Madras High Court
M/S.Vestas Technology R&D ... vs Assistant Commissioner Of Income ... on 30 June, 2021
W.P.No.37563 of 2016
and W.M.P.No.32189 of 2016
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED :30.06.2021
CORAM
THE HON'BLE MR.JUSTICE S.M.SUBRAMANIAM
W.P.No.37563 of 2016
and
W.M.P.No.32189 of 2016
M/s.Vestas Technology R&D Chennai Private Limited,
Represented by its Director – Finance,
Mr.Govindaraj Kolappan
Block A, 8th Floor, Tecci Park,
No.173, Rajiv Gandhi Salai (OMR)
Sholinganallur, Chennai – 600 119. ...Petitioner
Vs.
1.Assistant Commissioner of Income Tax,
Company Circle 3(2)
4th Floor, Wanaparthy Block,
121, Mahatma Gandhi Road,
Chennai – 600 034.
2.Principal Commissioner of Income Tax-3,
4th Floor, Main Building,
121, Mahatma Gandhi Road,
Chennai – 600 034. ... Respondents
1
https://www.mhc.tn.gov.in/judis/
W.P.No.37563 of 2016
and W.M.P.No.32189 of 2016
PRAYER : Writ Petition filed Under Article 226 of the Constitution of
India to issue of Writ of Certiorari, calling for the records on the file of the
first respondent and quash the impugned order in AACV8490Q/458-
V/2009-10 dated 08.09.2016 along with notice issued by the first
respondent under Section 148 of the Act in Pan No.AACV4768P dated
25.01.2016.
For Petitioner : Mr.N.V.Balaji
For Respondents : Mrs.Hema Muralikrishna
Standing Standing Counsel
for Income Tax
ORDER
The Notice issued under Section 148 of the Income Tax Act
dated 25.01.2016 and the order dated 08.09.2016 disposing of the
objections filed by the writ petitioner are under challenge in the present writ
petition
2. The petitioner is a Private Limited Company, incorporated
under the Companies Act, 1956 and is a wholly owned subsidiary of Vestas
Wind Systems A/S, a company incorporated in Denmark.
https://www.mhc.tn.gov.in/judis/
W.P.No.37563 of 2016
and W.M.P.No.32189 of 2016
3. The petitioner filed return of income on 29.09.2009, for the
Assessment Year 2009 - 10, claiming deduction under Section 10 A of the
Act. The Assessing Officer issued notice under Section 143 (2) of the
Income Tax Act on 21.09.2010 followed by notice under Section 142 (1) of
the Act calling for information. The petitioner submitted all the
informations and materials which were scrutinized and considered by the
Assessing Officer and original assessment order was passed by the
Assessing Officer on 17.04.2013 under Section 143 (3) of the Income Tax
Act.
4. While so, surprisingly notice under Section 148 of the
Income Tax Act was issued on 25.01.2016. The petitioner vide letter dated
25.02.2016 sought for the reasons for reopening of assessment. The
respondents furnished the reasons for reopening of assessment in
proceedings dated 29.04.2016. Thereafter on 15.06.2016, the petitioner
submitted its objections in detail and the said objections were disposed of
by the respondent, vide letter dated 08.09.2016.
https://www.mhc.tn.gov.in/judis/
W.P.No.37563 of 2016
and W.M.P.No.32189 of 2016
5. The learned counsel for the petitioner strenuously contended
that there is no reason to believe for reopening of assessment, in view of the
fact that the judgment relied on by the Assessing Officer for reopening of
assessment is the Tribunal's judgment and the issues as raised in the reasons
are decided by the Bombay High Court, in the case of CIT vs. Gem Plus
Jewellery India Limited, reported in 2011 330 ITR 175, which reads as
follows:
“On this position, in the present case it cannot be
disputed that the net consequence of the dis allowance of the
employer's contribution is that the business profits have to that
extent been enhanced. There was, as we have already noted, an
add back by the Assessing Officer to the income. All profits of
the unit of the assessee have been derived from manufacturing
activity. The dis allowance of the provident fund / ESIC
payments has been made because of the statutory provisions
section 43 B in the case of the employee's contribution and
section 36 (v) read with section 2 (24) (x) in the case of the
employee's contribution which has been deemed to be the
income of the assessee. The plain consequence of the dis
allowance and the add back that has been made by the
https://www.mhc.tn.gov.in/judis/
W.P.No.37563 of 2016
and W.M.P.No.32189 of 2016
Assessing Officer is an increase in the business profits of the
assessee. The contention of the revenue that in computing the
deduction under section 10 A the addition made on account of
the dis allowance of the provident fund / ESIC payments ought
to be ignored cannot be accepted. No statutory provision to
that effect having been made, the plain consequence of the dis
allowance made by the Assessing Officer must follow. The
second question shall accordingly, stand answered against the
revenue and in favour of the assessee.”
