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August, 14th 2013

                                   Date of decision: 5th August, 2013

+                     W.P.(C) 7452/2010

                   Through   Mr. S. Krishnan, Advocate.


                                       ..... Respondent
                  Through    Mr. Kamal Sawhney, Sr.
                  Standing Counsel.



      The petitioner has challenged reassessment proceedings initiated

in respect of assessment year 2006-07 vide notice dated 31st March,

2010 issued under Section 148 of the Income Tax Act, 1961 (Act, for


2.    Reassessment proceedings have been initiated within four years

from the end of the assessment year and, therefore, the first proviso to

Section 147 is not applicable.

3.    The petitioner had filed its return for the assessment year 2006-

07 on 19th October, 2006 and the return was selected for scrutiny.

Assessment order under Section 143(3) of the Act was passed on 25th

W.P. (C) 7452/2010                                    Page 1 of 9
August, 2008.

4.    The petitioner had claimed and were allowed deduction under

Section 10B of the Act amounting to Rs.6,72,28,255/- on the ground

that they were 100% export oriented unit and had fulfilled the

conditions of Section 10B. This is an undisputed position.

5.    The "reasons to believe" to justify reopening recorded by the

Assessing Officer under Section 147 of the Act read as under:-

             "The assessment of M/s Replika Press (P) Ltd. for
       the A.Y. 2006-07 was completed after scrutiny on
       25.08.2008, determining an income of Rs. 60, 07,205/-.
       Thereafter, it was observed that the assessee is engaged
       in the business of printing of text books (export as well
       as domestic sales) which does not made (sic) it eligible
       for claiming deduction u/s 108. It has been made clear
       in the case of Addl CIT WB-III, Calcutta Vs. A
       Mukherjee & Co. (P) Ltd. (113 ITR 718) that "a
       publisher may get the books printed from any printer,
       but the printer is a mere contractor and the publisher
       carries on the business of manufacturing and processing
       goods". A circular has also been issued by the CBDT
       (Circular No.347 dated 07/07/1982) on this matter.
       Thus the assessee is not a manufacturer for the purpose
       of claiming deduction u/s 10B. This mistake has
       resulted in under-assessment of income by
             In view of the above facts, I have reason to believe
       that income of Rs.6,72,28,255/- has escaped assessment
       by virtue of either omission or failure on the part of the
       assessee to disclose fully or truly all material facts
       necessary for assessment in this year in this case and
       the same is to be brought to tax under section 147/148
       of the I.T. Act."

6.     A reading of the said reasons makes it apparent and crystal clear

W.P. (C) 7452/2010                                  Page 2 of 9
that the Assessing Officer has referred to the business of the assessee

i.e. printing of textbooks, and has recorded a prima facie opinion that

this activity was not eligible for claiming deduction under Section 10B.

Reliance has been placed upon an earlier decision of the Calcutta High

Court in Additional CIT WB-III, Calcutta Vs. A Mukherjee & Co. (P)

Ltd. (1978) 113 ITR 718 (Calcutta). A portion of the said judgment has

also been quoted.

7.    A bare perusal of the original assessment order dated 25 th

August, 2008 would indicate that there was no doubt or dispute about

the business activity undertaken i.e. the petitioner was a printer of text

books.    The assessment order itself records that business of the

assessee was to print and export books which used to be delivered as

per instructions of the overseas importer to parties situated outside

India as well as in India (i.e. constructive exports). The petitioner had

shown     receipts    in    convertible     foreign     exchange       from

export/transmission of customized electronic data by way of scanning

and type setting charges. The assessee had shown domestic sales as

local turnover. It is clear that the Assessing Officer was fully aware

and conscious of the activities undertaken by the petitioner i.e. printing

of books in India as per instructions of the overseas third parties.

8.    The petitioner in objections had submitted that the reassessment

proceedings have been initiated in view of the audit objections. It was a
W.P. (C) 7452/2010                                    Page 3 of 9
case of ,,change of opinion and the nature and character of the

business activities undertaken by the petitioner were examined at the

first round and the Assessing Officer was satisfied that Section 10B

was applicable to the said activities i.e. the petitioner had carried on

business of manufacture or production.

9.    The Assessing Officer in his order dated 28th September, 2010

has referred to the said contention of the petitioner in the objections but

after referring to the judgment of the Supreme Court in CIT Vs. P.V.S.

Beedies (P) Ltd. (1999) 237 ITR 13 (SC) and the Delhi High Court in

New Light Trading Co. Vs. CIT (2001)170 CTR 138, rejected the said

contention recording that the audit objection was in respect of a new

information and not law.

10.   It cannot be disputed and questioned that the nature of activities

being undertaken by the assessee were in the knowledge of the

Assessing Officer in the first round. The nature and character of the

said activities i.e. printing of books has been mentioned in the

assessment order itself.    It is also recorded that these books were

printed and supplied to different parties as per the instructions of the

overseas importer.    Thus, it is incorrect and wrong that any fresh or

new factual information came to the knowledge of the Assessing

Officer after passing of the first assessment order dated 25th August,

2008. No new fact came to the knowledge of the Assessing Officer,
W.P. (C) 7452/2010                                    Page 4 of 9
which made him believe that the petitioner was carrying on another

activity and was not printing books. The audit objections in the present

case reflects and indicates that the auditors were of the opinion that the

Assessing Officer had erred in accepting the legal position that printing

of book amounts to manufacture or production. In the present case, the

Assessing Officer as per the "reasons to believe" had formed an

erroneous legal opinion in the original assessment order. Such cases

cannot be covered and cannot be made subject of reassessment

proceedings under Section 147 of the Act.             Appropriate remedy

available to the Revenue was to initiate proceedings under Section 263

of the Act, as it is their stand that the assessment order was erroneous

and was prejudicial to the interest of the Revenue.

