Leo Fasteners, Pondicherry v. ACIT, Pondicherry

ITA 3098/CHNY/2014 | 2007-2008
Pronouncement Date: 30-09-2016

Appeal Details

RSA Number 309821714 RSA 2014
Assessee PAN AABFL0652J
Bench Chennai
Appeal Number ITA 3098/CHNY/2014
Duration Of Justice 1 year(s) 9 month(s) 7 day(s)
Appellant Leo Fasteners, Pondicherry
Respondent ACIT, Pondicherry
Appeal Type Income Tax Appeal
Pronouncement Date 30-09-2016
Appeal Filed By Assessee
Bench Allotted A
Assessment Year 2007-2008
Appeal Filed On 23-12-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH CHENNAI . . . .. ' #$ & '( [ BEFORE SHRI N.R.S. GANESAN JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH ACCOUNTANT MEMBER] ./ I.T.A.NO.1223 3097 & 3098/MDS/2014 / ASSESSMENT YEAR : 2005-06 2006-07 AND 2007-08 M/S LEO FASTENERS REP. BY ITS PARTNER A-27A INDUSTRIAL ESTATE THATTANCHAVADU PONDICHERRY - 9 VS. THE ASSTT. COMMISSIONER OF INCOME-TAX CIRCLE I PONDICHERRY [PAN AABFL 0652 J ] ( )* / APPELLANT) ( + )* /RESPONDENT) / APPELLANT BY : SMT. PUSHYA SEETHARAMAN SR. ADVOCATE & SMT. J. SREEVIDYA ADVOCATE /RESPONDENT BY : SHRI SHIVA SRINIVAS JCIT / DATE OF HEARING : 19 - 09 - 201 6 ! / DATE OF PRONOUNCEMENT : 30 - 0 9 - 2016 / O R D E R PER D.S. SUNDER SINGH ACCOUNTANT MEMBER THESE APPEALS WERE DISPOSED BY THE TRIBUNA L VIDE ORDER DATED 29.5.2015. SUBSEQUENTLY THE ASSESSEE FILED MISCELLANEOUS PETITIONS IN M.P.NOS.70 71 & 72/MDS/2015 AND THE T RIBUNAL VIDE ITS ORDER DATED 09.12.2015 HAS RECALLED THE ORDER DAT ED 29.5.2015. :-2-: I.T.A.NO.1223/14 ETC 2. IN THESE APPEALS THE ASSESSEE HAS RAISED COM MON GROUNDS REGARDING VALIDITY OF ISSUE OF NOTICE U/S 147 OF T HE ACT AND ALSO SEPARATE GROUNDS ON MERITS FOR DEDUCTION U/S 80IB OF THE ACT ON THE INTEREST EARNED ON DEPOSITS WHICH WAS KEPT FOR MARG IN MONEY AND GAIN ON FOREIGN EXCHANGE FLUCTUATION. FOR THE SAKE OF CONVENIENCE AND BREVITY WE DISPOSE OF THE APPEALS BY THIS COMM ON ORDER. 3. FIRST WE TAKE UP THE APPEALS FOR ASSESSMENT YEAR 2005-06 AND 2006-07. 4. THE FIRST ISSUE IS RELATING TO REOPENING OF ASSESSMENT. THE FACTS OF THE CASE ARE THAT FOR ASSESSMENT YEAR 2005 -06 ASSESSMENT WAS COMPLETED ORIGINALLY U/S 143(3) OF THE ACT BY AN ORDER DATED 31.12.2007. THE ASSESSEE IS ENGAGED IN THE MANUFACT URE OF HIGH TENSION PRECISION FASTENERS AND THE UNIT IS CARRIED ON WITH THE AID OF POWER AND EMPLOYING MORE THAN 10 WORKERS AND CLAIM ED 100% OF DEDUCTION U/S 80IB AMOUNTING TO RS.13 22 69 090/- RELATING TO UNIT-I AND UNIT-II. IN THE ASSESSMENT ORDER U/S 143 (3) DATED 31/12/2007 THE ASSESSING OFFICER HAS DISALLOWED TH E CLAIM OF THE ASSESSEE U/S 80IB OF THE ACT. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A) AND THE CIT(A) HAS PASSED AN ORDER HOLDI NG THAT THE PROFITS OF THE ASSESSEE-FIRM FOR BOTH THE UNITS WI LL QUALIFY FOR :-3-: I.T.A.NO.1223/14 ETC DEDUCTION U/S 80IB @ 25% AS AGAINST THE CLAIM OF 1 00% MADE BY THE ASSESSEE. 