The Commissioner of Income Tax Chennai vs M/s. Flothern Engineers Pvt. Limited

Chitra Venkataraman, J.—Following are the questions of law raised in the Tax Case (Appeal) filed for the assessment year 2001-02.

Whether on the facts and in the circumstances of the case the Tribunal was right in holding that the reassessment order made by the AO u/s. 143(3) read with Section 147 based on the subsequent decision of the Supreme Court is bad in law especially the claim of deduction u/s. 80IB had wrongly been allowed?

Whether on the facts and in the circumstances of the case the Tribunal was right in quashing the assessment passed u/s. 147 of the Act?

The assessee herein is engaged in the business of contracts for erection, commissioning and pressure die casting. We find from the records that the assessee filed its return for the assessment year 2001-02 on 31.10.2001, admitting total income of Rs. 66,13,350/- after claiming deduction u/s 80IB of the Income Tax Act, 1961 (hereinafter called as the "Act") for the whole unit. An order of assessment was passed u/s 143(3) of the Act on 22.09.2003, disallowing the deduction u/s 80IB of the Act on the ground that the assessee company undertook job work of designing, engineering alone on the materials supplied by the contractee. Admittedly, the assessee went on appeal before the Commissioner of Income Tax (Appeals) as against the order dated 22.09.2003. The Commissioner of Income Tax (Appeals) allowed the assessee''s claim of deduction u/s 80IB of the Act, by order dated 12.01.2005. This was taken on appeal by the Revenue before the Income Tax Appellate Tribunal, which confirmed the order of the Commissioner of Income Tax (Appeals) on 22.6.2007 in ITA. No. 842/Mds/2005. Admittedly this order of the Tribunal was not appealed against, hence, it attained finality.

It is a matter of record and as stated in the grounds of appeal before this Court too that the Assessing Officer passed an order giving effect to the order of the Commissioner of Income Tax (Appeals) on 18.01.2005 and granted deduction u/s 80IB of the Act as computed by the assessee at Rs. 47,00,000/-. Holding that the assessee was not entitled to the said deduction in entirety and that the deduction u/s 80IB of the Act had to be reduced by taking note of the carry forward unabsorbed depreciation of the assessment year 1999-2000 in view of the decision in Commissioner of Income Tax, Pune Vs. Shirke Construction Equipment Ltd., , the assessment was sought to be reopened u/s 148 of the Act. The Assessing Officer placed reliance on the decision reported in Commissioner of Income Tax, Pune Vs. Shirke Construction Equipment Ltd., , and thus passed the reassessment order. This was appealed by the assessee before the Commissioner of Income Tax (Appeals) contending that the assessee had produced all the materials necessary for granting the deduction u/s 80IB of the Act; hence, there was no failure on the part of the assessee to disclose the material facts truly and fully; that it was a mere review and a change of opinion that deduction granted was excessive; hence, the reopening of the assessment beyond four years was bad in law. The Commissioner of Income Tax (Appeals) agreed with the assessee that the assessment made to revise the claim was only a review; consequently following the decision of the Supreme Court in Commissioner of Income Tax, Delhi Vs. Kelvinator of India Limited, , the appeal was allowed in favour of the assessee. The Revenue went on appeal before the Income Tax Appellate Tribunal. The Tribunal held that the subsequent decision by the Supreme Court on the issue reversing the High Court decision could not be a ground for re-opening the assessment. Thus, applying the decisions of the Apex Court in the case of DCIT Vs. M/s. Simplex Concrete Piles (India) Ltd. in Civil Appeal No. 2329 of 2006 dated 11.09.2004 and the decision reported in Mepco Industries Ltd., Madurai Vs. Commissioner of Income Tax and Another, , the Income Tax Appellate Tribunal rejected the Revenue''s appeal and hence, the present appeal by the Revenue.

After considering the merits of the case canvassed by the Revenue, we do not think that we need to go into the above said decisions or the correctness of the Tribunal''s order for the following reasons:-

As already pointed out in the preceding paragraphs, the original assessment u/s 143(3) of the Act was completed on 22.09.2003, disallowing the claim for deduction u/s 80IB of the Act. Assessee filed appeal before the Commissioner of Income Tax (Appeals), who, by order dated 12.01.2005 in ITA. No. Tr. 283/ITA. No. 84/04-05 allowed the appeal. This was subsequently given effect to and order was passed on 18.05.2005 granting relief to the assessee. Thus, if there is any mistake in granting relief to the assessee u/s 80IB of the Act in the order passed on 18.05.2005, the only order that could be the subject of Revision would be the order dated 18.05.2005 and not the order passed on 22.09.2003, which was the subject matter of appeal before the Tribunal at the instance of the Revenue on 22.06.2007 and the order of the Tribunal had also attained finality.

A reading of the order revising the assessment by the Assessing Officer on 30.11.2009 which was subject matter of appeal before the Commissioner of Income Tax (Appeals) and Income Tax Appellate Tribunal show that it sought to revise the first order passed on 22.09.2003, which got merged with the order of the Tribunal in ITA. No. 842/Mds/2005 dated 22.06.2007, which had attained finality. Thus, if the Revenue is questioning the quantum of relief granted to the assessee, the order available for revision would be the order dated 18.05.2005. When this is not subjected to any revision u/s 147 of the Act, we fail to understand how Revenue would be justified in sustaining its plea on its jurisdiction to revise the order u/s 147 of the Act. On this sole ground, we dismiss the Tax Case (Appeal) filed by the Revenue. No costs.