Integra Garments & Textiles Ltd, Mumbai v. Income Tax Officer, Ward 6(3)(2), Mumbai & Ors

R.M. AMBERKAR (Private Secretary) IN THE HIGH COURT OF JUDICATURE AT BOMBAYO.O.C.J. WRIT PETITION NO. 3443 OF 2018 Integra Garments & Textiles Ltd, Mumbai..Petitioner Versus Income Tax Officer, Ward 6(3)(2), Mumbai & Ors...Respondents ................... •Mr. Saurabh Soparkar, Senior Counsel a/w Mr. Madhur Agrawali/by Mr. Atul Jasani for the Petitioner Mr. N.C. Mohanty for the RespondentMr. N.C. Mohanty for the Respondent ................... CORAM : AKIL KURESHI & M.S. SANKLECHA, JJ. DATE : JANUARY 25, 2019. P.C.: 1.We have heard learned counsel for the parties for finaldisposal of the petition. 2.The petitioner has challenged a notice of reopening of assessment dated 29.3.2018 issued by respondent No. 1 -Assessing OfÏcer. Brief facts are as under:- (a) Petitioner is a company registered under theCompanies Act. For the assessment year 2013-14, thepetitioner had filed return of income on 30.9.2013 declaring NIL income. In such return, the petitioner had shown areceipt of Rs. 40.51 crore (rounded off) on transfer ofleasehold rights in a landed property in favour of one MorarjiTextiles Limited. The petitioner, after claiming indexed costand other related deductions, offered net of Rs. 32.04 crore(rounded off) by way of capital gain arising out of suchtransfer. (b) The return of the petitioner was taken in scrutiny by theAssessing OfÏcer. He passed an order under Section 143(3)of the Income Tax Act, 1961 ("the Act" for short) on18.3.2016 in which the Assessing OfÏcer did not disturb thepetitioner's treatment to the said receipt. To reopen suchassessment, the Assessing OfÏcer issued the impugnednotice. In order to do so, he had recorded the followingreasons:- Reasons for reopening of the assessment in the case of M/s.Integra Garments & Textiles Ltd. for A.Y. 2013-14 u/S. 147 of theAct. 1.The assessee company M/s. Integra Garments & Textiles Ltd.PAN : has e-filed its return of income for A.Y. 2013-14on 30.9.2013 declaring total income of Rs. NIL. Subsequently, the case was selected for Scrutiny and order u/S. 143(3) of the Act waspassed on 18.3.2016 assessing the Total Income at Nil. 2.Subsequently, information has been received from the O/o ITO7(3)-2, Mumbai. Accroding to the information during the course ofassessment proceedings in the case of M/s. Morarjee Textiles Ltd forA.Y. 2013-14, it was found that M/s. Morarjee Textiles Ltd. hadentered into a paper transaction of Rs. 40.50 crore with the assesseecompany i.e purchase of land from the assessee company for a saleconsideration of the aforesaid sum. It has been informed that onverification of the documents and records of M/s. Morarjee TextilesLtd., at the time of merger and demerger of M/s. Integra Garments &Textiles Ltd (earlier also known as M/s. Integra Apparels P Ltd) toand from M/s. Morarjee Textiles Ltd., the assessee company i.e M/s.Integra Garments & Textiles Ltd. did not own the Land, which hasbeen claimed to have been sold to M/s. Morarjee Textiles Ltd by M/s.Integra Garments & Textiles Ltd. for a consideration of Rs. 40.50crore. 3.The information received was analyzed and the records of theassessee company were verified. On verification of the records, it isseen that the assessee has claimed to have received the Lease holdproperty as per the Scheme of Demerger and Merger order of Hon.Bombay High Court dated 29.6.2012 by which the Integra Division ofM/s. Morajree Textile Ltd was demerged to Five Star Mercantile Ltd.,w.e.f. 1.4.2011, which is now known as M/s. Integra Garments &Textiles Ltd. (after amalgamation of M/s. Morajree Holdings P Ltd.)i.e. the assessee company. Further, during the year underconsideration, the assessee company has claimed to have sold theLease hold property at Rs. 40.51 crore to M/s. Morajree Textiles Ltd.and offered the Capital Gain of Rs. 32,04,55,157/- on the transaction. 3.The information received was analyzed and the records of theassessee company were verified. On verification of the records, it isseen that the assessee has claimed to have received the Lease holdproperty as per the Scheme of Demerger and Merger order of Hon.Bombay High Court dated 29.6.2012 by which the Integra Division ofM/s. Morajree Textile Ltd was demerged to Five Star Mercantile Ltd.,w.e.f. 1.4.2011, which is now known as M/s. Integra Garments &Textiles Ltd. (after amalgamation of M/s. Morajree Holdings P Ltd.)i.e. the assessee company. Further, during the year underconsideration, the assessee company has claimed to have sold theLease hold property at Rs. 40.51 crore to M/s. Morajree Textiles Ltd.and offered the Capital Gain of Rs. 32,04,55,157/- on the transaction. 4.Based on the information, the history of the Lease hold Landwhich the assessee company has claimed to have sold during the year under consideration has been verified. It is seen that vide LeaseAgreement dated 23.11.1995, M/s. Morarjee Legler Private Limitedhad acquired the land from M/s. Maharashtra Industrial DevelopmentCorporation. Further, vide Deed of Assignment dated 24.11.2004,the rights were assigned to M/s. Morarjee Brembana Limited nowknown as Morajree Textile Limited for a consideration at NIL. Thus,the Leasehold Land in question is owned by M/s. Morarjee TextileLimited as per the aforesaid Deed of Assignment. 