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TMI Blog2025 (4) TMI 329X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of the case, the Tribunal was right in holding that reopening of assessment is valid? (TC(A) No.196 of 2012 (2003-04) and TC(A) No.197 of 2012 (2005-06)) (ii) Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that reopening of assessment made under Section 143(3) beyond 4 years on same set of facts would not amount to change of opinion? (TC(A) No.196 of 2012 (2003-04)) (iii) Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that reopening of assessment on the basis of retrospective amendment to Section 80HHC by Taxation Amendment Laws 2005 would constitute reason to believe that assessee had failed to disclose fully and truly all material facts? (TC(A) No.196 of 2012 (2003-04)) (iv) Whether on the facts and in the circumstances of the case the Tribunal was right in holding that reopening of assessment to disallow deduction under Section 80IA in the ninth year is valid though deduction under Section 80IA was allowed in the scrutiny assessment from the assessment year 1995-96 onwards? (TC(A) No.196 of 2012 (2003-04)) (v) Whether on the facts and in the circumstances of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partment to leave it to the assessee to take a decision as to what is best for them and for the health of the company. These aspects were rightly taken note of by the CIT(A) by observing that the assessee-company is able to get popularity because of its close association with the game of cricket and it is comparable to any other mode of advertisement establishing hoardings, publicity material and other conventional modes of advertisement. 22.Further, the CIT(A) rightly took note of the decision in Delhi Cloth and General Mills Co. Ltd. (supra) by observing that the power of the Revenue is confined only to examine the purpose of genuineness of the expenditure and not the expediency or the quantum. Nowhere there is any observation either made by the Assessing Officer or the Tribunal that the expenditure was not genuine. In fact, Mr.T.Ravikumar would fairly submit that all other expenditure, which have been claimed by the assessee towards sponsorship, advertisement, have been allowed in its entirety. The Tribunal fell in error in coming to a conclusion that donations were extended towards the Pace Foundation, when the fact remains that the assessee has established the foundation an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pretation of the provisions of the Act? (TC(A).No.155 of 2011 (AY 2002-03) and TC(A).No.156 of 2011 (AY 2004-05)) 7.Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that reopening of assessment made under Section 143(3) beyond 4 years on same set of facts would not amount to change of opinion? (TC(A) 155 of 2011 (AY2002-03))' 6. We now address the substantial questions relating to re-opening of assessment raised in respect of AYs 2002-03 and 2004-05. In respect of AY 2002-03, a return of income were filed in time and an assessment was completed on 29.12.2006, under scrutiny. In relation to AY 2004-05, the return of income filed within time was taken up for scrutiny and an order passed on 31.03.2005. 7. Prior thereto, the assessing authority had issued notices under Sections 143(2) & questionnaires under Section 142(1) of the Act for both years soliciting various particulars from the assessee. Those particulars included issues that had been identified for re-assessment as per the reasons for re-opening dated 03.06.2009 (both A.Ys.2002-03 and 2004-05) being claim of deduction claimed under Sections 88HHC and 80IA of the Act. 8. P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence, the above DEPB receipt of Rs.32,07,04,678/-, should be excluded for the purpose of computation of 80HHC deduction being the export incentives as per the proviso to Section 80HHC(3) otherwise means that the deduction u/s. 80HHC can not be further increased on the above receipt by way of DEPB credit. Further, the above view has been confirmed by the Ld.CIT(A)-III vide the order No.730/2006-07/A-III dated 27.03.2007 in the case of M/s.Breaks India Ltd for the AY 2004- 05 on similar disallowance made by the assessing officer. Based on the above facts, it is clear that assessee has not produced the material facts fully and truly before the tax authorities for the purpose of claim of deduction u/s.80 HHC of the Income tax act. Hence, I have the reason to believe that, the income has escaped the assessment by way of excess claim of deduction u/s.80HHC for the current year. 2.Further, it is noticed from the details submitted by the assessee for the AY 2006-07 that the assessee has been engaged in importing training to the pace bowlers of cricket in India. The assessee has claimed that the above expenditure as the expenditure incurred wholly and exclusively for the purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome filed by the assessee and that the officer had engaged in detailed discussion with the assessee on both the above issues. 12. Section 147 and the proviso to the extent to which it is relevant, are extracted below: Income escaping assessment. 