6. When the similar issue relating to dis-allowance were
decided by the Bombay High Court, there is no reason to rely on the
judgment of the Tribunal by invoking Section 147 of the Income Tax Act
and thus, the very basis for reopening of assessment is unsustainable and
liable to be set aside.
7. The learned counsel for the petitioner further contended that
the objections in detail with reference to the materials regarding dis-
allowance were dealt with by the Assessing Officer, while passing an
original order of assessment. Thus, the objections were not considered nor
https://www.mhc.tn.gov.in/judis/
W.P.No.37563 of 2016
and W.M.P.No.32189 of 2016
any findings are given in the impugned order. For all these reasons, the
impugned order is liable to be set aside.
8. The learned Senior Standing Counsel appearing for the
respondents disputed the said contentions by stating that where principles
with reference to the facts are applicable, in relation to the judgment
referred by either of the parties, are looked into by the Assessing Officer,
while proceeding with the reassessment, this Court cannot go into such
disputed facts regarding the materials scrutinized and the informations or
details now available with the Assessing Officer for reopening of
Assessment. All such details are to be gone into while undertaking the
process of reassessment and now it is in the stage of disposing of the
objections and therefore, the petitioner has to cooperate for reassessment.
9. This Court is of the considered opinion that the disputed
facts and circumstances based on the documents and evidences cannot be
adjudicated in a writ proceedings under Article 226 of the Constitution of
India. The facts relevant and the principles laid down in a particular
https://www.mhc.tn.gov.in/judis/
W.P.No.37563 of 2016
and W.M.P.No.32189 of 2016
judgment are to be considered while adjudication and this Court cannot
enter into venture of adjudication of those disputed facts. However, the fact
remains that the reasons are communicated and the reasons would show that
the expenditures are expressly disallowed under the deeming fiction created
by the penal Section of IT Act, on account of infringement of law. By
adding back the same item, the eligible profits got increased by these
disallowances, resulting in excess claim. It is well settled principle that the
deeming fictions created under any provisions of the IT Act, cannot be
imported to a beneficial provision of the Act as held in the case of DCIT vs.
Rameshbhai C Prajapati 2013 140 ITO 488 (AHD). Therefore, the above dis
allowance is required to be added back to the taxable income.
10. With reference to the above said reasons, various facts,
circumstances and intricacies in the documents are to be scrutinized by the
Competent Authority and such an exercise cannot be done by the High
Court.
https://www.mhc.tn.gov.in/judis/
W.P.No.37563 of 2016
and W.M.P.No.32189 of 2016
11. The disposal of the objections in the impugned order
reveals that mere production of account books or other evidence from
which material evidence could with due diligence have been discovered by
the AO does not necessarily amount to a disclosure within the meaning of
the first proviso to Section 147 - “necessary” - 79 ITR 582 (SC). It is to
further to be stated here that “It is possible with due diligence the Assessing
Officer would have ascertained this fact at the time of original assessment
also, but in view of the explanation (1) it does not mean that there was no
default on the part of the assessee”. The assessee can not try to take shelter
under the exception provided by the above proviso to Sec.147 that where an
assessment order u/s 143 (3) has been completed, no action after the expiry
of four years from the end of the assessment year can be taken.
https://www.mhc.tn.gov.in/judis/
W.P.No.37563 of 2016
and W.M.P.No.32189 of 2016
12. With the above observations, the writ petition stands
dismissed. No costs. Consequently, connected miscellaneous petition is
closed.
30.06.2021
Speaking order
Index : Yes
Internet: Yes
Pns
To
1.Assistant Commissioner of Income Tax,
Company Circle 3(2)
4th Floor, Wanaparthy Block,
121, Mahatma Gandhi Road,
Chennai – 600 034.
2.Principal Commissioner of Income Tax-3,
4th Floor, Main Building,
121, Mahatma Gandhi Road,
Chennai – 600 034.
https://www.mhc.tn.gov.in/judis/
W.P.No.37563 of 2016
and W.M.P.No.32189 of 2016
S.M.SUBRAMANIAM,J.
Pns
W.P.No.37563 of 2016
and
W.M.P.No.32189 of 2016
30.06.2021
https://www.mhc.tn.gov.in/judis/
