Relief to Tata: Bombay High Court quashes Income Tax Reassessment Notice [Read Judgment]

In a major relief to Tata, the Bombay High Court has quashed the  Income Tax reassessment notice.

The petitioner, Tata Sons Limited is a company incorporated under the Companies Act, 1913. The petitioner is an investment holding company of Tata Group’s Companies. For the assessment year 2003-04, the petitioner filed a return of income on 28th November 2003 declaring a total income of Rs.10,53,46,561/-. Along with the Return, the petitioner had, inter-alia, annexed the income tax summary containing details of the computation of income under each head of income, the quantum of deduction claimed under sections 10A and 80HHE as well as the income from business, gross and net income. The petitioner had also annexed the Audit Report, Director’s Report, and the Audited Accounts for the year ended 31st March 2003.

The petitioner’s case was selected for scrutiny assessment. Multiple notices and questionnaires were served on the petitioner on a variety of issues, including the deductions claimed under section 10A, 80HHE, and 80G, dis-allowance of interest, etc. The petitioner claimed to have given explanations and furnished documents in support thereof.

The division bench of Justice N.J.Jamadar and Justice K.R.Shriram has held that the case at hand is nothing but an instance of mere change of opinion. A bare perusal of the reasons indicates that the exercise was influenced by a mere change of opinion. To start with, it is imperative to note that the Assessing Officer has commenced the recording of reasons with the expression, “On perusal of records, it is seen that 10% of the eligible profits under section 10A were not fully taxed and yet, set off of the losses of local units to the extent of Rs.54,27,79,336/- was allowed and this resulted in short levy of tax.” Evidently, this assessment of the Assessing Officer betrays an intent to question the original assessment on the strength of the very same material, by substituting his view for the conclusion recorded by the Assessing Officer at the time of initial assessment.

“The alleged escapement of the income articulated under the second head “Correct computation of Business Income” also suffers from the same vice of mere change of opinion. The third head under which the income allegedly escaped assessment, under the caption, ‘Excess DIT Relief’ stands on a much weaker foundation. The Assessing Officer explicitly refers to the availability of two options for computation of deduction under section 10A and 80 HHE, namely, (i) exclusive method; and (ii) alternatively, profit of 10A units shall form part of the calculation of 80 HHE and export turnover of 10A is to be excluded therefrom. According to the Assessing Officer, the choice of the second method by the department resulted in escapement of income as excess DIT relief to the extent of Rs.3,67,31,204/- had been allowed. This inference is a classic example of change of opinion as it is rooted inexpediency of exercise of one option over another,” the court noted.

Tata Sons Limited a Company incorporated under the Companies Act VS Deputy Commissioner of Income Tax, Range 2(3)

CITATION: 2022 TAXSCAN (HC) 160

To Read the full text of the Judgment CLICK HERE

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