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TMI Blog2017 (11) TMI 1604X X X X Extracts X X X X X X X X Extracts X X X X ..... d (2009 (8) TMI 63 - SUPREME COURT) is not acceptable and is hereby rejected as learned CIT(A) was never seized of this controversy. Thus, we uphold re-assessment order passed by the AO u/s 147 - Decided in favour of revenue. - I.T.A. No. 5739/Mum/2015 - - - Dated:- 28-11-2017 - SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER For The Revenue : Shri Rajat Mittal For The Assessee : Shri. P.R. Toprani ORDER PER RAMIT KOCHAR, Accountant Member This appeal, filed by the Revenue, being ITA No. 5739/Mum/2015 for assessment year 2009-10, is directed against the appellate order dated 09-10-2015 passed by learned Commissioner of Income Tax (Appeals)-12, Mumbai (hereinafter called the CIT(A) ) rectifying the appellate order dated 13-08-2015 passed by learned CIT(A), for assessment year 2009-10, appellate proceedings had arisen before learned CIT(A) from the assessment order dated 30-01-2014 passed by learned Assessing Officer (hereinafter called the AO ) u/s 143(3) r.w.s 147 of the Income-tax Act, 1961 (hereinafter called the Act ). 2. The grounds of appeal raised by the Revenue in the memo of appeal filed with the Income-Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evised at ₹ 126,60,19,165/- by the AO vide order giving effect to order of the learned CIT(A) dated 30.07.2013 . On perusal of the records , it was observed by the A.O as under:- Supreme Court in the case of Liberty India Vs. CIT (317 ITR 218)(SC) on the issue of section 80IC of the Income tax Act 1961, held that The words derived from are narrower in connotation as compared to the words attributable to . In other words, by using the expression derived from , Parliament intended to cover sources, not beyond the first degree. SC held that the receipts, by way of Duty Drawback and sale of Duty Entitlement Pass Book (DEPB) licence by the Taxpayer, do not form part of the profits 'derived from' the industrial undertaking (IU), eligible for tax holiday under the Indian Tax Law. The SC further held that the Duty Drawback and sale of DEPB licence are incentives which flow from the schemes framed by the Government of India (GOI) and do not have any direct nexus with the profits derived from the eligible IU of the Taxpayer. The assessee had claimed deduction u/s. 80IC of ₹ 30,36,22,952/- for its Pulp and paper unit located at Lalkua, District Nainital. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t benefits Rs.2,36,32,653/- Sale of Scrap Rs.2,64,72,728/- Insurance and other claims ₹ 21,41,977/- Miscellaneous income Rs.5,38,64,040/- VAT Input Credit received -- Gain on Foreign Currency Fluctuation (Net) -- Provisions no longer required ₹ 1,24,91,873 /- Provision for doubtful debts written back Rs.69,20,850/- Total ₹ 12,61,11,808/- The A.O , while allowing deduction u/s. 80IC in the assessment proceedings u/s. 143(3) however considered export incentives to the tune of ₹ 2,36,32,653/- to be eligible while computing profits eligible for computing deduction u/s. 80IC . This is the main bone of contention between the rival parties which has led to the reopening of the concluded assessment as the A.O has observed that by considering export incentive to the tune of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... OI and do not have direct nexus with the profits derived from the business of the eligible undertaking, vide re-assessment order dated 30-01-2014 passed by the AO u/s 143(3) r.w.s. 147 of the 1961 Act. 4. Aggrieved by the re-assessment order dated 30-01-2014 passed by the AO u/s 143(3) r.w.s. 147 , the assessee filed first appeal before the learned CIT(A) who rejected the contentions of the assessee by dismissing the appeal of the assessee vide appellate orders dated 13-08-2015 which was later rectified by learned CIT(A) vide rectification orders dated 09-10-2015 passed by learned CIT-A, who allowed the appeal of the assessee by holding that reopening cannot be done u/s. 147 keeping in view of the tribunal decision in the case of assessee for A.Y 2007-08 in ITA no. 2036/Mum/2013 wherein tribunal quashed reopening u/s 147 and hence appeal of the assessee was allowed. The grounds on merits were dismissed by learned CIT(A) as being infructuous, vide rectification orders dated 09-10-2015 passed by learned CIT(A) rectifying appellate orders dated 13-08-2015. 