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TMI Blog2024 (5) TMI 225X X X X Extracts X X X X X X X X Extracts X X X X ..... of income for Assessment Year 2017-18 on 22.11.2017 which was revised on 26.11.2018, declaring total income of Rs. 54,94,84,050/- under the normal provisions and book profit of Rs. 345,20,74,045/- under MAT provisions of the Act. 5.1 The case of the petitioner was selected for scrutiny and detailed notice under Section 142(1) of the Act dated 5.7.2019 was issued, requiring the petitioner to furnish various details with respect to break-up of 'any other amount allowable as deduction' claimed in Schedule BP of return, wherein notional guarantee commission of Rs. 99,72,603/- was claimed by the petitioner. 5.2 The petitioner by reply dated 14.11.2019 submitted the requisite details. Thereafter, the assessment order under Section 143(3) of the Act was passed on 2.12.2019 assessing total income of Rs. 55,42,43,719/- under the normal provisions and book profit of Rs. 345,68,33,714/-. 5.3 The respondent thereafter issued the notice under Section 148 of the Act on 21.3.2021 for Assessment Year 2017-18. The petitioner, in response to the notice, filed return of income and requested for the copy of the reasons recorded for reopening the assessment. 5.4 The respondent - Assessing Officer p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company has reduced an amount of Rs. 99,72,603/- from its total income on account of corporate guarantee fees which is in respect of two of its subsidiaries companies claiming it to be a notional Income. However, it is seen that while computing the book profit the assessee has disallowed the same and increased the book profit. On the one hand the guarantee fees to the extent of 99.73 lakhs after deductions of Rs. 27,000/- which could not be ascertained from the records and on the other hand it is noticed that at note no. 5 of the balance sheet the investments in share capital of the two subsidiary companies namely KOG Food Products (India) Pvt. Ltd. and KTV Health Food Pvt. Ltd. has correspondingly been increased by Rs. 1 cr. The assessee has credited this guarantee commission in its income from other sources which is at the rate of 1% as mentioned in note 5 to its balance sheet. From the above treatment of the guarantee that commission when the same is credited in the profit and loss account and correspondingly share capital has been increased in these two subsidiary companies it cannot be said to be notional income as claimed by the assessee and as reduced from its total income. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'any other amount allowable as deduction' claimed in Schedule BP of the income-tax return, wherein the notional guarantee commission was claimed. Reliance was placed on the decision in the case of Gujarat State Board of School Textbooks v. Asst. CIT, reported in (2016) 75 taxman.com 281 and a decision in the case of Premium Finance (P.) Ltd. v. Asst. CIT, reported in (2016) 73 taxman.com 369 to submit that there is change of opinion by the respondent - Assessing Officer having the reason to believe that the income has escaped the assessment and, therefore, the impugned notice is without jurisdiction. 6.1 It was further submitted that the impugned notice is issued on the basis of the audit party objection which is not valid and the entire exercise of assumption of jurisdiction to issue the notice for reassessment would be without jurisdiction as reliance was placed on the decision in the case of Reckitt Benckiser Healthcare India (P) Ltd. v. Dy. CIT, reported in (2017) 392 ITR 336 as well as on the decision in the case of Adani Power Maharashtra Limited v. Asst. Commissioner of Income-Tax, rendered in Special Civil Application No. 347 of 2022, decided on 20.2.2023. 6.2 In suppor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... antee fees of Rs. 99.72 Lacs was not allowable from the computation of total income under normal provisions which has led to escapement of income. The petitioner lodged objections and at page 146, has stated that there was no new material and that the issue was gone into at the time of original assessment and that since the income of the petitioner was assessed under MAT provisions, escapement under normal computation would pale into insignificance. The objections of the petitioner have been disposed of by an order and at page 168, it has been recorded that during the course of original proceedings, no conscious decision has been taken. It has also been recorded that the petitioner's assertion that this was only notional income is not correct. It has also been recorded that though while computing book profits under Section 115JJB, the guarantee fees were taken into consideration but without any basis were reduced in the normal computation. 5. I humbly submit that the petitioner's main assertion that since the assessment was undertaken under the MAT provisions, escapement of income under the normal provisions cannot be invoked, is thoroughly misconceived. I crave leave ..... X X X X Extracts X X X X X X X X Extracts X X X X
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