General Motors India (P) Ltd v. Dy. CIT

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The Tax Publishers2013 TaxPub(DT) 0624 (Guj-HC) : (2013) 050 (I) ITCL 0255 : (2013) 354 ITR 0244 : (2013) 257 CTR 0123 : (2013) 082 DTR 0304 INCOME TAX ACT, 1961 --Reassessment--Notice under section 148 Change of opinion--The petitioner (assessee) Company was incorporated on 15-4-1994 and since April 2000, it is a wholly owned subsidiary of the G Motors Corporation Group. Its equity is held by G. Asia Pacific Holding LIC, USA and Holden Limited, Australia, a nominated subsidiary of General Motors Corporation, USA. The assessee-company is a private limited company incorporated under the Companies Act, 1956 and is engaged in manufacturing and trading of automobiles and its parts under the brand name 'Chevrolet'. The case of the assessee was taken up for scrutiny by issuing notice on 17-12-2007 under section 143(2). Thereafter, a notice under section 143(2) along with notice under section 142(1) was issued with detailed questionnaire. In response thereto, Chartered Accountants of the assessee attended from time to time and filed details as called for. Since there were large number of transactions of import, royalty payment, management fee, etc., the assessing officer after considering the volume of such transactions referred the return to Transfer Pricing Officer (TPO) under section 92CA(1) after obtaining approval of Commissioner. The (TPO), namely, the Additional Commissioner, Ahmedabad passed an order under section 92CA(3) and directed the assessing officer to make an addition of Rs. 53.15 crores to the total income of the assessee. The Dispute Resolution Panel, issued direction to the assessing officer on 27-8-2010 to make additions under the provisions of section 144C(6) and thereafter, the assessing officer following the directions of the Dispute Resolution Panel as per the provisions of section 144C(10) passed assessment order under section 143(3) read with section 144C wherein the assessing officer made additions under various heads to the income of the assessee, and allowed unabsorbed depreciation of assessment year 1997-98 in the amount of Rs. 43,60,22,158 and accepted the total income at Rs. NIL. The relevant additions were made to the income of the assessee but the same was set off against various unabsorbed losses and unabsorbed depreciation of the previous year. The assessing officer on 29-3-2011 issued notice under section 148 wherein it was stated that he had reason to believe that income chargeable to tax for the assessment year 2006-07 had escaped assessment within the meaning of section 147 and, therefore, he had proposed to reassess income/recompute loss/ depreciation allowance for the aforesaid assessment year. In compliance of the notice dated 29-3-2011, the assessee wrote a letter dated 4-4-2011 to the assessing officer requesting him to supply the reasons recorded before issuing notice under section 148. The reasons for reopening the assessment recorded under section 147 dated 29-3-2011 was supplied to the assessee on 29-11-2011. According to the assessee, the only ground for reopening the assessment was that the assessing officer had reason to believe that the unabsorbed depreciation pertaining to assessment year 1997-98 of Rs.43,60,22,158 was wrongly allowed to be set off against the income of assessment year 2006-07, though section 32(2) as amended by the Finance Act No. 2, 1996, the unabsorbed depreciation for the assessment year 1997-98 could be carried forward up to a maximum period of 8 years from the year in which it was first computed, therefore, brought forward depreciation was eligible for carry forward and set off against the income for assessment year 2005-06 only. It is pleaded by the petitioner that he raised various objections to notice under section 148 by his objection dated 7-12-2011 before the assessing officer that there was no failure on his part to disclose fully and truly all material facts necessary for assessment and requested the assessing officer to drop the re-assessment proceedings. The assessing officer did not pass any order disposing of the objections dated 7-12-2011 filed by the petitioner and he passed assessment order on 27-12-2011 under section 143(3) read with section 147 of the Act and objection dated 7-12-2011 was also rejected by him in the assessment order. *Held:* Since the assessee had disclosed fully and truly all material facts necessary for his assessment for the year and in response to the queries of the assessing officer, the assessee had placed entire material demanded by the assessing officer. And on the material on record, the assessing officer applied his mind and allowed unabsorbed depreciation for the year assessment year 1997-98 and other assessment years, to be carried forward and set off against the income of assessment year 2006-07, then merely because the assessing officer did not give reasons for allowing the claim of unabsorbed depreciation in the original assessment order would not make the assessment order illegal. The assessing officer, in law, must be deemed to have formed an opinion that the assessee's claim deserves to be accepted. Thus, in such a situation, the original assessment order cannot be reopened as it would amount to change of opinion by the assessing officer and the reassessment order is liable to be set aside. For the aforesaid reasons, this writ petition succeeds and is allowed. The notice issued under section 148 dated 29-3-2011 (Annexure A) and the assessment order dated 27-12-2011 passed by the assessing officer (Annexure F) respectively to the writ petition are quashed. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2013 TaxPub(DT) 0624 (Guj-HC) : (2013) 050 (I) ITCL 0255 : (2013) 354 ITR 0244 : (2013) 257 CTR 0123 : (2013) 082 DTR 0304

INCOME TAX ACT, 1961

--Reassessment--Notice under section 148 Change of opinion--The petitioner (assessee) Company was incorporated on 15-4-1994 and since April 2000, it is a wholly owned subsidiary of the G Motors Corporation Group. Its equity is held by G. Asia Pacific Holding LIC, USA and Holden Limited, Australia, a nominated subsidiary of General Motors Corporation, USA. The assessee-company is a private limited company incorporated under the Companies Act, 1956 and is engaged in manufacturing and trading of automobiles and its parts under the brand name 'Chevrolet'. The case of the assessee was taken up for scrutiny by issuing notice on 17-12-2007 under section 143(2). Thereafter, a notice under section 143(2) along with notice under section 142(1) was issued with detailed questionnaire. In response thereto, Chartered Accountants of the assessee attended from time to time and filed details as called for. Since there were large number of transactions of import, royalty payment, management fee, etc., the assessing officer after considering the volume of such transactions referred the return to Transfer Pricing Officer (TPO) under section 92CA(1) after obtaining approval of Commissioner. The (TPO), namely, the Additional Commissioner, Ahmedabad passed an order under section 92CA(3) and directed the assessing officer to make an addition of Rs. 53.15 crores to the total income of the assessee. The Dispute Resolution Panel, issued direction to the assessing officer on 27-8-2010 to make additions under the provisions of section 144C(6) and thereafter, the assessing officer following the directions of the Dispute Resolution Panel as per the provisions of section 144C(10) passed assessment order under section 143(3) read with section 144C wherein the assessing officer made additions under various heads to the income of the assessee, and allowed unabsorbed depreciation of assessment year 1997-98 in the amount of Rs. 43,60,22,158 and accepted the total income at Rs. NIL. The relevant additions were made to the income of the assessee but the same was set off against various unabsorbed losses and unabsorbed depreciation of the previous year. The assessing officer on 29-3-2011 issued notice under section 148 wherein it was stated that he had reason to believe that income chargeable to tax for the assessment year 2006-07 had escaped assessment within the meaning of section 147 and, therefore, he had proposed to reassess income/recompute loss/ depreciation allowance for the aforesaid assessment year. In compliance of the notice dated 29-3-2011, the assessee wrote a letter dated 4-4-2011 to the assessing officer requesting him to supply the reasons recorded before issuing notice under section 148. The reasons for reopening the assessment recorded under section 147 dated 29-3-2011 was supplied to the assessee on 29-11-2011. According to the assessee, the only ground for reopening the assessment was that the assessing officer had reason to believe that the unabsorbed depreciation pertaining to assessment year 1997-98 of Rs.43,60,22,158 was wrongly allowed to be set off against the income of assessment year 2006-07, though section 32(2) as amended by the Finance Act No. 2, 1996, the unabsorbed depreciation for the assessment year 1997-98 could be carried forward up to a maximum period of 8 years from the year in which it was first computed, therefore, brought forward depreciation was eligible for carry forward and set off against the income for assessment year 2005-06 only. It is pleaded by the petitioner that he raised various objections to notice under section 148 by his objection dated 7-12-2011 before the assessing officer that there was no failure on his part to disclose fully and truly all material facts necessary for assessment and requested the assessing officer to drop the re-assessment proceedings. The assessing officer did not pass any order disposing of the objections dated 7-12-2011 filed by the petitioner and he passed assessment order on 27-12-2011 under section 143(3) read with section 147 of the Act and objection dated 7-12-2011 was also rejected by him in the assessment order. Held: Since the assessee had disclosed fully and truly all material facts necessary for his assessment for the year and in response to the queries of the assessing officer, the assessee had placed entire material demanded by the assessing officer. And on the material on record, the assessing officer applied his mind and allowed unabsorbed depreciation for the year assessment year 1997-98 and other assessment years, to be carried forward and set off against the income of assessment year 2006-07, then merely because the assessing officer did not give reasons for allowing the claim of unabsorbed depreciation in the original assessment order would not make the assessment order illegal. The assessing officer, in law, must be deemed to have formed an opinion that the assessee's claim deserves to be accepted. Thus, in such a situation, the original assessment order cannot be reopened as it would amount to change of opinion by the assessing officer and the reassessment order is liable to be set aside. For the aforesaid reasons, this writ petition succeeds and is allowed. The notice issued under section 148 dated 29-3-2011 (Annexure A) and the assessment order dated 27-12-2011 passed by the assessing officer (Annexure F) respectively to the writ petition are quashed.