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TMI Blog2022 (8) TMI 1095X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Hon ble Supreme Court in the case of Parasuram Pottery Works Co. Ltd. [ 1976 (11) TMI 1 - SUPREME COURT ] The Bench states that assessment proceedings must have a finality at some point, for a society to be referred to as civilized. Revisiting jaded issues time and again, without allowing them to rest would be contrary to the above dictum. All the more in a case such as the present where there is not even an allegation that the assessee/petitioner has supressed income and made an incomplete and untrue disclosure. In fact, the reasons proceed wholly on the basis of the materials furnished by the petitioner originally as well as on Instructions issued by the Central Board of Direct taxes that have been cited by the petitioner and noticed by the officer. The impugned proceedings are quashed and this writ petition is allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. 2.)During the year the assessee claimed deduction u/s 10AA, which was recomputed in the Assessment order. Deduction of Rs.1732,61,17,117 has been allowed. The assessee owned totally 25 eligible units out of which 13 units earned profits and balance 12 units incurred loss (Rs.51,66,44,921). The assessee had adjusted the loss of eligible units against non eligible units. In the Asst. Order, this has been disallowed and the assessee has been allowed to carry forward the loss of eligible units. In this connection, it may be noted the CBDT Circular No.7/2013 dtd 16th July 2013 has clarified that despite their continued placement in Chapter III, section 10A/10AA/10B, they are tax holidays by way of 'deduction' under chapter VIA. Further it has been clarified that income/loss from various sources (eligible and ineligible units) of income under the same head has to be aggregated first. This implies that loss/profit of eligible units to be aggregated separately and loss/profit of non eligible units to aggregated separately for the purpose of arriving at the income/loss under the same head. In the instant case, the loss of 12 units amounting to Rs.51,66,44,921 to be aggregate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose of assessment for AY 2012-13. Hence, I have reason to believe that income chargeable to tax has escaped assessment and accordingly, the assessment needs to be reopened u/s 147 of the Income-tax Act. 6. The petitioner in line with the procedure for re-assessment set out in the judgment of the Supreme Court in the case of GKN Driveshafts (India) Vs. Income Tax Officer [259 ITR 18], challenged the assumption of jurisdiction by the assessing officer. The challenge is premised upon the bar of limitation, as set out under the proviso to Section 147, that reads as follows: Section 147: If any income chargeable to tax, in the case of an assessee, has escaped assessment for any assessment year, the Assessing Officer may, subject to the provisions of sections 148 to 153, assess or reassess such income or recompute the loss or the depreciation allowance or any other allowance or deduction for such assessment year (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year. Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gard to the sequence of events, dates or documents, as set out below, and learned standing counsel would agree that the same represent a faithful representation of the facts, circumstances and events as they had transpired. (10.1) The first reason is that the Mark-to-market loss on restatement of outstanding forward contracts is a notional loss and not allowable as a deductible expenditure, as laid down in Instruction No. 3 of 2010 dated 23 March 2010. (10.1.1) Notice under Section 142 (1) of the Act dated 30 November 2015 had specifically sought information with respect to 'Details of Mark to Market of any foreign currency exposure' and 'Details of loss from foreign currency fluctuation', at point Nos.12 and 14 thereof. Petitioner, vide submission filed on 10.03.16, provided a detailed explanation on the allowability of mark-to-market losses on outstanding forward contracts as a deduction in computing income under the head 'profits and gains of business or profession' and also under section 115JB of the Act. The said submission specifically addresses the non-applicability of Instructions No. 3 of 2010. (10.1.2) Interalia, the petitioner also furnished th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess expenditure ought to be disallowed. (10.3.1) The Petitioner, in Note No 2(e) to its Financial statements has disclosed the accounting policy with respect to capitalizing intangible assets such as computer software licenses, wherein it had clearly explained its stand that software licenses, having an enduring benefit, had been capitalized as fixed assets. In fact, the audited financial statements had been filed in response to a direction in that regard under point (c) of notice under section 142(1) dated 7 August 2013. (10.3.2) Further, the officer had, vide notice under section 142(1) of the Act dated 30 November 2015, specifically, requested information to be furnished by the petitioner in respect of 'Details of revenue expenditure claimed during the year, which is having enduring benefits or more than one year is attributable and the expenditure is amortized over a period in the books but claimed as current expenditure'. (10.3.3) It was in response thereto, that the petitioner had clarified that it had not claimed an expenditure in the return of income which has otherwise been amortized in the books of account for a period of more than a year vide point No. 13 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act in connection with the amalgamation during the course of assessment that had been responded to vide submissions dated 01.03.16 and 11.03.16. (f) The provisions of section 10AA (5) of the Act permit deduction in terms of section 10AA by the successor company upon amalgamation and this stand of the petitioner has been duly disclosed and accepted in the original assessment. (10.4.2) In fine, the amalgamation of MIPL and CIPL with the petitioner was duly disclosed in the financial statements and submissions made in connection with the claim of deduction under section 10AA of the Act in respect of the Gurgaon MrX SEZ unit. (10.5) The reasons next proceeded on the basis that the disallowance effected in terms of section 14A of the Act ought to be enhanced as the average value of investment has been taken at a lower sum. In Point No. 11 of the notice issued under section 142(1) of the Act dated 30 November 2015 specific information with respect of 'details of exempted income received/claimed during the year and application of section 14A read with Rule 8D had been sought. Details of any investment in respect of which no income was received was also directed to be furnished. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11. Mr. Srinivas, fairly, does not dispute the above facts, dates or sequence of events. Simply put, all issues as sought to be dealt with in the impugned proceedings, have not just been noted at the time of assessment, but the officer has put pointed queries to the petitioner and sought details that have been furnished and it is only thereafter that an order of scrutiny has come to be passed. 12. His argument is premised on the position that the order of assessment passed on 24.03.2016 does not specifically set out/reveal any discussion in regard to these issues. A perusal of the order of assessment, which runs between pages 71 and 141 of typed set dated 08.08.2019 would show that the assessing authority has captured therein, all primary issues that had engaged his attention, where he is not in agreement with the petitioner. 13. The petitioner is located in a special economic zone, and the claim of deduction under Section 10AA has been a specific issue dealt with under original assessment. So too the disallowance under Section 14A that was addressed by the officer at the first instance. As far as the other issues are concerned, though there may be no specific mention in the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... closure was held to be incomplete and untrue that this Court has interfered. 19. In the present case and in light of the admitted position that the issues featuring in reasons for re-assessment had been taken up for assessment originally but not pursued by the officer, the assessing officer being convinced by the explanation furnished by the petitioner, I am of the view that the petitioner has made a full and true disclosure originally, and the impugned proceedings are barred by law. There is also no material has been found by the officer post the original assessment. Thus, the impugned proceedings are barred by limitation and are not sustainable on any account. 20. In this connection, I may refer to the conclusion of the Hon'ble Supreme Court in the case of Parasuram Pottery Works Co. Ltd. Vs. Income Tax Officer (1977 AIR 429). The Bench states that assessment proceedings must have a finality at some point, for a society to be referred to as civilized. Revisiting jaded issues time and again, without allowing them to rest would be contrary to the above dictum. 21. All the more in a case such as the present where there is not even an allegation that the assessee/petitioner has su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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