IN THE INCOME TAX APPELLATE TRIBUNAL,
MUMBAI BENCH "B", MUMBAI
BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER
AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER
ITA No. 6662/Mum/2011
Assessment Year: 2004-05
DCIT -8(2) M/s. Monsanto India Ltd.
R. No. 216-A, Aayakar Ahura Centre, 5th Floor, 96,
Bhavan M.K. Road Vs. Mahakali Caves Road
Mumbai Andheri (E),
Mumbai- 400 093
PAN:AAACM 2875 L
(Appellant) (Respondent)
Assessee by Shri Kirit Kamdar/Pooja
:
Battacharjee
Revenue by : Ms. Amrita Singh
Date of hearing : 25.07.2014
Date of Pronouncement : 10.09.2014
ORDER
PER Dr. S.T.M. PAVALAN, JM:
This appeal filed by the Revenue is directed against the order of the
Ld.CIT(A) -17, Mumbai dated 12.07.2011 for the Assessment Year 2004-05.
2. In this appeal, the revenue, among other things, has agitated the decision of
the Ld.CIT(A) holding that the reassessment made by the AO u/s 143(3) read with
section 147 of the Income-tax Act is not valid.
3. The relevant facts are that the assessee, in its original return, had declared a
total income of Rs.39.97 cores after claiming deduction u/s 80IB amounting to
Rs.6,55,18,933/- on its Plant No.II. The case was assessed u/s 143(3) at
Rs.80,93,64,563/- vide order dated 22.12.2006 and the said order the AO made the
adjustments to the total income on account of the following: (i) the income earned
had scrap sales was not eligible for deduction u/s 80IB and (ii) the effect of
depreciation thrust on the assessee for the past assessment years. The assessee
filed an appeal against the assessment order before the first appellate authority, i.e.,
2 ITA No. 6662/Mum/2011
M/s. Monsanto India Ltd.
Assessment Year: 2004-05
the Ld.CIT(A) raising various grounds of appeal including the eligibility of deduction
u/s 80IB on scrap sales. However, the Ld.CIT(A) upheld that the income on scrap
sales was not eligible for deduction u/s 80IB. On further appeal before the Tribunal,
the Tribunal allowed certain relief which inter alia includes that scrap sales should be
computed while computing deduction u/s 80IB. The income assessed on giving
effects to the Tribunal order was determined at Rs.44,49,86,025/. Subsequently,
vide notice, dated 23.02.2010 u/s 148, the case was reopened by the AO on the
grounds that (i) depreciation of Rs.15,00,395/- pertaining to common assets claimed
by the assessee in its return is not reduced while computing the deduction u/s 80IB
in the order u/s 143(3) and (ii) common corporate expenses have been allocated by
the assessee at 10% on estimate basis whereas they should have been allocated in
the ratio of sales between the units. Accordingly, in the reopened assessment, the
AO recomputed the deduction u/s 80IB at Rs.5,42,81,222/- instead of
Rs.6,45,18,933/-. On appeal, the Ld.CIT(A) held that the reassessment made by the
AO u/s 143(3) read with section 147 of the Act is not valid. Aggrieved by the
impugned decision, the Revenue is in appeal before us.
4. Having heard both the sides and perused the material on record, it is
pertinent to mention that there is no dispute that the original statement has been
completed u/s 143(3) and the case has been reopened after four years from the end
of the relevant assessment year. The case has been reopened by the AO on the
grounds that (i) Depreciation of Rs.15,00,395/- pertaining to common assets claimed
by the assessee in its return is not reduced while computing the deduction u/s 80IB
in the order u/s 143(3) and (ii) common corporate expenses have been allotted by
the assessee at 10% on estimate basis whereas they should have been allocated in
the ratio of sales between the units. In this connection, it is relevant to state that no
new material or information has come to the possession of the AO subsequent to the
original assessment and the entire information has been available in form 10CCB
filed along with return or in the various submissions made at the time of original
assessment. Therefore, it cannot be said that there was no full or true disclosures by
the assessee. This clearly indicates that the condition prescribed in the proviso to
section 147 is not fulfilled by the AO for reopening the assessment already
completed by the AO u/s 143(3). Further, the perusal of the original assessment
3 ITA No. 6662/Mum/2011
M/s. Monsanto India Ltd.
Assessment Year: 2004-05
order indicates that the deduction u/s 80IB has been scrutinized by the AO and vide
para 6.2 of order, the plant wise Profit and Loss account along with the plant wise
depreciation has been placed in the order itself. Also, the assessee has pointed out
vide submissions dated 22.12.2006 and 31.03.2004, a completed disclosures with
regard to the plant wise allocation of depreciation and cost during the course of the
original assessment proceedings. Therefore, we are of the considered view that the
reasons recorded for the reopening the assessment amounts to a review of the
original assessment order, which is not legally tenable as the same would amount to
change of opinion. It is found that the Ld.CIT(A) has rightly appreciated the said
facts in the light of various decisions to come to a conclusion that the notice issued
u/s 148 is without jurisdiction and liable to be cancelled.
4.1 As regards the contention of the Revenue relying on the decisions of the
Karnataka High Court in the case of CIT Vs. Rinku Chakraborthy 242 CTR 425 in
support of the proposition that when the income liable to be assessed to tax has
escaped assessment due to oversight/inadvertent mistake committed by the AO, the
AO has the jurisdiction to reopen the assessment, it is pertinent to mention that the
claim of the Revenue is not supported with cogent reasons to explain that the AO,
during the assessment earlier completed u/s 143(3), due to oversight/inadvertent
mistake, allowed the claim of the assessee. As regards the Delhi High Court decision
in the case of Dalmia Pvt Ltd Vs. CIT relied by the Revenue to support the
proposition that despite specific and pointed queries in the assessment proceedings
u/s 143(3), the AO cannot be said to have formed any opinion if explicit opinion is
not recorded, the perusal of para 6.2 of the assessment order earlier passed under
section 143(3) clearly indicates that the AO has formed an explicit opinion on the
issue depreciation for the purpose of computing the deduction u/s 80IB. Therefore,
we do not find any merit in the contention of the Revenue relying on the said
decisions. In view of the aforementioned discussions, we are of the considered view
that the decision of the Ld.CIT(A) holding that the reassessment made by the AO
u/s 143(3) read with section 147 of the Income-tax Act is a not valid deserves to be
upheld. Since, the notice u/s 148, the reassessment proceedings and the consequent
4 ITA No. 6662/Mum/2011
M/s. Monsanto India Ltd.
Assessment Year: 2004-05
reassessment order are held to be invalid, the merits on the impugned additions are
not required to be further adjudicated upon.
5. In the result, the appeal filed by the Revenue is dismissed.
Order pronounced in the open court on this 10th day of September, 2014.
Sd/- Sd/-
(SANJAY ARORA) (Dr. S.T.M. PAVALAN)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai, Dated: 10.09.2014
*Srivastava
Copy to: The Appellant
The Respondent
The CIT, Concerned, Mumbai
The CIT(A) Concerned, Mumbai
The DR "B" Bench
//True Copy//
By Order
Dy/Asstt. Registrar, ITAT, Mumbai.
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