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TMI Blog2021 (6) TMI 964X X X X Extracts X X X X X X X X Extracts X X X X ..... AO to form an opinion before issuing notice u/s 148 - In the instant case, no such efforts were made and just based on the information received from VAT Department notice was issued -mere change of opinion cannot be a basis to issue a notice u/s 148 of the Act. We find support from in the judgment of Hon'ble Apex Court in the case of CIT vs. Kelvinator of India Ltd. [ 2010 (1) TMI 11 - SUPREME COURT] We find no reason to interfere in the finding of Ld. CIT(A) quashing reassessment proceedings. Ground No.1 raised by the Revenue is dismissed. Claim of deduction u/s 80IB - proof of commencing the commercial production - date from which appellant company was ready for manufacturing - HELD THAT:- From perusal of the above finding as well as the documentary evidences placed before us in the paper book including water connection, electricity connection, Maharashtra Pollution Control Board Registration, Sales Tax registration, professional Tax registration and the date of installation of machinery and found that all these events occurred before 31.03.2002 which was the deadline for commencing the commercial production. Ld. DR failed to rebut this fact by placing any contrary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. On the facts and in the circumstances of the case the Id. CIT is erred i holding that the AO has reopened the case on the basis of date mentioned i Audit report, which is factually incorrect. Even in appellate order in para 4.3 the Id.CIT(A) has reproduced the Reasons of reopening of the case according to which the case was reopened on the basis of information received from VAT department Mumbai, that the purchases from Motion Tradres Pvt. Ltd was non genuine, and in para 4.2 of the appellate order the Id. CIT(A) has confirmed the addition on this issue, as such the reasons of reopening are valid. So Ld. CIT(A) is not justified in holding that proceedings u/s 148 have not been validly initiated. 2.On the facts and in the circumstances of the case the Id. CIT is erred in allowing deduction u/s 80IB which was available only for the undertakings started their production before 31-03-2002, while as per Form No 10CCB date of commencement of production was 11.03.2003 and the assessee has also claimed deduction for AY 2012-13. If the claim of the assessee is correct how it has claimed deduction for 11th year of starting of manufacturing. 3.On the facts and in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made trial production before 31.03.2002 as deduction is available u/s 80IB(3), and the date mentioned by the Auditor is not correct. (Note - The matter is covered under the exceptions mentioned in Para 8 (c) of circular 21/2015). ITANo.956/Ind/2016 for A.Y. 2011-12 1. On the facts and in the circumstances of the case the Id. CIT is erred i holding that the AO has reopened the case on the basis of date mentioned in Audit report, which is not correct as the AO has formed his opinion on the basis of assessment proceeding for ASSESSMENT YEAR 2012-13. While making assessment for A.Y.2012-13, the AO found that the assessee claimed deduction u/s 80IB fo the Act ASSESSMENT YEAR 2011-12, being start period is ASSESSMENT YEAR 2002-03. The deduction is not available for the undertaking which started their production after the period relevant to ASSESSMENT YEAR 2002-03. Further the assessee in its Audit Report has mentioned that its Akola Unit is located under backward Area while on verifying the AO found that the Akola Unit is not locating in back ward area, as such the claim u/s 80IB(5), was not allowable to the assessee. The location of unit is located in backw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and lastly the eligibility certificate for Sales Tax Incentive under PSI-1993 Scheme issued on 28/03/2003 has also mention the date of 11.03.2003 as the date of commencement of production. (note The matter is covered under the exceptions mentioned in para 8(c) of circular 21/2015). 6. From perusal of the above grounds we find that two common issues have been raised by the Revenue challenging the finding of Ld. CIT(A). Firstly, holding that reopening of the assessee s case was not valid and secondly allowing the claim of deduction u/s 80IB of the Act. We will first take up the grounds of appeal raised for A.Y.2010-11 7. Brief facts of the case as culled out from the records are that the assessee is a Private Limited Company engaged in Manufacturing of Transformers and Switchgears. Assessment u/s 143(3) of the Act was completed on 28.03.2013 determining income at ₹ 98,62,840/-. Notice u/s 148 of the Act was issued on 28.03.2014 to the assessee after recording reasons for reopening on the issue of bogus purchases of ₹ 51,116/-. Assessee filed necessary submissions which could not find any favour of the assessing officer. Reassessment proceedings w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d profit offered to tax is ₹ 72,19,639/-. Against these figures the purchase of ₹ 51,116/- is too little and all the documentary evidences shows no iota of evidence that there was any intention of the assessee to evade tax by over stating the purchase. The above stated facts were required to be examined by the Ld. AO to form an opinion before issuing notice u/s 148 of the Act. We, however, find that in the instant case, no such efforts were made and just based on the information received from VAT Department notice was issued. It has been consistently held that mere change of opinion cannot be a basis to issue a notice u/s 148 of the Act. We find support from in the judgment of Hon'ble Apex Court in the case of CIT vs. Kelvinator of India Ltd. 320 ITR 561 (SC). 15. Under these given facts and circumstances of the case, we find no reason to interfere in the finding of Ld. CIT(A) quashing reassessment proceedings. Ground No.1 raised by the Revenue is dismissed. 