M/S. CRISIL LTD (FORMERLY KNOWN AS THE CRDIT RATING INFORMATION SERVICES INDIA LTD), MUMBAI v. THE ADDL CIT 8(1), MUMBAI

ITA 573/MUM/2008 | 2001-2002
Pronouncement Date: 30-04-2010 | Result: Allowed

Appeal Details

RSA Number 57319914 RSA 2008
Assessee PAN MARCH2004A
Bench Mumbai
Appeal Number ITA 573/MUM/2008
Duration Of Justice 2 year(s) 3 month(s) 6 day(s)
Appellant M/S. CRISIL LTD (FORMERLY KNOWN AS THE CRDIT RATING INFORMATION SERVICES INDIA LTD), MUMBAI
Respondent THE ADDL CIT 8(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-04-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted K
Tribunal Order Date 30-04-2010
Date Of Final Hearing 04-02-2010
Next Hearing Date 04-02-2010
Assessment Year 2001-2002
Appeal Filed On 24-01-2008
Judgment Text
ITA NO. 573/MUM/08 ASSESSMENT YEAR 2001-02 PAGE 1 OF 8 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI K BENCH MUMBAI BEFORE SHRI PRAMOD KUMAR (ACCOUNTANT MEMBER) AND SHRI V DURGA RAO (JUDICIAL MEMBER). ITA NO. 573/MUM/08 ASSESSMENT YEAR 2001-02 CRISIL LIMITED .APPELLANT CRISIL HOUSE PLOT NO. 121-122 5 TH FLOOR ANDHERI KURLA ROAD ANDHERI (EAST) MUMBAI 400 093 VS. ADDITIONAL COMMISSIONER OF INCOME TAX - RANGE 8 (1) MUMBAI . RESPONDENT APPELLANT BY : SHRI KANCHAN KAUSHAL RESPONDENT BY : SHRI DEEPAK SUTARIA O R D E R PER PRAMOD KUMAR: 1. THIS IS AN APPEAL FILED BY THE ASSESSEE AND IS D IRECTED AGAINST THE ORDER DATED 29 TH NOVEMBER 2007 PASSED BY THE LEARNED COMMISSIONER (APPEALS) IN THE MATTER OF ASSESSMENT UNDER SECTIO N 143(3) R.W.S. 147 OF THE INCOME TAX ACT 1961 FOR THE ASSESSMENT YEAR 2 001-02. ITA NO. 573/MUM/08 ASSESSMENT YEAR 2001-02 PAGE 2 OF 8 2. IN THE FIRST GROUND OF APPEAL THE ASSESSEE HAS RAISED THE FOLLOWING GRIEVANCE: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW HONBLE CIT(A) HAS ERRED IN REJECTING THE PLEA OF T HE APPELLANT THAT THE ASSESSMENT ORDER UNDER SECTION 143(3) R.W. S. 147 OF THE INCOME TAX ACT 1961 (THE ACT) IS BAD IN LAW. 3. THE MATERIAL FACTS LEADING TO THIS LITIGATION BE FORE US ARE AS FOLLOWS. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF INTER A LIA PROVIDING RATING ADVISORY RESEARCH AND INFORMATION SERVICES AND IN EXPORT OF SOFTWARE. THE ASSESSEE HAD FILED THE INCOME TAX RETURN DISCL OSING AN INCOME OF RS 8 59 03 560 ON 31 ST OCTOBER 2001. THE ASSESSMENT UNDER SECTION 143(3) WAS COMPLETED ON 8 TH MARCH 2004 AT A RETURNED INCOME OF RS 13 78 13 150. THE MATTER HOWEVER DID NOT REST T HERE. ON28TH MARCH 2006 THE ASSESSING OFFICER RECORDED REASONS TO REO PEN THE ASSESSMENT ON THE GROUND THAT INCOME OF RS 1 53 51 434 HAS ESCAPE D ASSESSMENT. WHILE RECORDING THESE REASONS THE ASSESSING OFFICER NOTE D THAT IN THE ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2002 -03 DEPRECIATION ON ONE OF THE PROPERTIES OWNED BY ASSESSEES SUBSIDIAR Y WAS DISALLOWED WHICH HAS SINCE BEEN CONFIRMED BY THE CIT(A). HE A LSO NOTED THAT IN THE ASSESSMENT YEAR 2002-03 THE ASSESSING OFFICER HAD DISALLOWED DEPRECIATION ON GOODWILL WHICH HAS ALSO BEEN CONFIR MED BY THE CIT(A) IN FIRST APPEAL. HE EXTENSIVELY QUOTED FROM THE