Principal Commissioner of Income-tax v. Lincoln Pharmaceuticals Ltd
[Citation -2015-LL-0311-5]

Citation 2015-LL-0311-5
Appellant Name Principal Commissioner of Income-tax
Respondent Name Lincoln Pharmaceuticals Ltd.
Court HIGH COURT OF GUJARAT AT AHMEDABAD
Relevant Act Income-tax
Date of Order 11/03/2015
Assessment Year 2003-04
Judgment View Judgment
Keyword Tags reassessment proceedings • plant and machinery • reassessment order • issuance of notice • original return
Bot Summary: Thereafter, after a period of four years of completing the assessment year 2003- 04, the Assessing Officer initiated the reassessment proceedings under section 147 of the Act mainly on the ground that though the assessee ceased to be a SSI unit as it exceeded the limit of investment of plant and machinery, i.e., exceeding the limit of Rs. 1 crore and thus it is not eligible for deduction under section 80-IB of the Act. The assessee was served with the reasons for reopening of the assessment by submitting that as for the assessment year 2003-04 the investment of plant and machinery was beyond Rs. 1 crore and thereby the assessee being ceased to be a SSI unit is not eligible under section 80-IB of the Act and despite the same the assessee claimed and was allowed deduction under section 80-IB of the Act of Rs. 35,40,963 for the assessment year 2003-04 and the income chargeable to tax has escaped under section 147 of the Act. The Assessing Officer passed the reassessment order for the assessment year 2003-04 and deleted the deduction under section 80-IB of the Act amounting to Rs. 38,07,493 and revised the income. At the outset, it is required to be noted that admittedly the reassessment proceedings for the assessment year 2003-04 was beyond the period of four years and the parameters, which would be applicable for initiation of the proceedings under section 147 of the Act within the period of four years, would defer from initiation of the proceedings beyond four years. From the facts borne out from the record and even it is not disputed by Shri Bhatt, learned counsel appearing on behalf of the Revenue that along with the original return for the assessment year 2003-04 the assessee did produce the balance-sheet in which the value of the plant and machinery was certified at Rs. 4,73,81,571 and there was no omission and/or suppression on the part of the assessee that the assessee did not disclose true and correct facts. Under the circumstances, the learned Tribunal has rightly not considered the appeal preferred by the Revenue which was on the merits of deletion of disallowance under section 80-IB of the Act. Under the circumstances, it is clarified that the present order shall be applicable with respect to the assessment year 2003-04 as initiation of the reassessment proceedings was beyond the period of four years and it was found that there was no suppression and/or omission on the part of the assessee.


JUDGMENT judgment of court was delivered by M. R. Shah J.-Feeling aggrieved and dissatisfied with impugned common judgment and order passed by learned Income-tax Appellate Tribunal "C" Bench, Ahmedabad (hereinafter referred to as "the Tribunal"), dated September 5, 2014, in I. T. A. No. 2687/Ahd/2010 (Asst. CIT (OSD) v. Lincoln Pharmaceuticals Ltd. [2014] 35 ITR (Trib) 498 (Ahd)) and Cross Objection No. 153/Ahd/2013 for assessment year 2003-04 by which learned Tribunal has allowed cross-objections preferred by assessee and dismissed appeal preferred by Revenue by holding that initiation of reassessment proceedings/reopening of assessment, which was admittedly beyond period of four years, was invalid, Revenue has preferred present tax appeals with following proposed questions of law: Tax Appeal No. 135 of 2015 "Whether Appellate Tribunal has erred in law and on facts by not upholding issuance of notice under section 148 as per provisions available as per Explanation 2(c)(iii) and 2(c)(iv) given below section 147 of Income-tax Act, by Assessing Officer and thereby allowing deduction claimed by assessee under section 80-IB of Income-tax Act without appreciating fact that deduction under section 80-IB is eligible for SSI unit only where investment in fixed assets on plant and machinery does not exceed Rs. 3 crores whereas total value of plant and machinery as per balance- sheet for all three assessment years under consideration was above 3 crores?" Tax Appeal No. 136 of 2015 "Whether Appellate Tribunal has erred in law and on facts in holding that issuance of notice under section 148 was bad in law which was issued as per provisions available as per Explanation 2(c)(iii) and 2(c)(iv) given below section 147 of Income-tax Act?" facts leading to present tax appeals in nut-shell are as under; (2.1) assessee filed return of income for assessment year 2003-04 and claimed deduction under section 80-IB of Income-tax Act (hereinafter referred to as "the Act"). assessee also produced balance- sheet along with return in which total value of plant and machinery was certified at Rs. 4,73,81,571 as on April 1, 2002, i.e., at beginning of financial year 2002-03 relevant to assessment year 2003-04. Assessing Officer granted deduction under section 80-IB of Act as claimed. Thereafter, after period of four years of completing assessment year 2003- 04, Assessing Officer initiated reassessment proceedings under section 147 of Act mainly on ground that though assessee ceased to be SSI unit as it exceeded limit of investment of plant and machinery, i.e., exceeding limit of Rs. 1 crore and thus it is not eligible for deduction under section 80-IB