5. ON APPEAL THE TRIBUNAL CONFIRMED THE ORDER OF THE LD .CIT(A) AND THE ASSESSEE FILED APPEAL BEFORE THE H ON'BLE MADRAS HIGH COURT IN T.C. NO.1218 TO 1220/2010 FOR ALL THE THREE ASSESSMENT YEARS AND ARE PENDING. MEANWHILE THE ASSESSING OFFICER HAS NOTICED THAT THE ASSESSEE HAS CLAIMED T HE DEDUCTION U/S 80IB ON INTEREST INCOME AND THE GAIN ON FOREIGN EXC HANGE FLUCTUATION AND ISSUED THE NOTICE U/S 148 OF THE ACT ON 28.3.2012 FOR EXCLUSION OF INTEREST INCOME OF ` 41 54 509/- AND FOREIGN EXCHANGE GAIN OF ` 17 82 318/- FOR THE PURPOSE OF COMPUTING THE ELIGIBLE DEDUCTION U/S 80IB. IN THE ORIGINAL ASSES SMENT ORDER OF 31.12.2007 THE ASSESSING OFFICER HAS EXAMINED THE ISSUE WHETHER THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80IB OR NOT BUT NOT EXAMINED THE ISSUE WHETHER THE INTEREST INCOME AND GAIN ON FOREIGN EXCHANGE ARE ALLOWABLE FOR THE PURPOSE OF COMPUTIN G THE ELIGIBLE DEDUCTION U/S 80IB OF THE ACT. THEREFORE NOTICE U/S 148 HAS BEEN ISSUED FOR REOPENING OF ASSESSMENT WHICH WAS CHALLE NGED BEFORE THE CIT(A). THE ASSESSEE COULD NOT SUCCEED BEFORE THE CIT(A) HENCE IN APPEAL BEFORE THE TRIBUNAL. :-4-: I.T.A.NO.1223/14 ETC 6. THE LD. SR. COUNSEL APPEARING FOR THE CASE HAS STATED THAT IN THE FIRST INSTANCE THE ASSESSING OFFICER DISALLOWE D THE ENTIRE DEDUCTION CLAIMED U/S 80IB OF THE ACT AFTER VERIFY ING THE COMPLETE DETAILS FILED BY THE ASSESSEE. SHE FURTHER SUBMIT TED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE BOOKS OF ACCO UNT FINANCIAL STATEMENTS AND CERTIFICATE ISSUED BY THE QUALIFIED ACCOUNTANT IN FORM 10CCB DETERMINING THE DEDUCTION U/S 80IB WE RE PRODUCED BEFORE THE ASSESSING OFFICER AND AFTER VERIFYING TH E ENTIRE DETAILS PLACED BEFORE THE ASSESSING OFFICER THE ASSESSING OFFICER DISALLOWED THE ENTIRE DEDUCTION U/S 80IB. LD. SR. COUNSEL ALSO INVITED OUT ATTENTION TO THE PROFIT & LOSS ACCOUNT COMPUTATI ON OF INCOME WHICH ARE PLACED AT PAGES 9 10 AND 6 OF THE PAPER BOOK. AT PAGE NO.9 OF THE PAPER BOOK THE ASSESSEE HAS FURNISHED THE DETAILS OF FOREIGN EXCHANGE FLUCTUATION THE INTEREST INCOME A ND ALSO NET PROFIT BEFORE INTEREST AND DEPRECIATION. FROM THE NET PRO FIT THE ASSESSEE COMPUTED THE DEDUCTION U/S 80IB WHICH IS PLACED A T PAGE 6 OF THE PAPER BOOK. THE LD. SR. COUNSEL SUBMITTED THAT TH E INFORMATION REGARDING THE INTEREST AND GAIN ON FOREIGN EXCHANG E FLUCTUATION WAS PLACED BEFORE THE ASSESSING OFFICER AT THE TIME OF ORIGINAL ASSESSMENT HENCE THERE IS NO FRESH MATERIAL RECEIV ED BY THE ASSESSING OFFICER. ACCORDINGLY LD. SR. COUNSEL C ONTENDED THAT THERE IS NO CASE FOR REOPENING THE ASSESSMENT U/S 147 OF I.T. ACT . FURTHER :-5-: I.T.A.NO.1223/14 ETC SHE SUBMITTED THAT THERE IS NO FAILURE ON THE PART OF THE ASSESSEE TO FURNISH THE REQUIRED DETAILS AND THE NOTICE U/S 148 WAS ISSUED BEYOND FOUR YEARS FROM THE END OF THE RELEVANT ASSE SSMENT YEAR WHICH REQUIRE FAILURE ON THE PART OF THE ASSESSEE. SHE ARGUED THAT THE ASSESSMENT MADE U/S 148 OF THE ACT CONSEQUENT TO ISSUE OF NOTICE U/S 148 IS BAD IN LAW. THE LD. SR. COUNSE L SUBMITTED THAT THE HON'BLE ITAT CHENNAI IN ITS ORDER DATED 29.5. 