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TMI Blog2016 (6) TMI 854X X X X Extracts X X X X X X X X Extracts X X X X ..... URABLE MR.JUSTICE AKIL KURESHI) 1. These appeals involve similar facts. We may record facts from Tax Appeal No.275/2016. Tax appeal pertains to assessment year 2004-2005. The Assessing Officer carried out scrutiny assessment of the return filed by the assessee. One of the claims was of capital gain arising out of sale of shares. In the context, the assessee had claimed various expenditures in the nature of professional services for investment portfolio and such other services. The Assessing Officer disallowed the expenditure holding that such expenditure was not for the purpose of assessee's business. The issue was carried in appeal. CIT(Appeals) confirmed the disallowance on slightly different grounds. 2. To reopen such assessment, the Assessing Officer issued notice dated 28.4.2008. In the reasons recorded, he had stated as under : In this case assessment order for A.Y. 2005-06 was passed u/s. 143(3) on 31.12.2007 by the Addl. CIT, Range1, Baroda. It was observed by him that the assessee has shown huge income as short term capital gains and long term capital gains arising out of investments. These incomes were held to be income assessable under the head profits a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iginal assessment proceedings, the Assessing Officer had in context of the assessee's claim of expenditure for earning such income held and observed as under : 10. Amount paid to Krishnadeep housing finance development Ltd. Samar Singh association, P N Vijay Financial Services Ltd and Kotal Securities Ltd. On perusal of the details of legal and professional charges claimed by the assessee it is noticed that the assessee has claimed ₹ 60 lacs to Krishnadeep House Finance Development Ltd, Rs. l280000/- to Samar Singh Association. ₹ 219396/- to P.N.Vijay Financial Service Ltd and ₹ 919789/- to Kotak Securities Limited on account of professional services in the nature of investment portfolio, professional services pertaining to investment and portfolio, professional advisory services for equity investment and investment management fees respectively. Considering the nature of expenses, the assessee was asked to show cause as to why these claims of the assessee should not be disallowed because these are not wholly and exclusively for the business purpose. The assessee s reply is as under- The appellant is a large company. For the year under consideration, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed from the balance sheet of the assessee that it has made investments in Shares, units of mutual funds, bonds and other securities. As per the balance sheet of the assessee as on 31.3.2004, the total value of investment is at ₹ 25903.76 lacs. In the computation of its total income, the assessee has shown ₹ 38132086/- under the head capital gains and it has also shown to have received ₹ 194230396/- on account of dividend. It is important here to mention that as per memorandum of the company and the AOA, the assessee is in the business of manufacturing and sale of refrigerant gases. Therefore, considering the business of the assessee, these expenses are not for the business purpose at all. It is also highlighted: here that the onus lies on the assessee to prove that the vehicle was used wholly and exclusively for the purpose of the business in order to claim other related expenses also in view of the following case laws - 7) Swadeshi Cotton Mills Co. Ltd. vs. CIT ITR 57 (SC) 8) Laxmi Ratan Cotton Mills Co. Ltd. vs. CIT, 73 ITR 634 (SC) 9) Harinagar Sugar Mills Ltd. vs. CIT, 117 ITR 945 (Bombay) 10) CIT vs. Southern Sea Food Ltd., 205 ITRI 76 (Mad) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowed the expenditure. Any reassessment of the said issue, would permit the Assessing Officer a second innings which is not envisaged under the power of reassessment. Division Bench of this Court in case of Gujarat Power Corporation Ltd. v. Assistant Commissioner of Incometax reported in (2013) 350 ITR 266(Guj), in context of earlier judgement in case of Praful Chunilal Patel v. M.J. Makwana, Asst. CIT reported in (1999) 236 ITR 832 (GUJ) held as under : 44. At this stage, we may examine the decision of the Division Bench of this Court in the case of Praful Chunilal Patel v. M. J. Makwana, Assistant Commissioner of Income Tax , (supra) more closely. This was a case wherein assessment previously framed under section 143(3) of the Act was sought to be reopened within a period of four years from the end of the relevant assessment year. The case concerned assessment year 1993-94 and therefore, the amended section 147 of the Act was applicable. On certain claims of the assessee which were not rejected by the Assessing Officer in the scrutiny assessment, the court held that in cases where the Assessing Officer has not made an assessment of any item of income chargeable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch claim was accepted on erroneous construction of the transaction or by mistake of law applicable to such a transaction. We are also of the opinion that by virtue of such observations if the revenue contends that post 1.4.1989, reopening of an assessment would be permissible on change of opinion, it would run counter to the decision of the Apex Court in case of Commissioner of Income Tax v. (1) Kelvinator of India Ltd. (SC) (supra). 8. In case of Cliantha Research Ltd. v. Deputy Commissioner of Incometax, Ahmedabad CircleI reported in (2013) 35 taxmann.com 61(Gujarat), the Court observed as under : 17. From the above it can be seen that the petitioners claim for deduction under Section 80IB(8A) of the Act came for detailed scrutiny by the Assessing Officer in the original scrutiny assessment. Series of queries were raised by the Assessing Officer. All such questions were answered at length by the assessee. He filed several replies before the Assessing Officer. Only after considering such replies and documents accompanying such replies, Assessing Officer framed the assessment in such assessment order. He disallowed only a small portion of the petitioners claim for dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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