of Act. assessee was served with reasons for reopening of assessment by submitting that as for assessment year 2003-04 investment of plant and machinery was beyond Rs. 1 crore and thereby assessee being ceased to be SSI unit is not eligible under section 80-IB of Act and despite same assessee claimed and was allowed deduction under section 80-IB of Act of Rs. 35,40,963 for assessment year 2003-04 and, therefore, income chargeable to tax has escaped under section 147 of Act. Assessing Officer passed reassessment order for assessment year 2003-04 and deleted deduction under section 80-IB of Act amounting to Rs. 38,07,493 and revised income. (2.2) Feeling aggrieved and dissatisfied with reassessment order passed by Assessing Officer under section 147 of Act for assessment year 2003-04 of disallowance of deduction under section 80-IB of Act amounting to Rs. 38,07,493 assessee preferred appeal before Commissioner of Income-tax (Appeals). It was also contended on behalf of assessee that initiation of assessment proceedings under section 147 of Act, which was beyond period of four years, was illegal and not permissible as there was no commission and/or suppression on part of assessee. learned Commissioner of Income-tax (Appeals) held that initiation of proceedings under section 147 of Act was justified and was permissible. However, on merits, learned Commissioner of Income-tax (Appeals) deleted disallowance of deduction under section 80-IB of Act. (2.3) Feeling aggrieved and dissatisfied with order passed by learned Commissioner of Income-tax (Appeals) in deleting disallowance of deduction under section 80-IB of Act on merits, Revenue preferred appeal before learned Tribunal, being I. T. A. No. 2687/Ahd/2010. Against finding recorded by learned Commissioner of Income-tax (Appeals) holding initiation of reassessment proceedings under section 147 of Act as legal and permissible, assessee preferred Cross Objection No. 153/Ahd/2013 before learned Tribunal. By impugned judgment and order learned Tribunal has allowed cross objections preferred by assessee and held that initiation of reassessment proceedings for assessment year 2003-04 was bad in law. Consequently, learned Tribunal did not decide appeal preferred by Revenue on merits. (2.4) Feeling aggrieved and dissatisfied with impugned judgment and order passed by learned Tribunal in I. T. A. No. 2687/Ahd/2010 and Cross Objection No. 153/Ahd/2013, Revenue has preferred present tax appeals. We have heard Shri Manish Bhatt, learned counsel appearing on behalf of appellant at length and we have perused order passed by Assessing Officer under section 147 of Act as well as order passed by learned Commissioner of Income-tax (Appeals) as well as impugned judgment and order passed by learned Tribunal. At outset, it is required to be noted that admittedly reassessment proceedings for assessment year 2003-04 was beyond period of four years and, therefore, parameters, which would be applicable for initiation of proceedings under section 147 of Act within period of four years, would defer from initiation of proceedings beyond four years. From record, it appears and it is not disputed by Shri Bhatt, learned counsel appearing on behalf of Revenue, that as such along with original return for assessment year 2003-04 assessee had produced balance-sheet in which total value of plant and machinery was Rs. 4,73,81,571. Despite above, Assessing Officer allowed deduction under section 80-IB of Act and, therefore, as such, it cannot be said that there was any omission and/or suppression on part of assessee in not disclosing true and correct facts. If that be so, it cannot be said that learned Tribunal has committed any error in holding reassessment proceedings for assessment year 2003-04 as bad in law. It is true that learned Tribunal has not specifically so observed. However, from facts borne out from record and even it is not disputed by Shri Bhatt, learned counsel appearing on behalf of Revenue that along with original return for assessment year 2003-04 assessee did produce balance-sheet in which value of plant and machinery was certified at Rs. 4,73,81,571 and, therefore, there was no omission and/or suppression on part of assessee that assessee did not disclose true and correct facts. We confirm finding recorded by learned Tribunal that initiation of reassessment proceedings for assessment year 2003-04 was not permissible and was not legal and as such was bad in law. Under circumstances, learned Tribunal has rightly not considered appeal preferred by Revenue which was on merits of deletion of disallowance under section 80-IB of Act. Under circumstances, there is no substance in present tax appeals and same deserves to be dismissed and are, accordingly, dismissed. As such, no substantial question of law arise in present tax appeals. (3.1) At this stage, Shri Bhatt, learned counsel appearing on behalf of appellant-Revenue, has requested to make observation that present order shall not come in way of Revenue in other appeals with respect to assessment years 2004-05 and 2005-06 where initiation of proceeding were within period of four years. Under circumstances, it is clarified that present order shall be applicable with respect to assessment year 2003-04 as initiation of reassessment proceedings was beyond period of four years and it was found that there was no suppression and/or omission on part of assessee. With this, both tax appeals are dismissed. *** Principal Commissioner of Income-tax v. Lincoln Pharmaceuticals Ltd
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