2015 CONFIRMED THE ORDER OF THE ASSESSING OFFICER IN ISSUING THE N OTICE U/S 148 UNDER THE MISTAKEN IMPRESSION OF THE INFORMATION RE GARDING THE INCLUSION OF INTEREST AND THE FOREIGN EXCHANGE GAI N HAS COME TO THE NOTICE OF THE DEPARTMENT CONSEQUENT TO SEARCH OPERA TION IN THE CASE OF THE ASSESSEE WHICH WAS NOT CORRECT. IT WA S ARGUED THAT THERE WAS NO SEARCH AND ONLY A SURVEY WAS CONDUCTED U/S 133A OF THE ACT ON 18/11/2004 BEFORE THE ASSESSMENT WAS MADE U/S 143(3) DATED 31.12.2007. 7. ON THE OTHER HAND THE LD. DR FAIRLY CONCEDED THAT THERE WAS NO SEARCH IN THE PREMISES OF THE ASSESSEE AND THERE WAS ONLY A SURVEY. THE LD. DR ARGUED THAT THE ASSESSEE HAS F URNISHED FORM 10CCB RETURN OF INCOME AND PROFIT & LOSS ACCOUNT B UT NOT FURNISHED THE DETAILS REGARDING INTEREST INCOME AND GAIN ON F OREIGN EXCHANGE. THE ASSESSING OFFICER HAS EXAMINED ONLY THE ISSUE R EGARDING THE :-6-: I.T.A.NO.1223/14 ETC ALLOWABILITY OF DEDUCTION U/S 80IB BUT NOT THE SP ECIFIC ISSUE RELATING TO THE INTEREST INCOME AND FOREIGN EXCHANGE GAIN. T HE D.R FURTHER ARGUED THAT SINCE THE ASSESSING OFFICER HAS NOT E XAMINED THE ISSUE SPECIFICALLY RELATING TO THE INCLUSION OF INTEREST INCOME AND GAIN ON FOREIGN EXCHANGE FLUCTUATION AND THE INFORMATION HA S COME TO THE NOTICE OF THE AO SUBSEQUENTLY ON VERIFICATION OF THE RECORDS THE ISSUE OF NOTICE U/S 148 OF THE ACT IS VALID AND RE QUIRED TO BE UPHELD. FURTHER THE LD. DR RELIED ON THE ORDERS OF THE AS SESSING OFFICER AND THE CIT(A). 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND P ERUSED THE MATERIAL PLACED ON RECORD. IN THIS CASE THE ASSES SMENT YEARS INVOLVED ARE 2005-06 AND 2006-07 AND THE ORIGINAL A SSESSMENTS WERE COMPLETED U/S 143(3) DISALLOWING THE ENTIRE D EDUCTION U/S 80IB OF THE ACT. THE ASSESSEE HAS FILED THE RETUR N OF INCOME AND THE CERTIFICATE U/S 10CCB. IN THE RETURN OF INCOM E THE ASSESSEE HAS FURNISHED THE DETAILS OF INTEREST AND GAIN ON F OREIGN EXCHANGE ALONG WITH THE PROFIT & LOSS ACCOUNT. THIS FACT WA S NOT DISPUTED BY THE REVENUE. DEDUCTION U/S 80IB WAS COMPUTED AND CLAIMED AS PER PROFIT & LOSS ACCOUNT. THE ASSESSMENT WAS COM PLETED U/S 143(3) AFTER VERIFICATION OF THE BOOKS OF ACCOUNT PRODUCED BY THE ASSESSEE. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A) AND THE :-7-: I.T.A.NO.1223/14 ETC ASSESSING OFFICER HAS PASSED CONSEQUENTIAL ORDER GI VING EFFECT TO THE CIT(A)S ORDER. SUBSEQUENTLY THE ASSESSMENT WAS R EOPENED AFTER VERIFICATION OF THE RECORDS AND NOTICED THAT THE ASSESSEE HAS CLAIMED EXCESS DEDUCTION U/S 80IB BY INCLUDING THE INTEREST INCOME AND GAIN ON FOREIGN EXCHANGE. THE ABOVE DETAILS WER E ALREADY AVAILABLE WITH THE DEPARTMENT IN THE ASSESSMENT REC ORDS AT THE TIME OF PASSING THE ORIGINAL ASSESSMENT ORDER U/S 143(3) . FOR READY REFERENCE WE REPRODUCE HEREUNDER FIRST PROVISO TO SECTION 147 OF THE ACT: PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTIO N (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE R ELEVANT ASSESSMENT YEAR NO ACTION SHALL BE TAKEN UNDER THI S SEC. AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS ANY INCOME CHARGEABLE TO TA X HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REAS ON OF THE FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB- SECTION (1) OF SECTION 142 OR SECTION 148 OR TO DI SCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSE SSMENT FOR THAT ASSESSMENT YEAR. 9. AS PER THE PROVISO TO SEC. 147 THE ASSESSING O FFICER IS PERMITTED TO REOPEN THE ASSESSMENT AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR ONLY IN CAS E THE ASSESSEE FAILS TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACT S NECESSARY FOR THE ASSESSMENT FOR THAT ASSESSMENT YEAR. IN THIS CASE SINCE THE ENTIRE MATERIAL WAS PLACED BEFORE THE ASSESSING OFFICER A ND THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE TH E TRUE AND CORRECT :-8-: I.T.A.NO.1223/14 ETC PARTICULARS BEFORE THE ASSESSING OFFICER. THE ASS ESSEE RELIED ON THE FOLLOWING DECISIONS. (I) PVP VENTURES LTD VS ACIT [2015] 94 CHH 147(CHENHC) (II) EI DUPONT INDIA PVT. LTD VS DCIT [201 3] 351 ITR (DEL) (III) PATEL ALLOY STEEL P LTD VS ACIT [2013] 1 ITR-OL 9580 [GUJARAT HC) (IV) CIT VS ANKIT C. MAHESHWARI [2014] 366 ITR 146(GUJ) (V) NEZONE FOODS P. LTD VS ACIT [2015]38 ITR (TRIB) 464 (VI) DONALDSON INDIA FILTERS SYSTEMS P. LTD VS THE DY. CIT [2015] 371 ITR 87(DEL) WHEREIN IT WAS HELD THAT UNLESS AND UNTIL IT WAS ALLEGED OR ESTABLISHED THAT THERE WAS ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE THE MATERIAL FACTS TRULY AND CORRECTLY IT WAS NOT PERMISSIBLE TO THE ASSESSING OFFICER TO REOPEN THE ASSESSMENT U/S 148. 10. THE REVENUE HAS NOT ESTABLISHED THE CASE THAT ASSESSEE HAS FAILED TO DISCLOSE ALL THE MATERIAL FACTS FOR D ISALLOWING DEDUCTION U/S 80IB IN RELATION TO INTEREST INCOME AND GAIN ON FOREIGN EXCHANGE. THEREFORE NOTICE ISSUED U/S 148 IS BAD IN LAW AND CASE LAW RELIED UPON BY THE ASSESSEE ARE SQUARELY APPLI CABLE TO THE FACTS :-9-: I.T.A.NO.1223/14 ETC OF THE CASE. THE NOTICE ISSUED U/S 148 AND THE CO NSEQUENT ASSESSMENTS ARE QUASHED. 