147. If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (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 section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulfilment of conditions laid down as per the above amendment to the section 80HHC(3) of the act. Hence, the assessee has to prove that, it had opted to choose either duty drawback or the DEPB being the duty remission scheme and the rate of the duty drawback was higher than the DEPB during that period. The corresponding proviso is reproduced as under. "Provided also that in the case of an assessee having export turnover exceeding rupees ten crores during the previous year, the profits computed under clause (a) or clause (b) or clause (e) of this sub-section or after giving effect to the first proviso, as the case may be, shall be further increased by the amount which bears to ninety per cent of any sum referred to in clause (iiid) of section 28, the same proportion as the export turnover bears to the total turnover of the business carried on by the assessee, if the assessee has necessary and sufficient evidence to prove that:- (a)he had an option to choose either the duty drawback or the Duty Entitlement Pass Book Scheme, being the Duty Remission Scheme, and (b)the rate of drawback credit attributable to the customs duty was higher than the rate of credit allowable under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are deemed to be cases where income chargeable to tax has escaped assessment. One of such situations is the excess grant of deductions. In the present case, the reason for re-opening is that the grant of deduction under Sections 80HHC and 80IA by the assessing officer was in excess of what the appellant was entitled to. 18. Thus, while the veracity or otherwise of that allegation in regard to excess claim of deduction requires to be tested, as far as the assumption of jurisdiction under Section 147 is concerned, we do not find any cause to intervene. The re-opening has been made within the time limit provided and the invocation of Explanation 2 to justify the assumption of jurisdiction to reassess is also in order, subject of course, to the process of re-assessment on merits. 19. The substantial question of law in relation to assumption of jurisdiction under Section 147 for AY 2004-05 is answered in favour of the revenue and against the assessee. 20. We now advert to the other substantial questions touching on reassessments for AY 2003-04, 2004-05 and 2005-06. Though a substantial question has been raised and admitted in this regard for AY 2008-09 as well, we find that the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ways to have included, synthetic essences in any form.] 6. Confectionery and chocolates. 7. Gramophones, including record players, and gramophone records. 8. [***] 9. [Projectors.] 10. Photographic apparatus and goods. 11-21. [***] 22. Office machines and apparatus such as typewriters, calculating machines, cash registering machines, cheque writing machines, intercom machines and teleprinters. Explanation.- . . . . 23. Steel furniture, whether made partly or wholly of steel. 24. Safes, strong boxes, cash and deed boxes and strong room doors. 25. Latex foam sponge and polyurethane foam. 26. [***] 27. Crown corks, or other fittings of cork, rubber, polyethylene or any other material. 28. Pilfer-proof caps for packaging or other fittings of cork, rubber polyethylene or any other material. 29. [***]] 25. According to the Department, the rubber tyres manufactured by the assessee would fall within the mischief of serial No.27 that reads 'crown corks, or other fittings of cork, rubber, polyethylene or any other material'. 26. Mr.Vijayaraghavan would argue that the entry has to be read ejusdem generis, and as applicable to corks only. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the ambit of entry No.27, as the revenue would argue, there would have been no necessity to refer to those products again in entry 28. 33. That apart, we do not find that the comma placed after the phrase 'crown corks', makes any difference to the interpretation that the fittings of cork, rubber, polyethylene or other material must relate to crown corks only. This argument is hence rejected and the substantial question of law in this regard is answered in favour of the assessee. 34. The decisions referred to by the assessee, would also support our conclusion as above. 35. We now address the substantial question relating to the rejection of deduction under Section 80IA in the last year of claim disregarding the grant of claim for the earlier year. The first year of claim under Section 80IA was AY 1995-96. Section 80IA was restructured in 1999 vide Finance Act, 1999 and bifurcated into two provisions i.e., Section 80IA and Section 80IB with effect from 01.04.2000. While Section 80IA continued to grant relief in respect of industrial undertakings or enterprises engaged in infrastructure development, Section 80IB provides for a deduction for industrial undertakings ot ..... X X X X Extracts X X X X X X X X Extracts X X X X
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