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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 ..... le is made absolute to the aforesaid extent. - HONOURABLE MR. JUSTICE BHARGAV D. KARIA AND HONOURABLE MR. JUSTICE NIRAL R. MEHTA Appearance: For the Petitioner(s) No. 1: Mr B S Soparkar (6851) For the Respondent(s) No. 1 : Ms Maithili D Mehta (3206) ORAL JUDGMENT (PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA) 1. Rule returnable forthwith. 2. Ms. Maithili Mehta, learned Senior Standing Counsel waives service of notice of Rule on behalf of respondent. 3. Having regard to the controversy in narrow compass, with the consent of learned advocates for the parties, the matter is taken up for hearing. 4. By this petition under Article 226 of the Constitution of India, the petitioner has challenged the notice issued under Section 148 of the Income-Tax Act, 1961 (for short the Act ) dated 21.3.2021 for reopening of the Assessment Year 2017- 18. 5. The petitioner, who is an importer and refiners of edible oil in India, filed original return 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 peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apital 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. As per para 6 of ICDS-IV, revenue from service transactions was to be recognized in same manner as in para 20 of Ind. As. Further the investment is increased in a notional manner but by actually recognizing investment on consideration of actual service provided. The reduction of guarantee fees of Rs. 99,72,603/- is not allowable from the computation of total income under normal provisions. The claim of wrong deduction has resulted in escaped assessment by an amount of Rs. 99,72,603/-. 3. Analysis of information collected/received: it is found that in Profit and Loss account, at Note No. 29 Other Income of Annual Report for F.Y. 2016-17 relevant to the Assessment Year 2017-18, the assessee has received guarantee commission of Rs. 9.97 Mn. The assessee 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oached this Court. 6. Mr. B.S. Soparkar learned advocate for the petitioner submitted that the main reason for reopening the assessment is not on basis of any fresh tangible material which is placed on the perusal of the assessment record, wherein it is found that as per Note No. 29 showing other income of Annual Report for Financial Year 2016-17 that the assessee has received guarantee commission of Rs. 9.97 Million and the assessee has reduced the amount of Rs. 99,72,603/- from the total income on account of corporate guarantee fees which is in respect of two of its subsidiary companies claiming to be a notional income. It was submitted that such opinion framed by the Assessing Officer is to reopen the assessment, is already considered during the course of the regular assessment as per the Notice under section 142(1) of the Act dated 5.7.2019, asking the same details with respect to break-up of 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is under Section 148 of the Act. Ms. Maithili Mehta referred to and relied upon the following averments made in the affidavit filed on behalf of the respondent : 4. The petition challenges the notice issued under Section 148 of the Act for Assessment Year 2017-18. The notice has been issued within a period of four years from the end of the relevant assessment year. As can be seen from the reasons recorded, relevant at page 137, the petitioner received guarantee commission of Rs. 99.72 Lacs and reduced the said amount from its total income on account of Corporate Guarantee Fees which is in respect of two of its subsidiary Companies claiming it to be a notional income. On the other hand, while computing the book profit, the petitioner disallowed the same and increased the book profit. After elaborating on other aspects, a specific reason has been formed that the reduction of guarantee 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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