11. SINCE WE HAVE QUASHED THE REOPENING OF ASS ESSMENTS FOR ASSESSMENT YEARS 2005-06 AND 2006-07 WE DO NOT CON SIDER IT NECESSARY TO ADJUDICATE UPON THE ISSUES ON MERITS F OR WHICH THE ASSESSEE HAS RAISED GROUNDS SEPARATELY. 12. IN THE RESULT THE ASSESSEES APPEALS FO R THE ASSESSMENT YEARS 2005-06 AND 2006-07 ARE ALLOWED. 13. NOW COMING TO THE APPEAL FOR ASSESSMENT YE AR 2007-08 THE ASSESSEE HAS RAISED TWO ISSUES IN ITS GROUNDS. THE FIRST ISSUE IS ON REOPENING OF ASSESSMENT AND THE THE ISSUE OF NO TICE U/S 148 OF THE ACT AND THE SECOND ISSUE IS DEDUCTION U/S 80I B OF THE ACT ON INTEREST INCOME AND GAIN ON FOREIGN EXCHANGE FLUCTU ATION. 14. IN THIS CASE ASSESSMENT WAS COMPLETED ON 18.12.2009 AND THE ASSESSING OFFICER DISALLOWED THE DEDUCTION CLAIMED U/S 80IB ENTIRELY RELATING TO UNIT-I RS.6884622/- AND UNIT-II RS.26153597/- AGGREGATING TO RS.33038219/-. THE A SSESSEE FILED APPEAL BEFORE THE CIT(A) AND THE CIT(A) HAS ALLOWED THE ASSESSEES APPEAL PARTLY RESTRICTING THE DEDUCTION U/S 80IB T O 25%. ON APPEAL THE TRIBUNAL CONFIRMED THE ORDER OF THE LD .CIT(A) AND THE :-10-: I.T.A.NO.1223/14 ETC ASSESSEE FILED APPEAL BEFORE THE HONBLE MADRAS HIG H COURT IN T.C. NO.1218 TO 1220/2010 FOR ALL THE THREE ASSESSMENT YEARS AND ARE PENDING BEFORE THE HONBLE HIGH COURT. MEANWHILE THE ASSESSING OFFICE HAS NOTICED THAT THE ASSESSEE HAS CLAIMED T HE DEDUCTION U/S 80IB ON INTEREST INCOME AND THE GAIN ON FOREIGN EXC HANGE FLUCTUATION AND THE SAME IS NOT INCLUDIBLE FOR THE PURPOSE COMPUTING THE DEDUCTION AND NOTICE U/S 148 HAS BEEN ISSUED T O DISALLOW THE CLAIM OF DEDUCTION U/S 80IB. THE ASSESSEE FILED OBJECTIONS BEFORE THE ASSESSING OFFICER AND THE ASSESSING OFFICER HAS PASSED A SPEAKING ORDER ADDRESSING THE OBJECTIONS RAISED BY THE ASSESSEE FOR ISSUE OF NOTICE U/S 148 OF THE ACT. SUBSEQUENTLY THE ASSESSMENT WAS COMPLETED U/S 143(3) R.W.S 147 OF THE ACT ON 28 .3.2013 EXCLUDING THE AMOUNT OF INTEREST AND THE GAIN ON FO REIGN EXCHANGE FLUCTUATION. THE ASSESSEE FILED APPEAL BEFORE TH E CIT(A) AND THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICE R IN REOPENING THE ASSESSMENT AS WELL AS ON MERITS. WHILE CONFIRM ING THE REOPENING OF ASSESSMENT THE CIT(A) RELIED ON THE J UDGMENT OF APEX COURT IN THE CASE OF CIT VS P.V.S.BEEDIES P. LTD 10 3 TAXMAN 204 THE DECISION OF HONBLE HIGH COURT OF BOMBAY IN THE CASE OF EXPORT CREDIT GUARANTEE CORPORTION OF INDIA LTD VS ADDL. C IT 30 TAXMANN.COM 211 KALYANJI MAVJI & COMPANY VS CIT 102 ITR 287 GUJARAT HIGH COURT IN PRAFUL CHUNNILAL PATEL & VASA NTH CHUNNILAL :-11-: I.T.A.NO.1223/14 ETC PATEL VS ACIT 236 ITR 832 AND THE DECISION OF CO-O RDINATE BENCH IN THE CASE OF CHENNAI PETROLEUM CORPORATION LTD DATE D 8.1.2013. NOT BEING SUCCESSFUL BEFORE THE CIT(A) THE ASSESS EE FILED APPEAL BEFORE US. 15. THE LD. SR. COUNSEL ARGUED THAT ASSESSEE HAS FURNISHED COMPLETE PARTICULARS BEFORE THE ASSESSING OFFICER