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TMI Blog2018 (11) TMI 1971X X X X Extracts X X X X X X X X Extracts X X X X ..... le for deduction u/s 80IA." 2. In ground No. 1, the assessee has challenged the issuance of notice u/s 148 and the consequent order passed under section 147 of the Act. In this regard, the ld. AR submitted that the assessee had filed its return declaring income of Rs. 81,41,70,667/- on 14.10.2010 after claiming deduction of Rs. 14,96,10,989/- u/s 80IA of the Act. The return of income was subsequently revised on 23.03.2012 declaring income of Rs. 77,61,60,827/-. It was submitted that in course of assessment proceedings, the assessee vide letter dated 11.05.2012 filed the copy of audit report in Form No. 10CCB as required u/s 80IA(7). Thereafter, the the Assessing officer vide letter dated 25.09.2012 required the assessee to furnish the justification for claiming deduction u/s 80IA. The assessee filed the reply dated 08.10.2012 justifying the claim of deduction u/s 80IA. Thereafter, vide letter dated 05.02.2013, the assessee explained as to why deduction u/s 80IA should be allowed to it with reference to the liquidated damages received from M/s Suzlon Energy Limited and sale of CERs. 3. It was further submitted by the ld AR that the Assessing officer completed the assessment u/s 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of four years from the end of relevant AY. Hence, the assessee's case falls in proviso to section 147 wherein the assessment cannot be reopened after the expiry of four years from the end of relevant AY unless any income chargeable to tax has escaped assessment for such assessment year by reason of failure on the part of assessee to disclose fully and truly all material facts necessary for assessment for that assessment year. It may be noted that in course of original assessment proceedings, assessee filed detailed working of claim of deduction u/s 80IA along with audit report in Form No. 10CCB as required u/s 80IA(7). After considering the same, the AO disallowed the claim of deduction to the extent of Rs. 3,80,44,554/- in respect of liquidated damages received from M/s Suzlon energy Limited and sale of CERs. Thus, all the material facts necessary for claim of deduction u/s 80IA was disclosed fully and truly by the assessee. Therefore, it is incorrect on part of the lower authorities to hold that assessee has not disclosed fully and truly all material facts necessary for its assessment on the issue of allowance of deduction u/s 80IA of the Act. Hence, reopening of assessment aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilable on record. Undisputedly, the assessment was initially completed u/s 143(3) vide order dated 27.02.2013 and the same was reopened by issuance of notice u/s 148 dated 31.03.2017 after the expiry of four years from the end of the relevant assessment year 2010-11. The proviso to section 147 is thus clearly attracted and it therefore needs to be examined whether the income which is sought to be brought to tax by the Assessing officer and which has thus escaped assessment is on account of failure on the part of the assessee to disclose fully and truly all material facts necessary for completion of assessment. 12. In this regard, firstly, we refer to the reasons recorded by the AO before issuance of notice u/s 148 which reads as under: "The assessee filed its return of income for AY 2010-11 on 14.10.2010 declaring total income of Rs. 81,41,70,667/- which was assessed u/s 143(3) at the total income of Rs. 85,17,09,380/- on 27.02.2013. On going through the records, it was noticed that assessee had not charged proportionate head office expenses on account of establishment & financial expenses on wind mills for the purpose of computation of deduction u/s 80IA. As per provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... various mining units which are not eligible for such tax holiday. It is also a fact that there are head office establishment and financial expenses. It is therefore reasonable on part of the Assessing officer to hold a prima facie belief that such head office expenses incurred at the entity level should be allocated between the two set of activities - the activities which are eligible for tax holiday and those which are not eligible for tax holiday. At the same time, it could be position of the assessee that certain expenses though incurred at the head office level are not incurred in relation to or have no nexus with tax holiday units therefore, there was no necessity to allocate these expenses at the first place. Alternatively, the assessee may plead that all expenses incurred in relation to tax holiday units have already been accounted for separately and there is thus no necessity for any allocation of head office expenses. The question is whether such a position of the assessee and the related facts are manifest clearly on the face of the financial statements, the documentation in forms of tax audit report, the tax computation or other documentation/submissions filed either as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cannot be a ground for reopening. Similarly, in case of Hindustan Zinc, there was complete disclosure regarding additional depreciation on captive power plant and the reassessment proceedings were thus held invalid. We have also gone through the other decisions relied upon by the ld AR and find that the same doesn't support the case of the assessee. The decision of the Hon'ble Gujarat High Court in case of Ajanta Pvt. Ltd. (supra) rather supports the case of the Revenue. 17. In light of above discussions and in the entirety of facts and circumstances of the case, we doesn't see any infirmity in AO's exercising his jurisdiction under section 147 of the Act by issuance of notice u/s 148 of the Act. In the result, the ground of appeal is dismissed. 18. In ground No. 2, the assessee has challenged the confirmation of the action of the AO of reducing the claim of deduction u/s 80IA of Rs. 1,47,82,535/- by apportioning establishment and financial expenses at Rs. 36,83,29,248/- to wind power generation undertakings eligible for deduction u/s 80IA ignoring that the entire operation and maintenance of wind plants has been given to Suzlon Energies Ltd. and therefore, the said expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orate office is Rs. 23,47,12,627/-. Out of it, the AO himself has considered donation of Rs. 5,12,84,990/- and business promotion expenses of Rs. 51,63,000/- debited in corporate office as not relating to power generating units. After excluding the same, the remaining expenditure at corporate office is Rs. 17,82,64,637/-. It may be noted that none of these expenses pertain to the 80IA undertakings in as much as the entire operation and maintenance of the plant has been given to Suzlon Energies Ltd. Therefore, assessee has not to incur any expenditure on salary/ employees benefit, travelling, conveyance and other expenses debited under the various heads of expenses in Corporate Office/ head office. No strategic planning, day to day management and supervision, financial management, marketing management, tendering, work allocation, contract awarding, control etc. is required for operating these power plants by the Corporate Office/ head Office. Therefore, no part of these expenses more particularly expenses on repairs, rates and taxes, land tax, insurance, travelling, conveyance, financial expenses, consultancy charges, etc. can be allocated to the income derived from these power gene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... level and to safeguard the interest of the shareholders and the assessee still remains responsible for the activities of these eligible undertakings to the outside world even though at the operational level, the whole of its activities have been outsourced to Suzlon Energies Ltd. Therefore, the contention of the ld AR cannot be accepted that no expenses in furtherance and support of what we have stated above has been incurred by the assessee and which has no nexus with the eligible undertakings. To our mind, these activities at the strategic, managerial, regulatory and overall oversight level definitely have a nexus with the eligible undertakings and the expenses incurred in relation thereto needs to be allocated to the eligible undertakings. 25. Now, coming to the specifics of the expenditure incurred at the corporate level, on perusal of the details available at the APB 15-16, we find that the establishment expenses at the Corporate office has been shown as Rs 23,47,12,627. The AO has however wrongly took the total establishment expenditure at the entity level at Rs. 46,57,18,479/- which includes establishment expenditure incurred in relating to various mining activities. What t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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