ORDERS OF THE CIT(A) AND RATHER MECHANICALLY CONCLUDED THAT IN VIEW OF THE ABOVE FINDINGS OF THE ASSESSING OFFICER AND THE HONBLE CIT(A) FOR THE AY 2002-03 I HAVE REASONS TO BELIEVE THAT THE INCOME OF RS 1 33 87 8 67 AND RS 19 63 567 ON ACCOUNT OF INADMISSIBLE DEPRECIATION CLAIM ON BU ILDING AND GOODWILL RESPECTIVELY HAS ESCAPED ASSESSMENT. WHILE THE ASS ESSEE PARTICIPATED IN THE REOPENED ASSESSMENT PROCEEDINGS HE WAS AGGRIEV ED OF THE REOPENING OF THE ASSESSMENT AND HE CARRIED THAT GRIEVANCE IN APPEAL BEFORE THE ITA NO. 573/MUM/08 ASSESSMENT YEAR 2001-02 PAGE 3 OF 8 CIT(A). IT WAS CONTENDED THAT THE REASSESSMENT HAS BEEN STARTED ON A MERE CHANGE OF OPINION WHICH IS NOT PERMISSIBLE UND ER THE SCHEME OF THE ACT AND ELABORATE SUBMISSIONS WERE MADE CHALLENGIN G THE VALIDITY OF REASSESSMENT PROCEEDINGS. NONE OF THOSE SUBMISSIONS HOWEVER IMPRESSED THE LEARNED CIT(A). HE REJECTED THE GRIEV ANCE OF THE ASSESSEE RATHER SUMMARILY BY OBSERVING AS FOLLOWS : THE ISSUE HAS BEEN CAREFULLY EXAMINED. THE PLEA OF THE APPELLANT CANNOT BE ACCEPTED IN AS MUCH AS THE REOPENING OF THE ASSESSMENT IS BASED ON THE DECISION OF THE CIT(A) WHO HAD WHILE DECIDING THE APPEAL DID NOT ACCEPT THE PLEA OF THE APPELLANT AND HELD THE GROUNDS AGAINST THE APPELLANT. THE DECISIO NS RELIED UPON BY THE LEARNED COUNSEL OF THE APPELLANT DONOT TAKE INTO ACCOUNT SPECIAL FACTS OF THE CASE UNDER REFERENCE. THE ASSE SSING OFFICER AFTER PERUSAL OF THE ORDER OF THE CIT(A) CAME TO B ELIEF THAT THAT THE INCOME HAS ESCAPED ASSESSMENT FOR THE ASSESSMEN T YEAR 2001-02. A PERUSAL OF THE ORDER PASSED BY THE AO CL EARLY SHOWS THAT NO OPINION HAD CRYSTALLIZED IN THE MIND OF THE AO REGARDING THE VARIOUS ISSUES RAISED IN THE ASSESSMENT ORDER N OW FRAMED IN CONSEQUENCE TO THE REOEPENIG OF THE ORIGINAL ORDER UNDER SECTION 147 OF THE INCOME TAX ACT. THE PLEA OF THE ASSESSEE IS REJECTED AND THE GROUND IS DECIDED AGAINST THE APPELLANT. 4. AGGRIEVED OF THE STAND SO TAKEN BY THE LEARNED C IT(A) THE ASSESSEE IS IN SECOND APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL CONTENTIONS PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTUAL MATRIX OF THE CASE AS A LSO THE APPLICABLE LEGAL POSITION. 6. WE HAVE NOTED THAT DURING THE COURSE OF ORIGINA L ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER HAD REQUISITIONE D SPECIFIC INFORMATION ABOUT ASSESSEES CLAIM OF DEPRECIATION ON THE PROPE RTY IN QUESTION. VIDE LETTER DATED 27 TH JANUARY 2003 A COPY OF WHICH IS PLACED AT PAGE 23 OF THE ITA NO. 573/MUM/08 ASSESSMENT YEAR 2001-02 PAGE 4 OF 8 PAPERBOOK THE ASSESSING OFFICER REQUIRED THE ASSES SEE TO EXPLAIN WHETHER ANY DEPRECIATION HAS BEEN CLAIMED ON THE SH ARES HELD IN CRISIL PROPERTIES LIMITED WHICH IS YOUR SUBSIDIARY COMPANY AND WHETHER THIS DEPLOYMENT OF FUNDS SHOULD BE TREATED AS INVESTMENT IN BUSINESS ASSET AND FURTHER NOTED THAT IT IS SEEN THAT YOU HAVE CL AIMED DEPRECIATION FOR THE FULL YEAR WITH REFERENCE TO THE BUILDINGS WHOSE TITLE ARE NOT IN FAVOUR OF THE COMPANY. THE ASSESSEE WAS THEN REQUIRED TO CLARIFY AS TO WHEN THE TRANSACTIONS FOR PURCHASE OF THIS