A ND THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE. FURTHER SHE ARGUED THAT THE ASSESSING OFFICER HAS EXAMINED THE DETAILS FURNISHE D BY THE ASSESSEE AND DISALLOWED THE DEDUCTION U/S 80IB AND AFTERWARDS HE CANNOT RELOOK AND TAKE A STAND THAT CERTAIN INCOMES ARE NOT INCLUDED WHICH WERE NOT ENTITLED FOR DEDUCTION U/S 80IB AND RESORT FOR THE REOPENING OF ASSESSMENT MERELY BECAUSE THE ASSESSIN G OFFICER HAS NOT EXAMINED THE DETAILS. THE DETAILS AND BOOKS OF ACCOUNTS WERE PLACED BEFORE THE ASSESSING OFFICER AT THE TIME OR IGINAL ASSESSMENT AND THE ASSESSING OFFICER CAME TO THE CONCLUSION AF TER VERIFICATION OF THE DETAILS THAT THE ASSESSEE WAS NOT ENTITLED FOR DEDUCTION U/S 80IB AND ACCORDINGLY COMPLETED THE ASSESSMENT. SHE ARGUED THAT THE NOTICE U/S 148 DATED 28/03/2013 WAS A MERE CHA NGE OF OPINION AND IT SHOULD BE QUASHED. 16. ON THE OTHER HAND THE LD. DR ARGUED THAT WH ILE FRAMING THE ORIGINAL ASSESSMENT THE ASSESSING OFFICER HAS DISALLOWED THE :-12-: I.T.A.NO.1223/14 ETC ENTIRE DEDUCTION U/S 80IB AND EXAMINED THE ISSUE W HETHER THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 80IB OF THE ACT OR NOT AND THERE WAS NO OCCASION TO THE ASSESSING OFFICER TO E XAMINE WHETHER A PARTICULAR SOURCE OF INCOME WAS ELIGIBLE FOR DEDU CTION U/S 80IB OR NOT . THEREFORE THE D.R CONTENDED THAT THERE IS N O ERROR IN ISSUE OF NOTICE U/S 148 AND THE AO HAS ISSUED THE NOTICE AFT ER RECORDING THE REASONS . THE LD. DR RELIED ON THE ORDERS OF THE L OWER AUTHORITIES AND DEFENDED THE RESPONDENT. 17. WE HEARD THE RIVAL SUBMISSIONS AND PERU SED THE MATERIAL ON RECORD. IN THIS CASE THE ASSESSMENT W AS COMPLETED U/S 143(3) OF THE ACT BY AN ORDER DATED 18.12.2009 AND THE ASSESSING OFFICER HAS DECIDED THE ISSUE WHETHER TH E ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80IB OR NOT AND TAKEN A DECISION THAT THE ASSESSEE IS NOT ENTITLED TO DEDUCTION U/S 80IB. AC CORDINGLY HE DISALLOWED THE ENTIRE DEDUCTION U/S 80IB IN RESPEC T OF UNIT I AND UNIT II. THERE WAS NO OCCASION FOR THE ASSESSING O FFICER TO EXAMINE WHETHER A PARTICULAR SOURCE OF INCOME IS ELIGIBLE F OR DEDUCTION U/S 80IB OF THE ACT OR NOT. THE ASSESSEE ALSO DID NOT PRODUCE ANY EVIDENCE TO SHOW THAT THE ASSESSING OFFICER HAS TAK EN A CONSCIOUS DECISION AFTER VERIFYING THE INCOME RELATING TO IN TEREST AND THE GAIN ON FOREIGN EXCHANGE FLUCTUATION IS INCLUDIBLE OR NO T?. THEREFORE IT IS :-13-: I.T.A.NO.1223/14 ETC CLEARLY EVIDENT FROM THE ORDERS OF THE LOWER AUTHOR ITIES THAT THE ASSESSING OFFICER HAS NEVER EXAMINED THE ISSUE REGA RDING ELIGIBILITY OF DEDUCTION U/S 80IA/80IB IN RELATION TO THE INTE REST INCOME AND THE GAIN ON FOREIGN EXCHANGE FLUCTUATION. IN THIS C ASE ASSESSMENT YEAR INVOLVED IS 2007-08 AND THE NOTICE WAS ISSUED ON 28.3.2012 WITHIN FOUR YEARS FROM THE