D.T.& T.D.C.Ltd. vs The Assistant Commissioner Of ...
2010 Latest Caselaw 396 Del

*            IN THE HIGH COURT OF DELHI AT NEW DELHI


%                                   Judgment delivered on: 25th January, 2010

+       W.P.(C) 13603/2004

        D.T.& T.D.C.LTD.                                      ..... Petitioner


                                   -versus-


        THE ASSISTANT COMMISSIONER OF INCOME TAX
                                           ..... Respondent

Advocates who appeared in this case:

        For the Petitioner          :     Mr Rajiv Tyagi with Ms Chanchal Biswal
        For the Respondent          :     Mr Sanjeev Sabharwal



        CORAM:
        HON'BLE MR JUSTICE BADAR DURREZ AHMED
        HON'BLE MR JUSTICE SIDDHARTH MRIDUL

1. Whether reporters of local papers may be allowed to see the judgment?

2. To be referred to the Reporter or not?

        3.       Whether the judgment should be reported in
                 the Digest?                                                     .


BADAR DURREZ AHMED, J (ORAL)

1. This writ petition concerns three assessment years-1997-98, 1998-99

and 1999-2000.

2. Approval of the Committee on Disputes had been taken for pursuing

this writ petition. Permission was granted on 26th September, 2008.

3. The Government of National Capital Territory of Delhi (Delhi

Administration at the relevant time) had authorized the petitioner (Delhi

Tourism & Transportation Development Corporation Limited) (DTTDC) to

run liquor vends throughout Delhi. The petitioner was required to keep aside

a sum of Rs 5/- per bottle for the Transport Infrastructure Utilization Fund

(TIUF) which was to be spent towards the activities of construction of

flyovers and pedestrian facilities. The said fund was under the direct control

of the Government of National Capital Territory of Delhi and utilized for the

aforesaid purpose.

4. The fact that the petitioner kept aside a sum of Rs 5/- per bottle for the

TIUF was disclosed by the petitioner in its income tax return. In fact, the

department had, in respect of earlier assessment years, taken the stand that

the said sum of Rs 5/- per bottle was taxable in the hands of the petitioner.

However, in respect of the assessment year 1990-91 and 1991-92 the matter

was carried in appeal to the Income Tax Appellate Tribunal, which by its

decision dated 31st August, 1995 held the same not to be taxable, after

recording a finding that it was nothing but diversion of income by overriding

title. The reference is pending before this Court in respect of the said

Tribunal‟s decision dated 31st August, 1995. In respect of the assessment

year 1996-97, the Income Tax Appellate Tribunal took a similar view in

favour of the assessee by virtue of its order dated 27 th October, 2000. The

Revenue preferred an appeal against the same which is pending before this

Court.

5. The original assessment order was passed in respect of three

assessment years in question namely 1997-98, 1998-99 and 1999-2000 on

28th March, 2002. In each of the assessment orders pertaining to each of the

three assessment years the TIUF has been specifically noticed by the

Assessing Officer. He had brought the interest on such amount to tax but

had not taxed the amount transferred to the TIUF. We may also point out

that in the course of the assessment proceedings in respect of the three years

in question, the Assessing Officer had raised specific queries with regard to

TIUF. The petitioner had submitted a detailed reply dated 18th January,

2002 explaining the exact nature and purpose of TIUF. It is only thereafter

that the assessment order was passed by the Assessing Officer on 28 th

March, 2002.

6. By three separate notices, all dated 26th March, 2004, issued under

Section 148 of the Income Tax Act, 1961 (hereinafter referred to the „said

Act‟), the Assessing Officer proposed to reopen the assessments in respect

of the three assessment years in question. The reasons for reopening the

assessments were supplied by virtue of the letter dated 28th April, 2004 to

the petitioner. The reasons in respect of the three years are virtually

identical and we shall refer only to the reasons provided in respect of the

assessment year 1997-98. The reasons disclosed are as under:-

"Sub-Reasons for reopening of case u/s 147 of the IT Act for AY 1997-98

Please refer to your letter dated 19.4.04. The reasons for reopening assessment for AY 1997-98 are as under:-

It was noticed that the assessee company has debited a sum of Rs.13,70,08,125 in the P&L account towards "Transportation Infrastructure Utilization Fund". Further, during the year the assessee company earned interest income of Rs.1,31,19,000 on the outstanding balances of Transportation Infrastructure Utilization Fund (TIUF) and this interest income was also transferred to TIUF treating this as part of TIUF. In the Notes annexed to and forming part of the Accounts, it has been mentioned that

"Funds provided by the government or funds diverted to "Transportation Infrastructure Utilization Fund" from sale proceeds of Country Liquor, as per the obligatory requirements of the government of NCT of Delhi, are utilized for constructing flyovers and pedestrian facilities in Delhi and meeting establishment and other administrative expenses of Engineering Wing specially created for the purpose. In this regard the amount of retail margins to be diverted is being decided by the state government from time to time."