16. Now we take second issue raised in ground nos. 2 to 6 with regard to claim of deduction u/s 80IB of the Act. We find that Ld. CIT(A) after examining the facts of the case had allowed deduction u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.1.2 The AO is not justified in denying the claim of the appellant u/s 801B because:- The Plant of the appellant was ready for Production by 31.03.2002 and for want of order from the, Electricity board, the commercial . production started on 11.03.2003., The appellant contended that Plant was ready for production but due to delay in order from the Electricity board, commercial Production was started on 11.03.2003. In the application as filed for permanent registration also mentioned the investment made in the Plant Machinery and Building. The investment was made till 31.03.2002 was considered in the application itself proved that Plant was ready to put to u.se by 31.03.2002. That prior to commencement of production, water connection was taken 6n 11.02.2002. Since, building was completed prior to 31.03.2002 and no additional amount towards water bill was paid by the appellant. 4.1.3 The sales tax ,registration was obtained after completion of the plant when plant was ready for production and sale. The sales tax registration itself proved that Plant was ready for production. For the production of Transformer no big plant was required. Bills for Plant machin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Board Registration, Sales Tax registration, professional Tax registration and the date of installation of machinery and found that all these events occurred before 31.03.2002 which was the deadline for commencing the commercial production. Ld. DR failed to rebut this fact by placing any contrary material. 18. We, therefore, under the given facts and circumstances of the case, are of the considered view that the assessee is eligible for deduction u/s 80IB of the Act and thus, find no reason to interfere in the finding of Ld. CIT(A) allowing the assessee s claim of deduction u/s 80IB of the Act at ₹ 42,92,354/-. We accordingly dismiss revenue s ground nos. 2,3,4,5 6. Accordingly all the grounds raised by the revenue for A.Y.2010-11 are dismissed. Now we take up Revenue s appeal for A.Y.2011-12 19. Ground no.1 2 challenges the action of Ld. CIT(A) holding the reopening proceedings being not justified and not initiated validly and the remaining grounds 3 to 6 relates to deduction u/s 80IB of the Act. 20. Brief facts of the case are that e-return of income for A.Y. 2011-12 was filed on 22.09.2011 declaring total income at ₹ 74,20,390/-. Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has registered in Maharashtra as small scale industries and commenced the production activity on 11.3.2003( as per report furnished in from 10CCB certified by the chartered accountant) 3. However, it is found that the Akola district neither covered in category A industrial backward district nor was covered in category B. therefore assessee company was eligible for deduction u/s 80IB(5). Further, as per conditions of 80IB(3). The production of company should be started between 1st April 1991 to 312.3.2002. Since the assessee company has started the production on 11.3.2003 i.e. beyond the period prescribed as such and not eligible for claiming the deduction u/s 80IB(3). 4. It is also noticed that the assessee company has also claimed deduction of ₹ 59,15,999/- u/s 80IB for the year under consideration i.e. 2011-12. As discussed above the assesse company does not fulfill the condition of claiming deduction u/s 80 IB as such the claim is not allowable to the assessee company. 5. therefore, I have reason to believe that income amounting to ₹ 59,15,999/- has escaped assessment within the meaning of section 147 of the Act. From the reasons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 80IB was available before the AO in the original assessment proceedings pertaining to the assessment year 2005-06, 2006-07,2010-11 and 2011-12 which has been completed u/s 143(3) of the I.T. Act. The AO has not brought out any fresh material on record therefore reopening was done on mere change of opinion. Therefore, the appeal on these grounds is allowed. 25. From perusal of the above finding as well as the settled judicial precedence and our finding in the case of assessee for preceding assessment year we observe that the claim of deduction u/s 80IB of the Act was already examined by the assessee during the regular assessment proceedings. There was no new material available on record which could indicate that the excess or wrong claim made by the assessee. All the facts pertaining to claim of deduction u/s 80IB of the Act stood duly filed before the Assessing Officer. Considering the totality of facts and the ratio laid down by Hon'ble Supreme Court in the case of CIT vs. Kelvinator of India Ltd. 320 ITR 561(SC) that reasons to believe cannot be equated with change of opinion. We, therefore, respectfully following the same, are of the considered view that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and all other connections were obtained by the appellant company. The claim of the appellant was also examined in detailed while passing the assessment order for the Assessment. Years 2005-06 and 2006-07 i.e. in the first years of profit and after being satisfied with the explanation of the appellant. The claim was accepted u/s 80IB of the Act. 4.2.2 The AO is not justified in denying the claim of the appellant u/s 80IB because: The plant of the appellant was ready for production by 31.3.2002 and for want of order from the Electricity board, the commercial production started on 11.3.2003. The appellant contended that plant was ready for production but due to delay in order from the electricity board, commercial production was started on 11.3.2003. In the application as filed for permanent registration also mentioned the investment made in the Plant machinery and building. The investment was made till 31.3.2002 was considered in the application itself proved that plant was ready to put to use by 31.3.2002. That prior to commencement of production, water connection was taken on 11.2.2002. Since the building was completed prior to 31.3.2002 and no addit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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