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From the Courts »
  Vatsala Shenoy vs. JCIT (Supreme Court)
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DCIT, Circle 7(1),New Delhi Room No. 312, 3rd floor, CR Building, IP Estate, New Delhi VS. M/s Samtel Color Limited, 6th floor, TDI Centre, Distt. Centre, Jasola, New Delhi
February, 18th 2015
                                                    ITA NOS. 4134&4135/Del/2010


             IN THE INCOME TAX APPELLATE TRIBUNAL
                   DELHI BENCH "G ", NEW DELHI
            BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER
                                  AND
              SHRI J.S. REDDY, ACCOUNTANT MEMBER


                        I.T.A.No.4134/Del/2010
                             A.Y. : 2002-03
DCIT, Circle 7(1),                       M/s Samtel Color Limited,
New Delhi                           VS. 6th floor, TDI Centre,
Room No. 312, 3rd floor, CR              Distt. Centre,
Building, IP Estate, New Delhi           Jasola, New Delhi
                                         (PAN: AAACS6589D)
(APPELLANT)                              (RESPONDENT)
                                  AND
                        I.T.A.No.4135/Del/2010
                             A.Y. : 2002-03
DCIT, Circle 7(1),                       M/s Samcor Glass Ltd.,
New Delhi                           VS. 6th floor, TDI Centre,
Room No. 312, 3rd floor, CR              Distt. Centre,
Building, IP Estate, New Delhi           Jasola, New Delhi
                                         (PAN: AAACS6589D)
(APPELLANT)                              (RESPONDENT)


        Department by                 :    Sh. BRR Kumar, Sr. DR
         Assessee by                  :    Sh. D.C. Garg, CA


                      Date of Hearing : 12-02-2015
                      Date of Order       : 17-02-2015
                             ORDER
PER H.S. SIDHU : JM
     These Appeals have been filed by the Revenue against the
impugned orders both dated 02/06/2010 passed by the Ld.
Commissioner of Income Tax (Appeals)-X, New Delhi. Since                  the
legal issue is common and identical, therefore, we are disposing of



                                      1
                                                          ITA NOS. 4134&4135/Del/2010


these        Appeals by      this consolidated order for the sake of
convenience, by dealing with ITA No. 4135/Del/2010 (A.Y. 2002-03).

2.   The grounds raised in ITA No. 4134/Del/2010 read as under:-

     (i)      Ld.   CIT(A)   erred   in       law   and   on    the    facts    and
              circumstances of the case, in holding that the reopening
              of the assessment u/s. 147 of the I.T. Act was incorrect
              and invalid while the AO reopened the case after due
              application of mind and following the due procedure or
              reopening the case.

     (ii)     The appellant craves to amend, modify, alter, add or
              forego any ground of appeal at any time before or during
              the hearing of this appeal.

3.   The grounds raised in ITA No. 4134/Del/2010 read as under:-

     (i)      On the facts and circumstances of the case and in law Ld.
              CIT(A) erred in holding that reopening of the assessment
              u/s. 147 was incorrect and invalid, while the AO reopened
              the case by recording valid reasons and following due
              procedure.

     (ii)     On the facts and circumstances of the case and in law the
              Ld. CIT(A) erred in deleting the addition of Rs. 13,03,988/-
              being interest income accrued on fixed deposits.

     (iii)    On the facts and circumstances of the case and in law the
              Ld. CIT(A) erred in not adjudicating issue of addition of
              Rs. 40,24,338/- being expenditure on capital spares
              consumed being capital in nature, on merits.

4.   The brief facts of the case are that the assessee is a limited
company engaged in the business of manufacturing of Glass Shells,

                                          2
                                                         ITA NOS. 4134&4135/Del/2010





Panels and Funnels for black & White and Color Picture Tubes and
trading. The Original assessment in this case was completed under
section 143(3) of Income-tax Act vide order dated 28.03.2005 at NIL
income after adjustment of depreciation for current year at
Rs.23,77,27,956/-.   Balance      depreciation         remained      unabsorbed
amounting to Rs.5,68,51,301/- was allowed to carry forward for
subsequent year. Subsequently vide order dated 18.08.2008 u/s 154
of Income-tax Act, depreciation allowable was calculated at Rs.
23,94,35,051/-. After adjustment of depreciation of current year
balance depreciation of Rs.5,51,44,206/- was allowed to carry
forward for subsequent year. The Assessing Officer perused the
assessment record and observed that the Assessee Company has
claimed excess amount under the following heads:-

          "1.   As per schedule-9, page-16 of the audit report, the
                assessee has shown interest on fixed deposits for
                Rs. 13,03,988/- has not been shown as income as
                per schedule-14 of the audited account. Income of
                an   amount       of       Rs   13,03,988/-        has    escaped
                assessment on account of interest accrued on fixed
                deposit, which should be taken as income.

          2.    The assessee had paid technical assistance fee for
                Rs.26,94,333/-.        Though          technical     information
                acquired by the assessee was to have contributed
                to benefit        of enduring nature end therefore,
                required     to    have         been     treated     as    capital
                expenditure. Income of an amount of Rs.26,94,333/-
                has escaped assessment as that amount has been
                paid as technical assistance fee. Since the assessee
                is deriving a benefit of enduring nature and
                therefore, should be treated as capital expenditure.

                                       3
                                                      ITA NOS. 4134&4135/Del/2010


             3.      The   assessee       has   claimed   expenditure        for
                     Rs.40,24,338/- on capital spares consumed (vide
                     assessment order calculation sheet) is of capital
                     nature, which should have been disallowed. This
                     mistake resulted under-assessment of income by
                     Rs.   40,24,338/-.    An    income    of    amount       of
                     Rs.40,24,338/- has escaped assessment as the
                     expenditure incurred on capital spares consumed is
                     of capital nature rather than revenue."

4.1   In view of the above, the AO have reason to believe that the
taxable income to the tune of Rs. 80,22,659/- has escaped
assessment within the meaning of section 147 of the I.T. Act, 1961.
After recording the reasons to believe in writing and after approval
from the Ld. CIT(A), Delhi-III, New Delhi u/s. 151(1) of the I.T. Act,
the then AO issued notice u/s. 148 of the I.T. Act, 1961 on
25.3.2009.        The reasons recorded were provided to the assessee
vide letter dated 17.8.2008. In response to the same, the assessee
provided letter dated 4.9.2009, as submitted that no income has
escaped assessment and therefore, the assessee requested to drop
the reassessment proceedings. The objections of the assessee was
also considered and rejected by the AO, vide order dated 7.10.2009
before issuing the notice u/s. 148 of the I.T. Act and case of the
assessee was fixed for hearing on 16.10.2009.                On 16.10.2009
various Authorised Representative of the Assessee appeared. After
considering all the documentary evidence and the submission of the
assesssee. AO completed the assessment u/s. 147/143(3) of the I.T.
Act vide order dated 29.10.2009.

5.    Aggrieved with the same, assessee filed the Appeal before the
Ld. CIT(A) by raising various grounds including challenging the
reopening of the assessment u/s. 147 of the Act, who vide impugned

                                      4
                                                   ITA NOS. 4134&4135/Del/2010


orders     both dated 2.6.2010 allowed the appeals of both the
Assessees on legal issue as well as on merits.

6.      Now the Revenue is in appeal before the Tribunal.

7.      At the time of hearing Ld. DR relied upon the order passed by
the AO u/s. 147/143(3) of the I.T. Act and the contention raised by
the Revenue in the Grounds of Appeal. Ld. DR filed a small Paper
Book containing pages 1 to 59 in which he has attached the various
documentary evidences relating to the assessment record as well
as the record of the Ld. First Appellate Authority.

8.      Ld. Counsel of the assessee controverted the arguments
advanced by the Ld. DR and relied upon the order passed by the Ld.
CIT(A).

9.      We have heard both the parties and perused the relevant
records, especially the orders passed by the Revenue Authorities
alongwith the Paper Book filed by the Ld. DR. We are of the view
that it is an admitted case that        assessee is a limited company
engaged in the business of manufacturing of Glass Shells, Panels
and Funnels for black & White and Color Picture Tubes and trading.
The Original assessment in this case was completed under section
143(3) of Income-tax Act vide order dated 28.03.2005 at NIL income
after     adjustment    of   depreciation    for    current      year      at
Rs.23,77,27,956/-.     Balance   depreciation   remained      unabsorbed
amounting to Rs.5,68,51,301/- was allowed to carry forward for
subsequent year. Subsequently vide order dated 18.08.2008 u/s 154
of Income-tax Act, depreciation allowable was calculated at Rs.
23,94,35,051/-. After adjustment of depreciation of current year
balance depreciation of Rs.5,51,44,206/- was allowed to carry
forward for subsequent year. AO perused the original assessment



                                    5
                                                        ITA NOS. 4134&4135/Del/2010


and   observed that the assessee company has claimed excess
amount under the following heads:-

           "1. As per schedule-9, page-16 of the audit report, the
               assessee has shown interest on fixed deposits for
               Rs. 13,03,988/- has not been shown as income as
               per schedule-14 of the audited account. Income of
               an    amount      of       Rs   13,03,988/-        has    escaped
               assessment on account of interest accrued on fixed
               deposit, which should be taken as income.

          2.   The assessee had paid technical assistance fee for
               Rs.26,94,333/-.        Though          technical     information
               acquired by the assessee was to have contributed
               to benefit        of enduring nature end therefore,
               required     to    have         been     treated     as    capital
               expenditure. Income of an amount of Rs.26,94,333/-
               has escaped assessment as that amount has been
               paid as technical assistance fee. Since the assessee
               is deriving a benefit of enduring nature and
               therefore, should be treated as capital expenditure.