END OF THE RELEVANT ASSE SSMENT YEAR. THE ASSESSEE RELIED ON THE FOLLOWING JUDGMENTS: DONALDSON INDIA FILTERS SYSTEMS P. LTD VS THE DY. CIT [2015] 371 ITR 87(DEL) PVP VENTURES LTD VS ACIT [2015] 94 CHH 147(CHENHC) EI DUPONT INDIA PVT. LTD VS DCIT [2013] 351 ITR 299(DEL) PATEL ALLOY STEEL P LTD VS ACIT [2013] 1 ITR-OL 95 80 [GUJARAT HC) CIT VS ANKIT C. MAHESHWARI [2014] 366 ITR 146(GUJ) NEZONE FOODS P. LTD VS ACIT [2015]38 ITR (TRIB) 46 4 18. THE JUDGMENTS RELIED UPON BY THE ASSESSEE WE RE RELATING TO ASSESSMENT REOPENED BEYOND FOUR YEARS AND FAILURE O N THE PART OF THE ASSESSEE TO DISCLOSE TRULY AND FULLY THE MATER IAL FACTS. SINCE IN THE ASSESSEES CASE THE ASSESSEMENT WAS REOPENED U/S 148 WITHIN A PERIOD OF FOUR YEARS THE CASE LAWS RELIED UPON BY THE ASSESSEE DO NOT HELP IN ANY WAY. THE CIT(A) HAS RE LIED ON THE DECISIONS CITED SUPRA WHICH ARE SQUARELY APPLICABLE IN THE :-14-: I.T.A.NO.1223/14 ETC ASSESSEES CASE. IN THIS CASE THE ASSESSING OFFIC ER HAS NOT VERIFIED DURING THE ORIGINAL ASSESSMENT PROCEEDINGS REGARDIN G THE ALLOWABILITY OF DEDUCTION U/S 80IB IN RELATION TO THE INTEREST INCOME AND FOREIGN EXCHANGE GAIN. IN SUCH CIRCUMSTANCES THE GUJARAT HIGH COURT JUDGMENT IN THE CASE OF PRAFUL CHUNNILAL VS.C IT 236 ITR 832 RELIED UP ON BY THE LD.CIT COMES TO THE HELP OF T HE REVENUE. SIMILARLY IN THE CASE OF KALYANJI MAVJI & COMPANY (SUPRA) THE APEX COURT HELD THAT THERE IS NO CHANGE OF OPINION IF TH E ASSESSMENT IS REOPENED ON NEW FACTS WHICH CAME TO THE NOTICE SUBS EQUENTLY EVEN THOUGH THEY ARE ALREADY ON THE RECORD. THEREFORE WE HOLD THAT THE ASSESSING OFFICER HAS RIGHTLY REOPENED THE ASSESSME NT BY ISSUE OF NOTICE U/S 148 AND THE GROUNDS RAISED BY THE ASS ESSEE ON REOPENING OF ASSESSMENT ARE DISMISSED. 19. COMING TO THE MERITS OF THE ISSUES THE LD. SR. COUNSEL CONTENDED THAT THE ASSESSEE HAS A GOOD CASE. SHE ARGUED THAT THE INTEREST INCOME EARNED BY THE ASSESSEE ON MARGIN M ONEY WAS DEPOSITED IN THE BANK AND THEREFORE THERE IS A LIN K BETWEEN THE BUSINESS AND THE INTEREST INCOME RECEIVED BY THE A SSESSEE. SIMILARLY GAIN ON FOREIGN EXCHANGE ACCORDING TO T HE LD. SR. COUNSEL FORM PART OF BUSINESS INCOME FOR THE PURPOSE OF DED UCTION U/S 80IB OF THE ACT. :-15-: I.T.A.NO.1223/14 ETC 20. ON THE CONTRARY LD. DR SUBMITTED THAT TH E INCOME RECEIVED BY AN INDUSTRIAL UNDERTAKING ALONE IS ELIG IBLE FOR DEDUCTION US 80IB OF THE ACT. IN THIS CASE THE ASSESSEE E ARNED THE INTEREST INCOME FROM DEPOSITS MADE WITH BANKS THEREFORE TH E ASSESSEE IS NOT ENTITLED FOR DEDUCTION U/S 80IB OF THE ACT. R EFERRING TO GAIN ON FOREIGN EXCHANGE THE LD. DR SUBMITTED THAT GAIN ON FOREIGN EXCHANGE ALSO IS NOT DERIVED FROM INDUSTRIAL UNDERT AKING THEREFORE NOT ELIGIBLE FOR DEDUCTION US 80IB OF THE ACT. 21. WE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL ON RECORD. ADMITTEDLY THE ASSESSEE HAS DEPOSITED MONEY IN THE BANKS AND RECEIVED INTEREST. ASSESSEE CLAIMS THAT IT IS A MARGIN MOEY DEPOSITS. IRRESPECTIVE OF THE NATURE OF DEPOSI T THE SOURCE OF RECEIPT OF INTEREST IS NOT FROM BUSINESS BUT FROM THE DEPOSIT MADE FROM THE BANK. THEREFORE WE ARE OF THE OPINION T HAT THE INTEREST RECEIVED FROM BANK IS NOT ELIGIBLE FOR DEDUCTION U /S 80IB. 22. NOW COMING TO GAIN ON FOREIGN EXCHANGE TH E CLAIM OF THE ASSESSEE BEFORE THE LOWER AUTHORITIES WAS THAT THE ASSESSEE BORROWED FCNR LOAN FOR PURCHASE OF WINDMILL. THE C LAIM BEFORE THE LOWER AUTHORITIES IS THAT DUE TO FOREIGN EXCHANGE F LUCTUATION THE ASSESSEE GAINED RS 33 58 735/- IN RELATION TO FCNR LOAN. SINCE THE LOAN WAS OBTAINED FOR PURCHASE OF WINDMILL THE GAIN ON FOREIGN :-16-: I.T.A.NO.1223/14 ETC EXCHANGE WOULD REDUCE THE COST OF THE WINDMILL AS H ELD BY THE APEX COURT IN THE CASE OF CIT VS KARNAL SUGARS PVT LTD 2 43 ITR 2. THEREFORE THE GAIN ON FOREIGN EXCHANGE HAS TO BE T REATED AS CAPITAL RECEIPT. IT IS NOT DISPUTED BY THE REVENUE THAT TH E ASSESSEE BORROWED FCNR LOAN FOR PURCHASING THE WINDMILL. IF THE GAIN AROSE DUE TO FOREIGN EXCHANGE FLUCTUATION IN RELATION FCN R LOAN FOR PURCHASE OF WINDMILL SUCH GAIN WOULD GO TO REDUCE T HE COST OF WINDMILL. THEREFORE WHAT WAS RECEIVED BY THE ASSE SSEE WOULD GO TO REDUCE THE COST OF CAPITAL VIZ. WINDMILL. THERE FORE THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT TO THAT EXTENT TH E INCOME OF THE ASSESSEE WOULD BE REDUCED. HOWEVER THE CIT(A) FOU ND THAT THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE IN RESPECT O F LOAN TAKEN FOR PURCHASE OF WINDMILL AND TREATMENT OF GAIN ON FOREI GN EXCHANGE. NO MATERIAL WAS ALSO FILED BEFORE THIS TRIBUNAL. THEREFORE THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THAT THE MATTER NEEDS TO BE RE-EXAMINED BY THE ASSESSING OFFICER. ACCORDING LY THE ISSUE WITH REGARD TO CLAIM OF DEDUCTION U/S 80IB OF THE ACT ON THE FOREIGN EXCHANGE FLUCTUATION GAIN IS REMITTED BACK TO THE F ILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL REC ONSIDER THE ISSUE AFRESH IN THE LIGHT OF THE MATERIAL THAT MAY BE FIL ED BY THE ASSESSEE WITH REGARD TO PURCHASE OF WINDMILL AND THEREAFTER DECIDE THE SAME IN ACCORDANCE WITH LAW. :-17-: I.T.A.NO.1223/14 ETC 23. IN THE RESULT THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2007-08 IS PARTLY ALLOWED FOR STATISTICAL PURP OSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH SEPTEMBER 2016 AT CHENNAI. SD/- SD/- ( ' . ' / . 0 ) ( N.R.S. GANESAN ) / JUDICIAL MEMBER ( . . ' #$ ) (D.S. SUNDER SINGH) & / ACCOUNTANT MEMBER '# / CHENNAI $% / DATED: 30 TH SEPTEMBER 2016 RD %& '( )( / COPY TO: 1 . / APPELLANT 4. * / CIT 2. / RESPONDENT 5. (+ - / DR 3. * () / CIT(A) 6. 0 1 / GF