5.Further, M/s. Integra Apparels & Textiles Limited got mergedwith M/s. Morarjee Textiles Limited (previously ) known as MorarjeeBrembana Limited) as per merger order of Hon. Karnataka HighCourt dated 27.8.2010 with record date 1.1.2010. Subsequently, asper Scheme of Demerger and Merger order of Hon. Bombay HighCourt dated 29.6.2012, the Integra Division of Morarjee TextileLimited was demerged as M/s. Five Star Mercantile Limited and M/s.Morarjee Holdings Private Limited was merged with M/s. Five StarMercantile Limited. The new entity so formed was renamed as M/s.Integra Garments and Textiles Limited i.e the assessee company. 6. As per the Scheme of demerger, the Assets and Liabilitiespertaining to Integra Division were to be demerged. The compositionscheme of demerger and merger approved by the Hon. Bombay HighCourt was as under:- PART - II DEMERGER OF INTEGRA DIVISION OF MORARJEE TO FIVESTAR MERCANTILE LTD. 4. VESTING OF INTEGRA DIVISION Upon this scheme becoming effective and with effect from theappointment Date, the Integra Division of Morarjee, as definedin Clause 1.8 shall stand demerged to and vested in ordeemed to be demerged to and vested in FSML, as a goingconcern, in accordance with section 2(19AA) of the IncomeUpon this scheme becoming effective and with effect from theappointment Date, the Integra Division of Morarjee, as definedin Clause 1.8 shall stand demerged to and vested in ordeemed to be demerged to and vested in FSML, as a goingconcern, in accordance with section 2(19AA) of the Income Tax Act, 1961 and in the following manner. 4.1With effect from the Appointment Date, the whole of theundertaking including assets, investments and propertiesof Morajree relatable to the Integra Divisionshall, underthe provisions of Section 391-394 read with Section 100 to 103and all other applicable provisions, if any, of the Act, withoutany further act or deed, stand transferred and / or deemedto be transferred to and vested in FSML as a goingconcern so as to vest in FSML all the rights, title andinterest pertaining to the Integra Division.undertaking including assets, investments and propertiesof Morajree relatable to the Integra Divisionshall, underthe provisions of Section 391-394 read with Section 100 to 103and all other applicable provisions, if any, of the Act, withoutany further act or deed, stand transferred and / or deemedto be transferred to and vested in FSML as a goingconcern so as to vest in FSML all the rights, title andinterest pertaining to the Integra Division. 4.4Any and all immovable properties (including land togetherwith the building and structure standing thereon) of theMorajree relating to Integra Division, whether freehold andany documents of title, rights and easements in relationthereto, shall stand transferred to and be vested in theFSML, without any act or deed done by the Morarjee or theFSML. With effect from the Appointment Date, the FSMLshall be entitled to exercise all rights and privileges and beliable to pay ground rent, municipal taxes and fulfill allobligations, in relation to or applicable to such immovableproperties. The mutation of title to the immovable propertiesin the name of the FSML shall be made and duly recorded bythe appropriate authorities pursuant to the sanction of thisScheme by the Hon'ble High Court and this Schemebecoming effective in accordance with the terms hereofwithout any further act or deed on the part of the FSML."with the building and structure standing thereon) of theMorajree relating to Integra Division, whether freehold andany documents of title, rights and easements in relationthereto, shall stand transferred to and be vested in theFSML, without any act or deed done by the Morarjee or theFSML. With effect from the Appointment Date, the FSMLshall be entitled to exercise all rights and privileges and beliable to pay ground rent, municipal taxes and fulfill allobligations, in relation to or applicable to such immovableproperties. The mutation of title to the immovable propertiesin the name of the FSML shall be made and duly recorded bythe appropriate authorities pursuant to the sanction of thisScheme by the Hon'ble High Court and this Schemebecoming effective in accordance with the terms hereofwithout any further act or deed on the part of the FSML." Thus, as per the approved scheme, the Assets and Liabilitiesrelatable to Integra Divisiosn only were to be transferred to the newentity i.e M/s. Five Star Mercantile Limited now known as M/s. IntegraGarments and Textiles Limited, the assessee company. Therefore,the Lease hold Land in question has to remain with M/s. Morajree Textiles Limited, being the owner as per Deed of Assignment dated24.11.2004. 7.There is no mutation of title of the Lease hold land in favour ofM/s. Integra Garments & Textiles Limited which has been recordedby the Appropriate Authority. Therefore, the ownership of the Leasehold land rests with M/s. Morarjee Textiles Limited and the samewas never transferred to the assessee company. 8.In view of the above facts and circumstances, it is very muchclear that the assessee company is not the owner of the Lease holdLand claimed to have sold for a consideration of Rs. 40,51,00,000/-to M/s. Morarjee Textile Ltd., vide Deed of conveyance for Transfer ofLease Land dated 25.3.2013. Therefore, the receipt of Rs. 40.51crore during the year under consideration remains unexplained. Thefacts of the case prove that the assessee had filed inaccurateparticulars of income related to the receipt of Rs. 40.51 crore duringthe year under consideration. 9.In view of the above discussed facts and circumstances, I amsatisfied that income chargeable to tax has escaped assessment andhave the "reason to believe" that income chargeable to tax, to thetune of Rs. 40,51,00,000/- has escaped assessment for A.Y. 2013-14within the meaning of Section 147 of the I.T. Act, 1961. 10.As per Section 147 of the I T Act, if the Assessing Officer hasreason to believe that income has escaped assessment it confersjurisdiction to reopen the assessment. The expression "has reasonto believe" is wider than "is satisfied". "Information" for re-openingmay come from external sources or even from materials already onrecord or may be derived from the discovery of new and importantmatter or fresh facts. Reliance in this regard is placed on theJudgment of the Apex Court in the case of ACIT V/s. Rajesh JhaveriStock Brokers Pvt Ltd. [2007] 291 ITR 500. In this judgment, the 10.As per Section 147 of the I T Act, if the Assessing Officer hasreason to believe that income has escaped assessment it confersjurisdiction to reopen the assessment. The expression "has reasonto believe" is wider than "is satisfied". "Information" for re-openingmay come from external sources or even from materials already onrecord or may be derived from the discovery of new and importantmatter or fresh facts. Reliance in this regard is placed on theJudgment of the Apex Court in the case of ACIT V/s. Rajesh JhaveriStock Brokers Pvt Ltd. [2007] 291 ITR 500. In this judgment, the Hon'ble Supreme Court has held that - " Section 147 authorizes and permits the AssessingOfficer to assess or reassess income chargeable to tax if hehas reason to believe that income for any assessment yearhas escaped assessment. The word reason in the phrasereason to believe would mean cause or justification. If theAssessing Officer has cause or justification to know orsuppose that income had escaped assessment, it can be saidto have reason to believe that an income had escapedassessment. The expression cannot be read to mean that theAssessing Officer should have finally ascertained the fact bylegal evidence or conclusion." 11.In view of the above narrated facts, the assessment is to bereopened u/S. 147 of the I.T. Act, 1961 by way of issue of notice u/S.148. 12.Considering the afore-discussed facts and circumstances, it isrequested that approval may be granted to reopen the assessmentu/S. 147 of the I T Act and issue notice u/S. 148 of the Act in thiscase as required under proviso to Section 151(2) of the Act." (c).Upon receiving the reasons recorded by theAssessing OfÏcer, the petitioner raised objection to thenotice of reopening of assessment under a communicationdated 18.10.2018. Such objections were rejected by theAssessing OfÏcer by order dated 22.10.2018, hence, thispetition. 3.The gist of the reasons recorded by the AssessingOfÏcer may be recorded which would enable us to appreciatethe contentions of the learned counsel of the parties better.In the reasons, the Assessing OfÏcer has referred to a chainof mergers and demergers between different companies anddivisions of some of the companies which ultimatelyculminated into the assessee claiming leasehold rights overthe landed property in question. In the return filed, theassessee stated that such leasehold rights were transferredin favour of Morarjee Textiles Ltd during the period relevantto the assessment year in question and by way of saleconsideration, the petitioner received a sum of Rs. 40.11crore from Morarjee Textiles Ltd. This amount was treated ascapital gain of the assessee and after adjusting the indexedcost of acquisition, the assessee offered a net of Rs. 32.04crore by way of capital gain tax. The Assessing OfÏcer in thereasons referred to the order of assessment passed by theAssessing OfÏcer of Morarjee Textiles Ltd in which he hadheld that the leasehold rights belong to Morarjee Textiles Ltditself and therefore, Morarjee Textiles Ltd was wrong inclaiming that it had purchased such rights from the present petitioner company. On the basis of such information,respondent No. 1 - Assessing ofÏcer recorded in the reasonsthat the records of the assessee company were verified andupon verification of such records, it was noticed that theassessee had claimed the said transaction giving rise tocapital gain of Rs. 32.04 crore. He formed a belief thatleasehold rights were owned by Morarjee Textiles Ltd and inview of such facts, not being the owner of such leaseholdrights, the petitioner had wrongly claimed to have sold suchrights for consideration of Rs. 40.51 crore to Morarjee TextilesLtd. In the view of the Assessing ofÏcer, "Therefore, thereceipt of Rs. 40.51 crore during the year underconsideration remains unexplained." He thereafter formed abelief that the assessee had filed inaccurate particulars ofincome in relation to receipt of Rs. 40.51 crore during theyear under consideration. In view of such facts, he recordedthe satisfaction that the income of the assessee to the tuneof Rs. 40.51 crore chargeable to tax had escapedassessment. 4.In view of such facts, learned counsel for the petitionerraised following contentions:- i. That the assessee had already offered the entire considerationto tax. There was, therefore, no question of the incomechargeable to tax having escaped assessment; to tax. There was, therefore, no question of the incomechargeable to tax having escaped assessment; ii.If the Assessing Officer is correct in contending that the propertyin question does not belong to the petitioner assessee, then, atbest, it can be said that the petitioner received a sum of Rs.40.51 crore from Morarjee Textiles Ltd not in exchange of anyconsideration and therefore, it remains a gift. He contended thatat the relevant time, the gift received by a company was nottaxable in any manner, therefore, there was no question ofincome chargeable to tax having escaped assessment;in question does not belong to the petitioner assessee, then, atbest, it can be said that the petitioner received a sum of Rs.40.51 crore from Morarjee Textiles Ltd not in exchange of anyconsideration and therefore, it remains a gift. He contended thatat the relevant time, the gift received by a company was nottaxable in any manner, therefore, there was no question ofincome chargeable to tax having escaped assessment; iii.In any case, the entire issue was examined minutely by theAssessing Officer during the original scrutiny assessment. Anyattempt on the part of the Assessing Officer to reopen this issuewould be based on mere change of opinion. In these context,learned counsel relied on certain decisions reference to whichwould be made at a later stage.Assessing Officer during the original scrutiny assessment. Anyattempt on the part of the Assessing Officer to reopen this issuewould be based on mere change of opinion. In these context,learned counsel relied on certain decisions reference to whichwould be made at a later stage. 5.On the other hand, learned counsel Mr. Mohanty for the Department opposed the petition raising followingcontentions:-contentions:- i. The Assessing Officer has recorded proper reasons for issuingthe notice of reopening of assessment;the notice of reopening of assessment; ii.He received information and material after the assessment wascompleted which would prima facie show escapement of incomechargeable to tax. On the basis of such material, the AssessingOfficer correctly formed a belief that it was a case for reopeningof assessment. At this stage, the Court would not examinesufficiency of such reasons. completed which would prima facie show escapement of incomechargeable to tax. On the basis of such material, the AssessingOfficer correctly formed a belief that it was a case for reopeningof assessment. At this stage, the Court would not examinesufficiency of such reasons. i. The Assessing Officer has recorded proper reasons for issuingthe notice of reopening of assessment;the notice of reopening of assessment; ii.He received information and material after the assessment wascompleted which would prima facie show escapement of incomechargeable to tax. On the basis of such material, the AssessingOfficer correctly formed a belief that it was a case for reopeningof assessment. At this stage, the Court would not examinesufficiency of such reasons. completed which would prima facie show escapement of incomechargeable to tax. On the basis of such material, the AssessingOfficer correctly formed a belief that it was a case for reopeningof assessment. At this stage, the Court would not examinesufficiency of such reasons. iii.He contended that if the theory of the petitioner having receivedRs. 40.51 crore by way of sale of leasehold rights in the land isdisproved, the receipt remains unexplained. To support thesecontentions, learned counsel relied on certain decisions whichwe would refer at later stage.Rs. 40.51 crore by way of sale of leasehold rights in the land isdisproved, the receipt remains unexplained. To support thesecontentions, learned counsel relied on certain decisions whichwe would refer at later stage. 6.Having heard the learned counsel for the parties andhaving perused the documents on record, we find thatundisputedly, the petitioner had disclosed the transaction inquestion of having received a sum of Rs. 40.51 crore fromMorarjee Textiles Ltd under a deed evidencing transfer ofleasehold rights in the land. Not only in the return, duringassessment also, the petitioner had made such disclosuresas would be clear from the discussion to follow. Thistransaction was also examined by the Assessing OfÏcerduring assessment. In the reasons recorded itself, theAssessing OfÏcer has referred to this transaction as emergingfrom the assessment records. Thus, in clear terms, theassessee had offered such receipt to tax. However, if theAssessing OfÏcer has sufÏcient reason to believe that the same ought to have been taxed under a different provisionsat a higher rate, the question of reopening of assessmentmay still become relevant. However, in the present case, theissue stands on a different footing altogether. 7.This is so because if the Assessing OfÏcer is correct incontending that the assessee was not the owner of theleasehold rights and therefore, could not have transferredthe same to Morarjee Textiles Ltd, the question of taxing thereceipt of Rs. 40.51 crore under appropriate provisions wouldimmediately arise. In other words, if the Assessing OfÏcer iscorrect in holding a belief that the assessee not being theowner of such leasehold rights, could not have transfered thesame to Morarjee Textile, he would also then have to showunder which provision, the Department would tax the receiptof Rs. 40.51 crore. In plain terms, it would be a receipt in thehands of the assessee without any consideration in thereturn being transferred to Morarjee Textiles Ltd. In otherwords, it would be a receipt without exchange ofconsideration and therefore, can at best be seen as a giftfrom Morarjee Textiles Ltd to the assessee company. No provision under the Act was brought to our notice underwhich in the present circumstances, the Revenue could callupon the recipient of such gift to offer the same to tax. Wenotice that Section 56 of the Act which pertains to incomefrom other sources. Sub-section 1 of Section 56 providesthat income of every kind which is not to be excluded fromthe total income under the Act shall be chargeable to incometax under the head "income from other sources", if it is notchargeable to income tax under any of the heads specified inSection 14 items A to E. Sub-section 2 of Section 56 in turnprovides that in particular, and without prejudice to thegenerality of the provisions of sub-section (1), the incomesspecified in following classes shall be chargeable to incometax under the income from other sources. Clause (vii) of sub-section (2) of Section 56 provides that where an individual ora Hindu undivided family receives, in any previous year, fromany person or persons on or after the 1st day of October,2009 but before the 1st day of April, 2017, any sum ofmoney, without consideration, the aggregate value of whichexceeds fifty thousand rupees, the whole of the aggregatevalue of such sum. Thus clause (vii) applies only to individual or a Hindu undivided family. Clause (viia) of sub-section (2) of Section 56 provides that where a firm or acompany not being a company in which the public aresubstantially interested, receives, in any previous year, fromany person or persons, on or after the 1st day of June, 2010[but before the 1st day of April, 2017], any property, beingshares of a company not being a company in which publicare substantially interested, inter alia without considerationor for a consideration which is less than the agreegate fairmarket value of the property. Under this clause, therefore, incase of a firm or a company other than a company in whichthe public had substantially interested, under certaincircumstances, receipt without consideration or fairconsideration would be taxed as income from other source.However, this clause also would not include the petitionercompany. 8.This was, however, changed by the legislature byinsertion of clause (x) to sub-section (2) of Section 57 whichwould taken within its sweep receipt of any sum of moneywithout consideration in case of any person. This clause was introduced w.e.f. 1.4.2017. This clause would include anyperson being individual, Hindu undivided family or company.It was for this reason, the legislature has simultaneouslylimited the applicability of cluase (vii) and (viia) by makingcorresponding amendments in such clauses by addingfollowing words: "but before the 1st day of April, 2017" and "on or after 1st day ofOctober, 2009". This clause was thus introduced w.e.f. 1.4.2017 andtherefore, would not cover the present case. 9.We are conscious, as pointed out by Mr. Mohanty, thelearned counsel for the Department that the AssessingOfÏcer attempted to bring the receipt within Section 68 ofthe Act as unexplained cash credit. However, for obviousreasons, such provision cannot be invoked. Firstly, thereceipt was from banking channel. The Assessing OfÏcerdoes not doubt the creditworthiness of the company payingthe amount. He has not even suggested that it is the incomeof the assessee which is being routed through MorarjeeTextiles Ltd under the present transaction. 10. There is one more reason why we cannot sustain theimpugned notice which is, the entire issue was examined bythe Assessing OfÏcer during the original scrutinyassessment. As noted, the assessee had disclosed suchtransaction in the return of income filed. In the return, inaddition to offering a sum of Rs. 32.04 crore by way ofcapital gain tax, the assessee had given the break up thereof as under:- 10. There is one more reason why we cannot sustain theimpugned notice which is, the entire issue was examined bythe Assessing OfÏcer during the original scrutinyassessment. As noted, the assessee had disclosed suchtransaction in the return of income filed. In the return, inaddition to offering a sum of Rs. 32.04 crore by way ofcapital gain tax, the assessee had given the break up thereof as under:- B)Long Term Capital Gain1)From slump salea)Full Value of consideration(a) NILb) Net worth of the under taking or division(b)NILc) Long Term Capital gains from slump sale(c) NILd) Deduction under sections 54D/54EC/54G/54GA(d)NILE)Net long term capital gain from slump sale (1NIL(1c-1d)e)2)Asset in case of non-resident to which first proviso to section 48 (2)NILapplicable3)Assets in case of others were proviso under Section 112(1) not exercisesa)Full value of consideration3(a)405100000b)Deductions under section 48i)Cost of acquisition after indexation(bi)84644843ii)Cost of improvement after indexation(bii)NILiii)Expenditure of Transfer(biii)NILiv)Total (bi + bii + biii)(biv)84644843c)Balance (3a-biv)320455157 11.Further, the assessment proceedings, in response to the query raised by the Assessing OfÏcer, the petitioner had explained the transaction giving rise to such long termcapital gain by stating as under:- Sr.ParticularsAnnexureNo.No1Long term capital gains on Sale of Land / Property:1Reference to Computation of Income submitted vide our earliersubmissions, the assessee company has sold land during theconcerned assessment year. Copy of sale agreement for sale ofland at Nagapur has been submitted vide our earlier letter /submissions. The said property is situated in the MaharashtraIndustrial Development Corporation (MIDC).We now submit herewith copy of MIDC circular dated 05.01.2013evidencing rate of land for transfer in Butibori (Nagpur) at Rs.1150/- (much less than Rate at which the assessee company hassold the specified Land / Property). 12.However, the assessee eloborated the entire transaction in a communicated dated 4.3.2016, the relevant portion of which reads as under:- "In this regard, we submit as under:- A) Working of Long Term Capital Gain on Transfer of Leasehold rights Sr.ParticularsRelevant Relevant Amount in No.DatesSectionINRASale Consideration for 25th March, 2013Sec. 240,51,00,000Leasehold Rights in LandBCost of Acquisitions23rd Nov. 199534871291Cost of acquisition and Date of Purchase of Previous Owner considered as date of acquisition in hand of Transfer for computation of Capital GainCIndexed Cost of Acquisition1998852/351=2.428,46,44,843Based Year considered for Indexation as previous45owner got complete ownership Rights in leaseholdRights in Year 1998. Ref. Clause 1 of Agreement withMIDC dt. 23.11.1995DLong Term Capital GainA.Y. 2013-144532,04,55,157(LTCG)ECurrent Years Short Term Capital Loss adjustedA.Y. 2013-14Section(9,24,18,526)against LTCG (on sale of Depreciable Block of70(2) Assets) - Separate Working Provided as Annexure"A"FCurrent Year Business Loss adjusted against LTCGA.Y. 2013-14Section(18,38,19,064)71(2) GPrevious Years unabsorbed Depreciation consideredA.Y. 2013-14Section 71(2) (4,42,17,567)as Current Year Depreciation U/s. 32(2) - As perread with Separate Annexure "B"Section 32(2)NET TAXABLE CAPAITAL GAIN LIABLE FOR TAX0 B) List chronological Events for cost with reference to Certain mode ofacquisitions, where the capital assets become property of the assessee by way ofcertain modes stated under Section 49 of the Income Tax Act. GPrevious Years unabsorbed Depreciation consideredA.Y. 2013-14Section 71(2) (4,42,17,567)as Current Year Depreciation U/s. 32(2) - As perread with Separate Annexure "B"Section 32(2)NET TAXABLE CAPAITAL GAIN LIABLE FOR TAX0 B) List chronological Events for cost with reference to Certain mode ofacquisitions, where the capital assets become property of the assessee by way ofcertain modes stated under Section 49 of the Income Tax Act. Original Owner of Lease hold rightsCostDocumentsin Industrial LandMorarjee Legler Private LimitedRs. 3,48,71,291/-1)Lease Agreement between Morarjee Legler Private(Rs. 1,05,32,100 +Limited and Maharashtra Industrial DevelopmentRs. 2,43,39,191,)Corporation dated 23rd Nov. 1995, enclosed asannexure "1"2)Audited Balance Sheet of Morarjee Legler PrivateLimited for the year ended 31.03.2003. enclosed asannexure "2"Supplimental AgreementRs. 12,07,9263) Supplimental Agreement between Morarjee Leglerand Maharashtra Industrial Development Corporationdated 24th Sept 2004 as Annexure "3"Deed of Assignment (Gift of rights in Cost in Books - NIL4)Deed of Assignment between Morarjee Legler PrivateLeasehold Land by way of Cost for the purpose ofLimited and Morarjee Brembana Limited (Morarjeeassignment at NIL value)working of Capital Gain inTextile Ltd) dated 24th Nov. 2004 enclosed asview of Section 49(1) readannexure 4"with Section 475)Mumbai ITAT judgment in case of Morarjee TextileRs. 3,48,71,291Limited A.Y. 2005-06 - ITA 2077/MUM/2009 enclosedas annexure 5"Integra Apparels & Textiles Limited6) Merger Order of Hon. Karnataka High Court Ordergot merged with Morarjee Textiledated 27th August 2010 is enclosed as Annexure "6"Limited (Previously) known as(Record date 1st Jan. 2010)Morarjee Brembana Limited)Transfer of said Leasehold LandCost for the purpose of7) Scheme of Demerger and Merger order of Hon.from Morarjee Textile Limited toworking of Capital Gain inBombay High Court dated 29th June 2012 (DemergerIntegra Garments and Textilesview of Section 49(1) readof Integra Division of Morarjee Textile Ltd to Five StarLimitedwith Section 47Mercantile Ltd (now known as Integra Garment andTextile Limited) w.e.f. 1st April, 2011 andRs. 3,48,71,291Amalgamation of Morarjee Holdings Private Limited(renamed Integra Garments and Textiles Limited)w.e.f. 1st Jan. 2012 enclosed as Annexure "7"Sale of Leasehold Land by IntegraSale Consideration8) Deed of Conveyance for Transfer of Lease land datedGarments and Textiles LimitedRs. 40,51,00,000/-25th March 2013 at Annexure "8"(Previously known as to Five StarMercantile Limited) to MorarjeeTextile LimitedChange in name of Fivestar9) Fresh Certificate of Incorporation consequent uponMercantile Limited to IntegraChange in name is enclosed as Annexure "9"Garments and Textiles Limited C)Submissions on working of Long Term Capital Gain resulted from Transferof Lease hold land During the year under consideration Assessee Company has computed Long TermCapital Gain on Transfer of Lease hold land (i.e. Plot No. G-1 situated at MIDC,Nagpur) to Morarjee Textile Limited. The said leasehold land transferred at Rs.40,51,00,000/- and adopted as a Full Value of Sale Consideration for Computationof Long Term Capital Gain u/S. 45. For computation of Capital Gain, Your assessee has considered a Cost ofacquisition at Rs. 3,48,71,291/-, which is a cost of acquisition in hand of Lastprevious owner of the Property i.e (Morarjee Legler Limited) since your assesseehas acquired said property by one of the mode specified under Section 49 fromprevious owner and Previous to previous owner M/s. Morarjee Brembana Limited(i.e. Gift by way of assignment) also acquired said property by one of the modespecified under Section 49. Cost of acquisition means any capital expenditure at the time of acquiring capitalasset under Transfer which includes purchase price, various expenses incurred upto date of complete acquisition. For computation of Capital Gain, Your assessee has considered a Cost ofacquisition at Rs. 3,48,71,291/-, which is a cost of acquisition in hand of Lastprevious owner of the Property i.e (Morarjee Legler Limited) since your assesseehas acquired said property by one of the mode specified under Section 49 fromprevious owner and Previous to previous owner M/s. Morarjee Brembana Limited(i.e. Gift by way of assignment) also acquired said property by one of the modespecified under Section 49. Cost of acquisition means any capital expenditure at the time of acquiring capitalasset under Transfer which includes purchase price, various expenses incurred upto date of complete acquisition. The Leased land under consideration was originally acquired by Morarjee LeglerPrivate Limited in 1995 from MIDC and got complete possession of the property in1998 (refer clause 1 of Agreement dated 23rd Nov. 1995 entered with MIDC),Therefore, in working of Indexed cost of acquisition, base year for applying indexhas been taken as F.Y. 1998-99 and not F.Y. 1995-96." 13.In the final order of the assessment, the AssessingOfÏcer did not disturb these workings offered by thepetitioner. It can, thus, be seen that during the assessmentproceedings, the transaction in question had come up forconsideration of the Assessing OfÏcer. Not only the source ofthe receipt, the working of the capital gain and sequence ofthe events under which the assessee claimed to haveacquired such leasehold right was transferred, were broughtto the attention of the Assessing OfÏcer. The documents ofmerger, demerger and lease agreements were produced.Written submissions were made to justify the assessee'sclaim of being the owner of such leasehold rights. It is,therefore, not open to the Assessing OfÏcer to contend that the issue was not examined during the original assessmentproceedings. Perhaps, this was not even the argument of thelearned counsel for the Revenue. His argument, however,was that after the assessment was completed, the AssessingOfÏcer received certain information on the basis of which, heformed a belief that the income chargeable to tax hasescaped assessment. If the Assessing OfÏcer had in factreceived any additional material or information which wasalien to the assessment records, the contention of thelearned counsel for the Revenue would require furtherconsideration. In a given case, the situation may arise whereeven if the Assessing OfÏcer has examined an issue duringthe assessment, he may receive additional information andmaterial from outside sources prima facie suggesting thatthe stand of the assessee and the conclusion of theAssessing OfÏcer on the basis of records of the assessment,were incorrect. In such situation, reopening of assessmentmay still be permitted. In the present case, however, nosuch material outside of the assessment records is shown tohave been brought to the notice of the Assessing OfÏcer. Heonly referred to the order of the assessment passed by the Assessing OfÏcer of Morarjee Textiles Ltd. Such assessmentwas based on the documents which were already part of theassessment in case of the present petitioner. At besttherefore, the opinion formed by the Assessing OfÏcer ofMorarjee Textiles can be seen to be another view pointwhich may also be valid. However, the formation of theopinion by another Assessing OfÏcer on the same set ofdocuments and materials cannot give justifiable ground tothe Assessing OfÏcer of the present assessee to contend thatthere is additional information or material at his commandpermitting him to have a relook at the situation. In plainterms, what the Assessing OfÏcer in the present case isattempting to do is to review his own conclusions formedduring the original assessment after full examination, withthe aid of not new or additional materials but on the basis ofthe conclusions of another Assessing OfÏcer; which arebased on the same materials available during the originalassessment before him. 14. Situation thus, in the present case is that the AssessingOfÏcer during the assessment examined the transaction in question on the strength of certain documents and acceptedthe capital gain offered by the assessee arising out of suchtransaction. Another Assessing OfÏcer in the case ofMorarjee Textiles examined the same set of documents andformed a different opinion. When this was placed beforehim, the Assessing OfÏcer of the petitioner wishes to changehis view and adopt the view of the Assessing OfÏcer ofMorarjee Textiles, which is wholly impermissible. 15.The concept of change of opinion not permittingreopening of assessment once an issue has been examinedduring the original scrutiny assessment is all too wellestablished requiring reference to any judgments. However, we may refer to the decision of the Supreme Court in thecase of CIT Vs. Kelvinator of India Ltd.[1 ]In the case ofGKN Sinter Metals Ltd Vs. Ms. Ramapriya Raghavan,Assistant Commissioner of Income Tax, Circle 2(1)[2], this Court observed as under: "21. It was lastly contended by Mr. Chhotrary, learned Counselappearing for the Revenue that the impugned notice is only for re-assessment for Assessment Year 2002-03. At this stage, theRevenue is not required to establish the case to the hilt, but onlyappearing for the Revenue that the impugned notice is only for re-assessment for Assessment Year 2002-03. At this stage, theRevenue is not required to establish the case to the hilt, but only1[2010] 320 ITR 561 2[2015] 371 ITR 225 [Bombay]2[2015] 371 ITR 225 [Bombay] we may refer to the decision of the Supreme Court in thecase of CIT Vs. Kelvinator of India Ltd.[1 ]In the case ofGKN Sinter Metals Ltd Vs. Ms. Ramapriya Raghavan,Assistant Commissioner of Income Tax, Circle 2(1)[2], this Court observed as under: "21. It was lastly contended by Mr. Chhotrary, learned Counselappearing for the Revenue that the impugned notice is only for re-assessment for Assessment Year 2002-03. At this stage, theRevenue is not required to establish the case to the hilt, but onlyappearing for the Revenue that the impugned notice is only for re-assessment for Assessment Year 2002-03. At this stage, theRevenue is not required to establish the case to the hilt, but only1[2010] 320 ITR 561 2[2015] 371 ITR 225 [Bombay]2[2015] 371 ITR 225 [Bombay] required to make out a prima facie case in support of its stand. Insupport of the above submission, reliance was also placed upon thedecision of the Supreme Court in Asstt. CIT v. Rajesh Jhaveri StockBrokers (P.) Ltd. [2007] 291 ITR 500/161 Taxman 316. There can beno dispute to the above proposition. It is submitted that during thecourse of re-assessment proceedings, the Petitioner would haveopportunities to satisfy the authorities that there has been noescapement of income and the allocation of the common expensesbetween the three manufacturing units for the purposes of claimingdeduction under Section 80IA/IB of the Act is in accordance with law.However, issue being examined is whether the Assessing Officer hasjurisdiction to issue the re-opening notice. Once an assessment orderis being passed, it has some sanctity. If the assessment order is tobe disturbed, then the Assessing Officer must strictly satisfy thecondition precedent as provided under Section 147/148 of the Actbefore he can issue a notice, seeking to re-open an assessment. Inthis case, as we have pointed out herein above, there has been achange of opinion on the part of the Assessing Officer in issuing anotice and, therefore, he has no reason to believe that incomechargeable to tax has escaped assessment. In these circumstances,the jurisdictional requirement for issuing a notice is not satisfied and,therefore, the impugned notice and the consequent order dated 14thNovember, 2007 disposing of the objections, are not sustainable." 16.In case of Commissioner of Income Tax Vs. Aroni Commercial Ltd[3] , this Court observed as under:- "(h) The first contention urged before us by the Revenue isidentical to the contentions which was urged by the Revenue in theearlier decision of this Court in respect of the same respondentassessee Aroni Commercials Ltd. Vs. Dy. CIT [2014] 362 ITR 403 /224 Taxman 13 (Mag) / 44 taxmann.com 304 (Bom). This Court hadin the aforesaid decision dealt with the above objections raised by the Revenue as under :- 16.In case of Commissioner of Income Tax Vs. Aroni Commercial Ltd[3] , this Court observed as under:- "(h) The first contention urged before us by the Revenue isidentical to the contentions which was urged by the Revenue in theearlier decision of this Court in respect of the same respondentassessee Aroni Commercials Ltd. Vs. Dy. CIT [2014] 362 ITR 403 /224 Taxman 13 (Mag) / 44 taxmann.com 304 (Bom). This Court hadin the aforesaid decision dealt with the above objections raised by the Revenue as under :- " We are of the view that once a query is raised during theassessment proceedings and the assessee has replied to it, it followsthat the query raised was a subject of consideration of the AssessingOfficer while completing the assessment. It is not necessary that anassessment order should contain reference and / or discussion todisclose its satisfaction in respect of the query raised. If anAssessing Officer has to record the consideration bestowed by himon all issues raised by him during the assessment proceedings evenwhere he is satisfied then it would be impossible for the AssessingOfficer to complete all the assessments which are required to bescrutinised by him under Section 143(3)of the Act. Moreover, onemust not forget that the manner in which an assessment order is tobe drafted is the sole domain of the Assessing Officer and it is notopen to an assessee to insist that the assessment order must recordall the questions raised and the satisfaction in respect thereof of theAssessing Officer. The only requirement is that the Assessing Officerought to have considered the objection now raised in the grounds forissuing notice under Section 148 of the Act, during the originalassessment proceedings.” The aforesaid observations will apply to the first grievance of theRevenue before us. In this case also a query was raised during theregular assessment proceedings and it was responded to by theassessee.This non consideration of the same in the assessmentorder is no evidence of the Assessing Officer not being satisfied withthe issue raised. 17. In case of Pr. Commissioner of Income Tax -6 Vs.Century Textiles & Industries Ltd.[4] , it was observed asunder:- 4[2018] 99 taxmann.com 205 (Bom) The aforesaid observations will apply to the first grievance of theRevenue before us. In this case also a query was raised during theregular assessment proceedings and it was responded to by theassessee.This non consideration of the same in the assessmentorder is no evidence of the Assessing Officer not being satisfied withthe issue raised. 17. In case of Pr. Commissioner of Income Tax -6 Vs.Century Textiles & Industries Ltd.[4] , it was observed asunder:- 4[2018] 99 taxmann.com 205 (Bom) "11. The undisputed position in the present case is that the regularassessment was completed under Section 143(3) of the Act and there-opening has been issued within a period of four years from theend of the relevant Assessment Year. Thus, the rigour of the firstproviso to Section 147 of the Act i