          3.   The    assessee        has      claimed      expenditure        for
               Rs.40,24,338/- on capital spares consumed (vide
               assessment order calculation sheet) is of capital
               nature, which should have been disallowed. This
               mistake resulted under-assessment of income by
               Rs.   40,24,338/-.         An    income       of    amount       of
               Rs.40,24,338/- has escaped assessment as the
               expenditure incurred on capital spares consumed is
               of capital nature rather than revenue."



                                      6
                                                 ITA NOS. 4134&4135/Del/2010


9.1      Keeping in view of the aforesaid reasons, the AO have reason
to believe that the taxable income to the tune of Rs. 80,22,659/-
has escaped assessment within the meaning of section 147 of the
I.T. Act, 1961 and he recorded the reasons to believe which was
supplied to the assessee. In response to the same, assessee filed
objection, which was considered and rejected vide           order dated
7.10.2009. Thereafter, AO issued notice u/s. 148 of the I.T. Act on
25.3.2009.     In response to the same, Authorised Representative of
the assessee appeared and after hearing him, the AO completed the
assessment on 29.10.2009 u/s. 143(3) by making the various
additions.

9.2   As per the     impugned order, Ld. CIT(A) has stated that the
assessee vide his letter dated 4.9.2009 raised certain objections
against reopening of the assessment which was disposed of by the
AO on 7.10.2009,     which Ld. CIT(A) has reproduced at pages 3 and
4 of the      impugned order.    The assessee has made additional
grounds including the legal ground before the Ld. CIT(A), which the
Ld. CIT(A) has mentioned at pages no. 5 and 6 of the impugned
order.




9.3   Ld. CIT(A) has dealt with the ground in which the assessee has
challenged the reopening of the assessment by submitting that the
AO has reopened the assessment merely on the basis of the change
of opinion as there was no tangible material available to have
reason to believe that income has escaped assessment. In support
of his contention, the assessee cited the decisions of the Hon'ble
Supreme Court of India in the case of CIT vs. Kelvinator of India
Limited in Appeal Nos. 2009-2011 of 2003 and in the case of CIT vs.
Foramer France (264 ITR 566) and the decision of the Hon'ble
Jurisdictional High Court in the case of Sita World Travels (India) Ltd.
vs. CIT (274 ITR 186).

                                   7
                                                 ITA NOS. 4134&4135/Del/2010


9.4   We have gone through the facts and circumstances of the
present case as well as the case laws cited by the Ld. Counsel of the
assessee before the Revenue Authorities as well as before us. We
are of the view that the AO has no fresh material to form his opinion
regarding escapement of assessment and he has also not found any
tangible material to record the reasons for reopening of the
assessment of the assessee.     It is merely a change of opinion which
is not permissible under the law as well as according to the various
decisions rendered by the     Hon'ble Supreme Court of India in the
case of CIT vs. Kelvinator of India Limited in Appeal Nos. 2009-2011
of 2003 and in the case of CIT vs. Foramer France (264 ITR 566) and
the decision of the Hon'ble Jurisdictional High Court in the case of
Sita World Travels (India) Ltd. vs. CIT (274 ITR 186).

9.5   In view of the aforesaid facts and circumstances, as explained
above, we are of the view that the Ld. CIT(A)       has passed a well
reasoned order in the case of both the aforesaid assesses on the
basis of the material available before him as well as on the basis of
the decisions of the Hon'ble Supreme Court of India in the case of
CIT vs. Kelvinator of India Limited in Appeal Nos. 2009-2011 of 2003
and in the case of CIT vs. Foramer France (264 ITR 566) and the
decision of the Hon'ble Jurisdictional High Court in the case of Sita
World Travels (India) Ltd. vs. CIT (274 ITR 186) and rightly held that
the issue reopening of assessment is incorrect and invalid.
Therefore, no interference is called for in the well reasoned order
passed by the Ld. CIT(A), hence, we uphold the impugned order
passed by the Ld. CIT(A) by dismissing the appeals filed by the
Revenue.

9.6   Since Ld. CIT(A) in the case of both the assesseess has rightly
held that the reopening of assessment was        incorrect and invalid,


                                   8
                                                ITA NOS. 4134&4135/Del/2010


therefore, in our considered opinion, there is no need to adjudicate
the issues on merits.

10.   In the result, both the appeals of the Revenue are dismissed.

      Order pronounced in the Open Court on 17/02/2015.


      Sd/-                                               Sd/-

[J.S. REDDY]                                      [H.S. SIDHU]
ACCOUNTANT MEMBER                              JUDICIAL MEMBER

Date 17/02/2015
"SRBHATNAGAR"


Copy forwarded to: -
1.    Appellant -
2.    Respondent -
3.    CIT
4.    CIT (A)
5.    DR, ITAT
                            TRUE COPY
                                                  By Order,




                             Assistant Registrar, ITAT, Delhi Benches




                                  9
     ITA NOS. 4134&4135/Del/2010




10

 
 
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