ASSETS WERE C ONCLUDED AND WHETHER TRANSFER IN FAVOUR OF THE ASSESSEE HAS TAKEN PLACE TO FULFILL THE REQUIREMENT OF OWNERSHIP FOR CLAIM OF DEPRECIATION. THE ASSE SSING OFFICER ALSO ASKED THE ASSESSEE TO PLEASE CLARIFY WHEN THIS BUILDING WAS OCCUPIED AND PRODUCE DOCUMENTARY EVIDENCE FOR HANDING OVER THE P OSSESSION. THE COMPLETE DETAILS FOR THE CLAIM OF DEPRECIATION WERE ON RECORD AS EVIDENT FROM THE CHART FILED AT PAGE 53 OF THE PAPERBOOK FI LED BEFORE US WHICH INCLUDED DEPRECIATION ON GOODWILL. AS REGARDS THE GOODWILL IT WAS ON RECORD THAT IT WAS ACQUIRED BY THE CRISIL AT A PAYM ENT OF RS 88 40 000 AND DEPRECIATION THEREON WAS ALL ALONG ALLOWED. WHEN A LL THE RELEVANT DISCLOSURES AND NECESSARY EXPLANATIONS ARE ON RECOR D AS HELD BY HONBLE BOMBAY HIGH COURT IN THE CASE OF ASIAN PAINTS LTD V S DCIT (308 ITR 195) A PRESUMPTION CAN BE RAISED THAT SUCH AN ORDER IS P ASSED ON APPLICATION OF MIND. IF NON APPLICATION OF MIND BY THE ASSESSING O FFICER IN PASSING THE ORDER WOULD ITSELF CONFER JURISDICTION UPON THE ASS ESSING OFFICER TO REOPEN THE PROCEEDINGS WITHOUT ANYTHING FURTHER IT WOULD AMOUNT TO GIVING A PREMIUM TO AN AUTHORITY EXERCISING QUASI JUDICIAL F UNCTION TO TAKE BENEFIT OF ITS WRONG. IN THE ESTEEMED VIEWS OF THE HONBLE JURISDICTIONAL HIGH COURT SUCH AN APPROACH IS NOT SUSTAINABLE IN LAW. AGREEING WITH THE VIEWS OF HONBLE DELHI HIGH COURT FULL BENCH DECISI ON IN THE CASE OF CIT VS KELVINATOR OF INDIA LTD (256 ITR 1) HONBLE BOMBA Y HIGH COURT IN THE CASE OF ASIAN PAINTS LTD (SUPRA) HAS OBSERVED THAT WHERE ACCORDING TO THE ASSESSING OFFICER HE FAILED TO APPLY HIS MIND TO THE RELEVANT MATERIAL IN THE MAKING OF AN ASSESSMENT ORDER HE CANNOT TAK E ADVANTAGE OF HIS OWN ITA NO. 573/MUM/08 ASSESSMENT YEAR 2001-02 PAGE 5 OF 8 WRONG AND REOPEN THE ASSESSMENT BY TAKING RECOURSE TO THE PROVISIONS OF SECTION 147. IN THIS VIEW OF THE MATTER THE CIT(A) S OBSERVATIONS THAT NO OPINION HAD CRYSTALLIZED IN THE MIND OF THE ASSESSI NG OFFICER ON VARIOUS ISSUES RAISED IN THE ASSESSMENT ORDER NOW AND THA T FOR THIS REASONS REOPENING IS JUSTIFIED IS DIRECTLY IN CONFLICT WIT H THE ESTEEMED VIEWS OF HONBLE JURISDICTIONAL HIGH COURT. WE HAVE ALSO NO TED THAT THE WHOLE THRUST OF THE REASONS RECORDED FOR REOPENING ARE TH E VIEWS OF THE CIT(A) IN THE ASSESSMENT YEAR 2002-03 BUT THEN THESE INPU TS ARE ON THE FACTS OF THIS CASE USED FOR NOTHING OTHER THAN CHANGE OF OP INION BY THE ASSESSING OFFICER. HERE IS AN ASSESSING OFFICER WHO HAS ON G OING THROUGH DETAILED MATERIAL BEFORE HIM IN THE COURSE OF SCRUTINY ASSES SMENT PROCEEDINGS AND AFTER EVEN SEEKING CLARIFICATIONS ON CERTAIN POINTS MADE UP HIS MIND TO ALLOW CERTAIN DEDUCTIONS FOR DEPRECIATION BUT ONCE HE REALIZES THAT ANOTHER VIEW TAKEN IN THE SUBSEQUENT ASSESSMENT YEA R HAS MET THE APPROVAL OF THE CIT(A) HE CHANGES HIS MIND TO TAKE THE OTHER VIEW FOR THIS ASSESSMENT YEAR AS WELL. SUCH A REOPENING OF ASSESS MENT ON MERE CHANGE OF OPINION IS NOT PERMISSIBLE EVEN UNDER THE MAIN P ROVISION OF SECTION 147. HONBLE SUPREME COURTS HAS IN THE CASE OF CIT VS KELVINATOR OF INDIA LTD ( 320 ITR 561) HELD THAT SECTION 147 C ANNOT BE SO CONSTRUED AS TO GIVE ARBITRARY POWERS TO THE ASSESSING OFFICER T O REOPEN THE ASSESSMENTS ON THE BASIS OF MERE CHANGE OF OPINION WHICH CANNOT BE PER SE REASONS TO REOPEN. EVEN IF WHEN REASSESSMENT IS RESORTED TO WITHIN FOUR YEARS THE BASIC CONDITIONS OF THE MAIN PROVIS IONS ARE TO BE COMPLIED WITH AND THE ABOVE OBSERVATIONS MADE BY THEIR LORDS HIPS ARE IN THIS CONTEXT. 