5. Aggrieved by the rectified appellate order dated 09-10-2015 passed by learned CIT(A), Revenue has come in appeal before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 29-09-2009 is placed which was submitted by the assessee along with return of income filed with Revenue wherein at page 96/pb the assessee has duly given explanation about deduction claimed u/s 80IC . In the said letter dated 29-09-2009, it was made clear that export benefits are duly considered while computing profits considered eligible for deduction u/s 80IC. Our attention was also drawn to reply dated 12.12.2011 which is placed in paper book/ page no.6 which was given before the AO during original assessment proceedings conducted by the AO u/s 143(3) r.w.s. 143(2), wherein specific query was raised by the A.O with respect to the claim of deduction u/s. 80IC w.r.t. other income‟s but no specific query was raised by the AO with respect to export benefits being considered for computing profits eligible for deduction u/s 80IC , and the assessee replied that other incomes shall be included for computing deduction u/s 80IC by referring to the decision of Hon‟ble Delhi High Court in the case of CIT v. Eltek SGS Private Limited 169 taxmann 283 and also decision of Delhi ITAT in the case of Nodi Exports v. ACIT reported in 2008 24 SOT 526. It was submitted that no speci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 013 is placed and hence it is submitted that issue of 80IC was very much before the AO wherein he denied inclusion of other income ( excluding export benefits) for computing profits eligible for deduction u/s 80IC and since the matter travelled to learned CIT(A) , the original assessment order u/s 143(3) got merged with learned CIT(A) order and hence now the original assessment order cannot be subject matter of reopening u/s 147 and hence the entire proceedings are bad in law. Ld. DR in the rejoinder objected to the assessee raising this contention before the tribunal for the first time as it was not raised before the learned CIT(A) that the A.O original assessment order got merged with the appellate order of learned CIT(A) and second proviso to Section 147 is attracted as this ground is raised for the first time before the tribunal . Ld. AR submitted that learned CIT(A) deleted the additions by holding that reopening of concluded assessment u/s 147 was bad in law and the assessee can always support the appellate order of learned CIT(A). 6. We have considered rival contentions and perused the material on record including orders of authorities below and cited case laws. We hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd to follow the decision of Hon‟ble Supreme Court in the case of Liberty India Limited(supra) which was very much operative in force on the date of filing of the return of income on 30-09-2009. The tax-auditors could not have given any opinion in tax-audit report vide form no 10CCB on 29-09-2009 which is contrary to the binding decision of the Hon‟ble Supreme Court in the case of Liberty India Limited(supra) pronounced on 31-08-2009. The AO could not have formed any opinion while framing assessment u/s 143(3) against the decision of Hon‟ble Supreme Court in the case of Liberty India Limited(supra) and any such opinion if at all formed contrary to Hon‟ble Supreme Court decision is bad in law and is non-est. Thus in the teeth of Hon‟ble Supreme Court judgement in Liberty India Limited(supra) pronounced on 31-08-2009 which was existing on the date of filing of return of income by the assessee on 30-09-2009, the claim of the assessee in the return of income filed with the revenue for claiming 80IC deduction wherein export benefits were included for computing eligible profits for computing deduction u/s 80IC , was ex-facie wrong claim qua export benefits h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence could not be subject matter of reopening proceedings u/s 147 of the Act. The assessee has placed reliance on decision of Hon‟ble Gujarat High Court in the case of United Phosphrous Limited (supra) and Hon‟ble Bombay High Court in the case of ICICI Bank Limited(supra). We have carefully gone through the above decisions as well provisions of the 1961 Act. We have observed that the AO never raised any query w.r.t. excise benefit forming part of the eligible profit derived from industrial undertaking for computing deduction u/s 80IC of the 1961 Act. We have observed that the AO excluded other incomes such as rent, surplus on sale of assets, sale of scraps , insurance claims, provisions no longer required etc amounting to ₹ 9,56,18,376/- while computing deduction u/s 80IC in original assessment framed u/s 143(3), while export benefits to the tune of ₹ 2,36,32,653/- which albeit formed part of other income disclosed in audited financial statements were never being queried by the AO for computing deductions u/s 80IC although the assessee made disclosure that the same was also included while computing deduction u/s 80IC, which clearly mean that the AO allowed t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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