANSCO . This entire para is on the basis of the PPA which is already on record, at the time of original assessment proceedings. The second para of the recording of the reasons is on the Note 9 of Schedule M to the Annual Accounts. This information is very much part of Schedule M of the Annual Accounts and based on the discussion made in the assessment year 2003- 04, the Assessing Officer comes to an opinion that this amount is taxable in this year. However, no new information has been brought on record and the entire information having b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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