7. NO DOUBT IN CASE THE ASSESSMENT IS COMPLETED UN DER SECTION 143(1) THAT SITUATION WOULD BE MATERIALLY DIFFERENT AS NO OPINION CAN BE SAID TO HAVE BEEN FORMED ONLY BECAUSE A CLAIM FOR DEDUCTION HAS BEEN ACCEPTED UNDER SECTION 143(1) BUT RIGHT NOW WE ARE IN SEISIN OF A SITUATION IN WHICH THE ORIGINAL ASSESSMENT WAS COMPLETED UNDER S ECTION 143(3) OF THE ITA NO. 573/MUM/08 ASSESSMENT YEAR 2001-02 PAGE 6 OF 8 ACT. 8. WE MAY ALSO ADD THAT THE LEARNED DEPARTMENTAL RE PRESENTATIVE HAS LAID A LOT OF EMPHASIS ON THE FACT THAT THE ONCE TH E ASSESSEE HAS NOT OBJECTED TO THE REOPENING IN THE REOPENED ASSESSMEN T PROCEEDINGS IT CANNOT BE OPEN TO HIM TO OBJECT TO THE SAME BEFORE THE APPELLATE AUTHORITIES EITHER. WE ARE UNABLE TO SEE ANY MERITS IN THIS CONTENTION. IT IS ONLY ELEMENTARY THAT ACQUIESCENCE DOES NOT CONFER A LEGAL JURISDICTION AND WHILE DECIDING THIS APPEAL WE HAVE TO DECIDE WHETHE R OR NOT THE ASSESSING OFFICER HAD A LAWFUL JURISDICTION TO REOPEN THE ASS ESSMENT. 9. IN THIS VIEW OF THESE DISCUSSIONS AND BEARING I N MIND ENTIRETY OF THE CASE WE ARE OF THE CONSIDERED VIEW THAT THE REASSE SSMENT PROCEEDINGS WERE ARE NOT SUSTAINABLE IN LAW AND MORE PARTICULAR LY IN THE LIGHT OF THE SCHEME OF THE ACT AS PERCEIVED BY THE HONBLE COURT S ABOVE. THE LEGAL OBJECTIONS RAISED BY THE ASSESSEE ARE INDEED WELL T AKEN AND WE APPROVE THE SAME. WE THEREFORE QUASH THE REASSESSMENT PRO CEEDINGS. AS THE REASSESSMENT ITSELF IS QUASHED THE ADDITIONS MADE IN THE REASSESSMENT ORDER DO NOT SURVIVE AND REQUIRE NO ADJUDICATION. 10. GROUND NO. 1 IS THUS ALLOWED AND THE REMAING GR OUNDS OF APPEAL ARE DISMISSED AS INFRUCTUOUS. 11. IN THE RESULT THE APPEAL IS ALLOWED IN THE TER MS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT TODAY ON 30 TH TH DAY OF APRIL 2010 SD/- SD/- ( V D RAO) (PRAMOD KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; 30 TH OF APRIL 2010. ITA NO. 573/MUM/08 ASSESSMENT YEAR 2001-02 PAGE 7 OF 8 COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT MUMBAI 4. THE COMMISSIONER (APPEALS) MUMBAI 5. DEPARTMENTAL REPRESENTATIVE - BENCH MUMB AI 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES MUMBAI ITA NO. 573/MUM/08 ASSESSMENT YEAR 2001-02 PAGE 8 OF 8 DATE INITIAL 1. DRAFT DICTATED ON 23.4.2010 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 26.4.2010 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 26.4.2010 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 26.4.2010 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 26.4.2010 SR.PS/PS 6. DATE OF PRONOUNCEMENT 30.4.2010 SR.PS 7. FILE SENT TO THE BENCH CLERK 30.4.2010 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER