CIT v. Fag Bearing India Ltd.

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The Tax Publishers2013 TaxPub(DT) 1689 (Guj-HC) : (2013) 215 TAXMAN 0387 Income Tax Act, 1961 --Reassessment--Reason to believe Change of opinion--Assessee-company was having two units, one of which was export-oriented unit (EOU) and assessee claimed exemption under section 10B in respect of EOU. Assessing officer asked assessee to furnish certain details in respect of apportionment of expenses between both units and during course of assessment, after being satisfied with assessee's details, exemption under section 10B was granted/allowed. However, subsequently assessing officer reopened assessment on the ground that apportionment of expenses between both the units was not proper. *Held:* Not justified. Assessing officer had allowed exemption after verifying details, and assessee's claim was also considered on basis of material available on record, thus, it was mere change of opinion, though notice under section 148 was issued within four years from end of relevant assessment year. Tribunal was perfectly justified in coming to conclusion that the claim of the assessee for exemption under section 10B was scrutinized by the assessing officer in detail in the original assessment. Pointed question with respect to allocation of the expenditure to the E.O.U and the D.T.A. unit was raised. Assessee supplied detailed materials justifying the allocation already made. In the final order of assessment, no additional expenditure was diverted to the assessee's E.O.U. In other words, the claim of exemption under section 10B was not disturbed. Of course, this was done without giving detailed reasons for the same. However, this would not be of any consequence once the assessing officer examined the claim, called for details and raised queries which the assessee replied at length. The mere fact that the assessing officer did not give reasons for not disturbing the claim made by the assessee in the final order of assessment would not authorize the assessing officer to reopen the same issue even within a period of four years from the end of relevant assessment year. [Para 5] Income Tax Act, 1961, Section 147 Income Tax Act, 1961, Section 148 In the Gujarat High Court Akil Kureshi & Sonia Gokani, J.J. CIT v. Fag Bearing India Ltd. Tax Appeal No. 154 of 2013 1 April, 2013 In favour of assessee. Appellant by : K. M. Parikh ORDER Akil Kureshi, J. Revenue is in appeal against the judgement of the Income Tax Appellate Tribunal dated 6-7-2012. Following question is presented for our consideration : 'Whether, on the facts and in the circumstances of the case, the ITAT was right in quashing the reassessment on the ground that the assessing officer has reopened the assessment on the same material which were in the records during the course of the original assessment proceedings, without appreciating that the Assessees case is fully covered under the provisions of section 147 read with Explanation 2(c)(iii)?' 2. As is apparent from the question framed, the issue pertains to validity of a notice of reopening under section 148 of the Income Tax Act, 1961 within a period of four years from the end of relevant assessment year. The assessment year in question is 2001-02. The assessment of the respondent-assessee for the said assessment year was taken in scrutiny. Assessment under section 143(3) of the Act was framed on 30-3-2004. Subsequently, notice under section 148 of the Act was issued on 29-3-2006. Assessing officer had recorded the following reasons for issuing such a notice: SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2013 TaxPub(DT) 1689 (Guj-HC) : (2013) 215 TAXMAN 0387

Income Tax Act, 1961

--Reassessment--Reason to believe Change of opinion--Assessee-company was having two units, one of which was export-oriented unit (EOU) and assessee claimed exemption under section 10B in respect of EOU. Assessing officer asked assessee to furnish certain details in respect of apportionment of expenses between both units and during course of assessment, after being satisfied with assessee's details, exemption under section 10B was granted/allowed. However, subsequently assessing officer reopened assessment on the ground that apportionment of expenses between both the units was not proper. Held: Not justified. Assessing officer had allowed exemption after verifying details, and assessee's claim was also considered on basis of material available on record, thus, it was mere change of opinion, though notice under section 148 was issued within four years from end of relevant assessment year.

Tribunal was perfectly justified in coming to conclusion that the claim of the assessee for exemption under section 10B was scrutinized by the assessing officer in detail in the original assessment. Pointed question with respect to allocation of the expenditure to the E.O.U and the D.T.A. unit was raised. Assessee supplied detailed materials justifying the allocation already made. In the final order of assessment, no additional expenditure was diverted to the assessee's E.O.U. In other words, the claim of exemption under section 10B was not disturbed. Of course, this was done without giving detailed reasons for the same. However, this would not be of any consequence once the assessing officer examined the claim, called for details and raised queries which the assessee replied at length. The mere fact that the assessing officer did not give reasons for not disturbing the claim made by the assessee in the final order of assessment would not authorize the assessing officer to reopen the same issue even within a period of four years from the end of relevant assessment year. [Para 5]

Income Tax Act, 1961, Section 147

Income Tax Act, 1961, Section 148

In the Gujarat High Court

Akil Kureshi & Sonia Gokani, J.J.

CIT v. Fag Bearing India Ltd.

Tax Appeal No. 154 of 2013

1 April, 2013

In favour of assessee.

Appellant by : K. M. Parikh

ORDER

Akil Kureshi, J.

Revenue is in appeal against the judgement of the Income Tax Appellate Tribunal dated 6-7-2012. Following question is presented for our consideration :

'Whether, on the facts and in the circumstances of the case, the ITAT was right in quashing the reassessment on the ground that the assessing officer has reopened the assessment on the same material which were in the records during the course of the original assessment proceedings, without appreciating that the Assessees case is fully covered under the provisions of section 147 read with Explanation 2(c)(iii)?'

2. As is apparent from the question framed, the issue pertains to validity of a notice of reopening under section 148 of the Income Tax Act, 1961 within a period of four years from the end of relevant assessment year. The assessment year in question is 2001-02. The assessment of the respondent-assessee for the said assessment year was taken in scrutiny. Assessment under section 143(3) of the Act was framed on 30-3-2004. Subsequently, notice under section 148 of the Act was issued on 29-3-2006. Assessing officer had recorded the following reasons for issuing such a notice: