The Commissioner Of Income Taxchennai v. M/S.flotherm Engingeers Pvt Limitedno

IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated : 10.04.2014 Coram The Honourable Mrs.Justice CHITRA VENKATARAMANandThe Honourable Mr.Justice T.S.SIVAGNANAM Tax Case (Appeal). No.743 of 2013 The Commissioner of Income TaxChennai... Appellant -vs- M/s.Flotherm Engingeers Pvt LimitedNo.14/20 R.K.Eye Centre, Chari StreetT.Nagar, Chennai-600 017... Respondent Tax Case Appeal filed under Section 260A of the Income Tax Act,1961 against the order of the Income Tax Appellate Tribunal, Madras'D' Bench, dated 21.02.2013 passed in I.T.A.No.916/Mds/2012 againstthe order dated 28.2.2011 passed in ITA 371/09-10/A-III on the file ofthe Commissioner of Income Tax (Appeals)-III, Chennai -34 and againstthe order dated 30.11.2009 in PAN No.AAACF 04 25B on the file ofDeputy Commissioner of Income Tax, Company Circle-II (1), Chennai. For appellant :Mr.T.Ravikumar, Standing Counselfor Income Tax Department. For respondent : Mr.V.S.Jayakumar JUDGMENT (Judgment of the Court was made by CHITRA VENKATARAMAN, J.) Following are the questions of law raised in the Tax Case(Appeal) filed for the assessment year 2001-02. " 1. Whether on the facts and in the circumstances ofthe case the Tribunal was right in holding that thereassessment order made by the AO u/s.143(3) read withSection 147 based on the subsequent decision of the SupremeCourt is bad in law especially the claim of deductionu/s.80IB had wrongly been allowed? 2. Whether on the facts and in the circumstances ofthe case the Tribunal was right in quashing the assessment https://hcservices.ecourts.gov.in/hcservices/ passed u/s.147 of the Act ?" 2. The assessee herein is engaged in the business of contractsfor erection, commissioning and pressure die casting. We find from therecords that the assessee filed its return for the assessment year2001-02 on 31.10.2001, admitting total income of Rs.66,13,350/- afterclaiming deduction under Section 80IB of the Income Tax Act, 1961(hereinafter called as the "Act") for the whole unit. An order ofassessment was passed under Section 143(3) of the Act on 22.09.2003,disallowing the deduction under Section 80IB of the Act on the groundthat the assessee company undertook job work of designing, engineeringalone on the materials supplied by the contractee. Admittedly, theassessee went on appeal before the Commissioner of Income Tax(Appeals) as against the order dated 22.09.2003. The Commissioner ofIncome Tax (Appeals) allowed the assessee's claim of deduction underSection 80IB of the Act, by order dated 12.01.2005. This was taken onappeal by the Revenue before the Income Tax Appellate Tribunal, whichconfirmed the order of the Commissioner of Income Tax (Appeals) on22.6.2007 in ITA.No.842/Mds/2005. Admittedly this order of theTribunal was not appealed against, hence, it attained finality. 3. It is a matter of record and as stated in the grounds ofappeal before this Court too that the Assessing Officer passed anorder giving effect to the order of the Commissioner of Income Tax(Appeals) on 18.01.2005 and granted deduction under Section 80IB ofthe Act as computed by the assessee at Rs.47,00,000/-. Holding thatthe assessee was not entitled to the said deduction in entirety andthat the deduction under Section 80IB of the Act had to be reduced bytaking note of the carry forward unabsorbed depreciation of theassessment year 1999-2000 in view of the decision in (2007) 291 ITR380 (SC) in the case of Commissioner of Income-Tax Vs. ShirkeConstruction Equipment Ltd., the assessment was sought to be reopenedunder Section 148 of the Act. The Assessing Officer placed relianceon the decision reported in (2007) 291 ITR 380 (SC) in the case ofCommissioner of Income-Tax Vs. Shirke Construction Equipment Ltd.,and thus passed the reassessment order. This was appealed by theassessee before the Commissioner of Income Tax (Appeals) contendingthat the assessee had produced all the materials necessary forgranting the deduction under Section 80IB of the Act; hence, there wasno failure on the part of the assessee to disclose the material factstruly and fully; that it was a mere review and a change of opinionthat deduction granted was excessive; hence, the reopening of theassessment beyond four years was bad in law. The Commissioner ofIncome Tax (Appeals) agreed with the assessee that the assessment madeto revise the claim was only a review; consequently following thedecision of the Supreme Court in (2010) 320 ITR 561 (SC) in the caseof Commissioner of Income-Tax Vs. Kelvinator of India Ltd., the appealwas allowed in favour of the assessee. The Revenue went on appealbefore the Income Tax Appellate Tribunal. The Tribunal held that thesubsequent decision by the Supreme Court on the issue reversing the High Court decision could not be a ground for re-opening theassessment. Thus, applying the decisions of the Apex Court in thecase of DCIT Vs. M/s.Simplex Concrete Piles (India)Ltd in Civil AppealNo.2329 of 2006 dated 11.09.2004 and the decision reported in 319 ITR208 in the case of Mepco Industries Ltd Vs. CIT and another, theIncome Tax Appellate Tribunal rejected the Revenue's appeal and hence,the present appeal by the Revenue. 4. After considering the merits of the case canvassed by theRevenue, we do not think that we need to go into the above saiddecisions or the correctness of the Tribunal's order for the followingreasons :- As already pointed out in the preceding paragraphs, the originalassessment under Section 143(3) of the Act was completed on22.09.2003, disallowing the claim for deduction under Section 80IB ofthe Act. Assessee filed appeal before the Commissioner of Income Tax(Appeals),who,byorderdated12.01.2005inITA.No.Tr.283/ITA.No.84/04-05 allowed the appeal. This wassubsequently given effect to and order was passed on 18.05.2005granting relief to the assessee. Thus, if there is any mistake ingranting relief to the assessee under Section 80IB of the Act in theorder passed on 18.05.2005, the only order that could be the subjectof Revision would be the order dated 18.05.2005 and not the orderpassed on 22.09.2003, which was the subject matter of appeal beforethe Tribunal at the instance of the Revenue on 22.06.2007 and theorder of the Tribunal had also attained finality. 5. A reading of the order revising the assessment by theAssessing Officer on 30.11.2009 which was subject matter of appealbefore the Commissioner of Income Tax(Appeals) and Income TaxAppellate Tribunal show that it sought to revise the first orderpassed on 22.09.2003, which got merged with the order of the Tribunalin ITA.No.842/Mds/2005 dated 22.06.2007, which had attained finality.Thus, if the Revenue is questioning the quantum of relief granted tothe assessee, the order available for revision would be the orderdated 18.05.2005. When this is not subjected to any revision underSection 147 of the Act, we fail to understand how Revenue would bejustified in sustaining its plea on its jurisdiction to revise theorder under Section 147 of the Act. On this sole ground, we dismissthe Tax Case (Appeal) filed by the Revenue. No costs. Sd/-Asst.Registrar(CO)2.5.2014 /True Copy/ Sub Asst.Registrar nvsri To 1. The Commissioner of Income Tax Chennai Chennai 2.The Commissioner of Income Tax (Appeals)-III Chennai-34 Chennai-34 3.The Income Tax Appellate Tribunal "D" Bench, Chennai. "D" Bench, Chennai. 4. The Deputy Commissioner of Income Tax, Company Circle -II(1), Chennai. 5.The Assistant Registrar,Income Tax Appellate Tribunal,Rajaji Bhavan, Besant Nagar, Chennai. +1cc to Mr.V.S.Jayakumar, Advocate Sr 17694 +1cc to Mr.T.Ravi Kumar, advocate Sr 17380 VD(CO)km/5.5. Tax Case (Appeal). No.743 of 2013