11.   Learned counsel for the respondent-assessee has drawn our

attention to the full bench decision of this Court in Commissioner of

Income Tax Vs. Usha International Ltd., [2012] 348 ITR 485 (Delhi)

wherein, reference is made to the judgment of the Supreme Court in

ALA Firm Vs. CIT, (1991) 189 ITR 285 (SC). Our attention was

drawn to proposition No.4; that information as required by Section

147(b) can relate to an earlier decision on the point of law but that

information should have come to the knowledge of the Assessing

Officer by his own efforts. Such information may be gathered after

examination of the assessment records. Decision in ALA Firm (supra)
W.P. (C) 7452/2010                                     Page 5 of 9
was referred to in Usha International (supra) in a different context and

purpose. Observations made by the Supreme Court was with reference

to the term "information" and conceptually there is a difference

between the scope and ambit of the reassessment provisions

incorporated with effect from 1st April, 1989.      The new statutory

provisions do not refer to the word "information" and nature, type or

character of information.    No doubt, the scope and ambit of the

amended reassessment provisions is wider, but what is relevant and

important is that cases of "change of opinion" are not covered or

protected under the re-enacted reopening provisions.              In this

connection, it would be appropriate to reproduce paragraphs 15 and 16

of the decision of the Full Bench in Usha International Ltd. (supra):-

           "15.     Thus where an Assessing Officer incorrectly
           or erroneously applies law or comes to a wrong
           conclusion and income chargeable to tax has
           escaped assessment, resort to Section 263 of the Act
           is available and should be resorted to. But initiation
           of reassessment proceedings will be invalid on the
           ground of change of opinion.
           16.     Here we must draw a distinction between
           erroneous application/ interpretation/understanding
           of law and cases where fresh or new factual
           information comes to the knowledge of the
           Assessing Officer subsequent to the passing of the
           assessment order.     If new facts, material or
           information comes to the knowledge of the
           Assessing Officer, which was not on record and
           available at the time of the assessment order, the
           principle of "change of opinion" will not apply.
           The reason is that "opinion" is formed on facts.

W.P. (C) 7452/2010                                  Page 6 of 9
           "Opinion" formed or based on wrong and incorrect
           facts or which are belied and untrue do not get
           protection and cover under the principle of "change
           of opinion". Factual information or material which
           was incorrect or was not available with the
           Assessing Officer at the time of original assessment
           would justify initiation of reassessment proceedings.
           The requirement in such cases is that the
           information or material available should relate to
           material facts.     The expression ,,material facts
           means those facts which if taken into account would
           have an adverse affect on the assessee by a higher
           assessment of income than the one actually made.
           They should be proximate and not have remote
           bearing on the assessment. The omission to disclose
           may be deliberate or inadvertent. The question of
           concealment is not relevant and is not a precondition
           which confers jurisdiction to reopen the

12.    After quoting the said paragraphs, the full bench had made

reference to New Light Trading Co. Vs. CIT (supra) and P.V.S.

Beedies (P) Ltd.(supra).

13.   We have also examined the judgment of the Calcutta High Court

in A. Mukherjee and Company Private Limited (supra). The said

judgment does not support the Revenue and the Assessing Officer in

the ,,reasons to believe has quoted one sentence , which in fact is a

misquote and does not state or convey what the Assessing Officer has

understood.    The full paragraph in A. Mukherjee and Company

Private Limited (supra) reads:-

              "In order that a publisher of books should be a
              manufacturer of books it is wholly unnecessary

W.P. (C) 7452/2010                                 Page 7 of 9
             for him either to be an owner of a printing press
             or to be a book-binder himself. A paper is not a
             book, though it is printed on papers. A
             publisher may get the books printed from any
             printer but the printer is not the manufacturer
             but a mere contractor. The findings of the
             Tribunal in our opinion conclusively show that
             the assessee was carrying on the activity of
             manufacturing and also of processing of books
             which are also goods."

14.   In the said case, the respondent was a publisher of books but did

not have a printing press. He would procure manuscripts, hit upon a

suitable format, get it printed from third parties under his supervision,

get the book bound and put it out for sale. The Calcutta High Court

dismissed the appeal of the Revenue and held in favour of the assessee

therein that he was engaged in manufacturing and also processing of

books, which were goods. The activity undertaken by the petitioner

herein, as accepted in the original assessment order, is that the

petitioner had printed text books and bound them and as per the

instructions of the importer dispatched them to parties outside India or

within India. The petitioner has set up an undertaking for printing and

production of books.

15.   Section 10B applies to 100% export oriented undertaking

engaged in export of articles, things or computer software for a period

of ten consecutive assessment years beginning from the year in which

the undertaking begins to manufacture or produce articles, things or

W.P. (C) 7452/2010                                   Page 8 of 9
computer software. The words "articles" and "things" are wide and by

no stretch it can be said that the petitioner does not produce an article

or a thing. After receipt of manuscripts from abroad, the petitioner has

to do type setting, make/process/print on paper and then bind printed

pages into books. Thus, a new product, distinct and separate from the

bare manuscripts takes shape and gets a physical shape in form of

books. Books are an article or a thing and the process involved is

certainly production, if not manufacture.

16.   In view of the aforesaid position, we allow the present writ

petition quashing the reassessment notice and the order dated 28th

September, 2010. No order as to costs.

                                             SANJIV KHANNA, J.

                                       SANJEEV SACHDEVA, J.
AUGUST 05, 2013

W.P. (C) 7452/2010                                   Page 9 of 9
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