In the assessment orders for AY 1990-91 1991-92, 92-93, 94-95 & 96-97, the amount transferred to TIUF was disallowed by the than AO. While disallowing the same, the AO held that the expenses debited under the above head were an application of income and not the diversion of income as contended by the assessee company. And the amounts spent by the assessee company on the construction of flyover & pedestrian facilities etc amounted to an expenditure of capital nature and was not

allowable deduction. The findings of the AO was confirmed by the CIT(A) in all those years. However, the ITAT decided the issue in favour of the assessee company holding that the expenditure actually incurred on the construction of flyovers and pedestrian facilities is revenue expenditure. In all the said years, the department has filed reference/appeal against the decision of the ITAT."

7. The petitioner, thereafter, filed objections in respect of each of the

years on 30th April, 2004 and submitted that what the Assessing Officer was

proposing to do amounted to a mere change of opinion which was

impermissible under Section 147 of the said Act. We may point out at this

juncture that that prior to the furnishing of the reasons, the petitioner had

approached this Court by way of a writ petition challenging the issuance of

the Section 148 notices. During the pendency of the writ petition, the

reasons were supplied and the objections were also taken by the petitioner.

This Court disposed of the said writ petition by directing that the procedure

prescribed in GKN Driveshafts (India) Ltd. vs. Income Tax Officer and

Others: 259 ITR 19 (SC) be followed and a speaking order be passed.

Thereafter, the speaking orders dated 26th July, 2004 have been passed in

respect of each assessment years in question.

8. We have examined the purported reasons, as well as the objections

and the speaking order and have also heard counsel for the parties. We are

of the view that the reopening of the completed assessments amounted to a

mere change of opinion, which is not permissible as per the settled legal

principles. The Assessing Officer had clearly applied his mind to the setting

apart of Rs 5/- per bottle for the purpose of the TIUF. This is evident from a

plain reading of the original assessment order itself as well as from the query

and the detailed answer given by the petitioner with regard to the said fund.

9. We may also point out that insofar as the assessment year 1997-98

and 1998-99 are concerned, the same would require application of the

proviso to Section 147 of the said Act, inasmuch as the notices under

Section 148 of the said Act in respect of these two years have been issued

beyond the period of four years prescribed in the said provision. That being

the case, before the Assessing Officer could acquire jurisdiction for

reopening the assessments in respect of these two years, it would have to be

shown that the assessee did not file a return or that he did not make a full

and true disclosure. It is an admitted position that the assessee had filed a

return, therefore, the only question which remains to be open is whether the

assessee made a full and true disclosure or not. In the present case there is

no allegation in the reasons recorded by the Assessing Officer that the

assessee had failed to make a full and true disclosure of the relevant facts.

In fact, there could be no such allegation because the assessee had clearly

indicated the nature and contents of the TIUF and the treatment given by the

assessee in its books of accounts. The same had also been examined by the

Assessing Officer as aforesaid. Thus, in respect of the assessment years

1997-98 and 1998-99 this additional ground is also available in favour of the

assessee/petitioner.

10. The position that a mere change of opinion would not entitle an

Assessing Officer to reopen a completed assessment is well settled. The

latest decision being of the Supreme Court in Civil Appeal No.2009-2011 of

2003 and Civil Appeal No. 2520 of 2008 decided on 18th January, 2010

which approves this Court‟s Full Bench decision in the case of

Commissioner of Income Tax vs. Kelvinator of India Limited:256 ITR 1

(Del.) (HC). The power of re-assessment is different from the power of

review. The Assessing Officer has been given the power to re-asses under

Section 147 upon certain conditions being satisfied. The Assessing Officer

does not have the power of review. If a change of opinion were to be

permitted as a ground for re-assessment then it would amount to granting a

licence to the Assessing Officer to „review‟ his decisions, which power he

does not have.

11. Consequently, holding that initiation of the proceedings in question

was based entirely on change of opinion, we find that the re-assessment

proceedings are without jurisdiction. The notices under Section 147/148 of

the said Act and the proceedings pursuant thereto stand quashed. We make

it clear that in this writ petition we have considered the case only from the

stand point of jurisdiction and not on the merits of the issues with regard to

taxability of the amount transferred to TIUF.

12. The writ petition stands allowed accordingly. No order as to costs.

BADAR DURREZ AHMED, J

SIDDHARTH MRIDUL, J JANUARY 25, 2010 dn