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TMI Blog2015 (5) TMI 620X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessment year were disclosed and were on record, then, one fails to understand as to why this notice has been issued. From the reasons itself, it is apparent that it is issued to revisit this claim of deduction under section 10A of the IT Act and as put forward by the Petitioner/Assessee. From the affidavit in reply, we have taken specific paragraphs, where the Petitioner's version before the Assessing Officer in the original assessment though accepted by the Assessing Officer, he is faulted for not having taken into consideration certain aspects of this deduction. If the Petitioner allegedly did not give information regarding the losses of the Unit IV and did not adjust the losses of Unit IV with the profits of other units and therefore the order in that behalf is termed as erroneous, then, this is a clear case of revisiting this claim. Now, a different opinion is held by the Respondents and for which they want to reopen the assessment. Such a course is clearly impermissible. - Decided in favour of assessee. - Writ Petition (L) No. 944 of 2015 - - - Dated:- 6-5-2015 - S. C. Dharmadhikari And A. K. Menon,JJ. For the Petitioner : Mr. Percy Pardiwalla Senior Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Judgments of the Hon'ble Supreme Court and of the Division Bench of this Court. We could have appreciated a case of genuine difficulty and brought forward fairly and completely, but what we find in this case is that the notice under section 148 of the IT Act is dated 27th March, 2014. That was served on the Petitioner, but the reasons which are said to be recorded, annexed to this notice, came to be furnished to the Petitioner on 29th October, 2014. Thereafter, the Petitioner raised the objections on 12th December, 2014. The order passed by the Respondents, rejecting these objections, is dated 12th February, 2015. The Respondents were obliged to abide by the above directions and not passed an order of assessment for a period of 4 weeks from the date of service of this order rejecting the objections. In the instant case, if that order itself was served on 10th March, 2015, then, this haste in passing an assessment order within four weeks cannot be justified. If the notice is dated 27th March, 2014, then, the period till 27th March, 2015 was enough to conclude the steps and in accordance with law. The Respondents having delayed the proceedings and at their own end, it woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fully and truly all material facts necessary for his assessment for that assessment year. The reasons recorded and copy of which is at Annexure 198 of the paper book read as under: ANEXURE M/s. Capegemini India Pvt. Ltd. Reason for issue of notice u/s 148 of the Income Tax Act, 1961 A. Y. 2007-08 In this case, the assessee company filed its return of income for A. Y. 2007-08 on 02.11.2007 declaring income of ₹ 2,76,74,434/under normal provision of the Act. Then the case was selected for scrutiny and the assessment was completed u/s 143(3) r.w.s. 144C(13) of the Act on 14.10.2011 assessing the total income at ₹ 115,90,05,170/. The assessee company is engaged in business of development and export of software. During the year under consideration, it is seen that the assessee company had claimed deduction u/s 10A of the Act for its Unit II III without setting off losses of Unit IV from the profits derived by the eligible units. As per the provisions of section 10A of the Act, deduction u/s 10A of the Act is allowable on the net profit derived by the assessee company from eligible units after setting off of losses from other eligible units. I have therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs in the audit reports were highlighted. Thus, the Pune II Unit is known as Unit II and the claim is raised for the 6th year, where as Hyderabad Unit is known as Unit III and the claim is raised for the 4th year. Chennai Unit is known as Unit IV and the claim raised is in the 7th year in relation thereto. The Petitioner company set off the losses of Unit IV (Chennai) against the profits of Unit I, namely, the Unit of Pune. The Petitioner also pointed out that there was a draft assessment order under section 143(3) r.w.s. 144C(1) dated 31st December, 2010. The paragraphs of the draft assessment order were reproduced. Thus, the complete claim of deduction was reflected in all the documents. The loss of the Chennai Unit has not been set off against the profits of Units II and III and therefore, impliedly the loss of Unit IV has been set off against the profits of Unit I, because that Unit has completed its 10 years of deduction under section 10A of the IT Act and therefore, not eligible for the said deduction. The assertion of the Petitioner was that complete facts were before the Assessing Officer during the course of the original assessment. They have been referred in the course of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings pending in your case for the A. Y. 2007-08. Your submission has been perused. However, the objection is not acceptable. In this regard, the objection is replied/removed as under: 1. Regarding Exemption claimed under section 10A :You have claimed full exemption under section 10A with respect to profits earned from Units II and III without setting off the losses of Unit IV. This is not in order, following the decision of the Honorable Karnataka High Court in the case of Yokagawa India Private Limited dated 08-11-2011. Further, the Department is in appeal before the Honorable Supreme Court in respect of the deduction claimed under section 10A in your own case for the Assessment year 2005-06. To keep the issue alive, the deduction claimed by you is not allowable for this year also. 2. Amalgamation with M/s. Accurum India Private Limited :According to information received in this office; it is seen that M/s. Kanbay Software (India) Private Limited has amalgamated with M/s. Accurum India Private Limited in the year 2007 vide order of the High Court of Madras dated 23-03-2007 sanctioning the scheme of amalgamation with effect from the appointed date 01-04-2006 subject to ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g reasons to believe that income has escaped assessment, the same was reopened for scrutiny under section 147 of the Act. 5. In the light of the above facts, the objections raised by the assessee is dismissed. [Jessie A. Ninan] Assistant Commissioner of Income tax, 14[1][2], Mumbai 11) It is in the light of the above undisputed factual position that we have heard Mr. Pardiwalla - learned Senior Counsel for the Petitioner and the learned Additional Solicitor General for the Respondents. 12) Mr. Pardiwalla's contention is that the notice under section 148 is totally vitiated as the Assessing Officer has failed to record the reasons mandated by the proviso to section 147. That proviso mandates that in the event the assessment is sought to be reopened after 4 years, then, the satisfaction in terms of the proviso must be recorded. That satisfaction must be reflected in the reasons accompanying the notice. Mr. Pardiwalla has invited our attention to the reasons to submit that far from indicating as to how the assessment already made can be faulted, the Assessing Officer has failed to even record the mandatory satisfaction. That is a precondition, inasmuch as, the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessing Officer for failing to adjust the losses of Unit IV against the profit making Units. Therefore, the Respondents, in the affidavit submit that there was no mention of the loss being adjusted against the profits of other units and this fact was not considered by the Assessing Officer in the draft assessment order. The Dispute Resolution Panel is equally faulted for having this draft assessment order accepted merely on the question of computation of deduction under section 10A of the IT Act. Then, the grounds of Appeal to the Tribunal have been referred to. 14) It is thus contended that the Tribunal, in the order passed in Appeal, did not consider the issue of adjustment of the losses of Unit IV against the profits of Units II and III, which is the subject matter of issuance of notice under section 148 of the IT Act. Therefore, this notice is justified by urging that the Assessing Officer had reason to believe that income chargeable to tax has escaped assessment for failure of the Petitioner/Assessee to disclose truly and filly all material facts relevant to the assessment year. 15) Upon hearing both sides and perusing the Writ Petition and all Annexures thereto so a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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