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04-10-2018, MBI Kits International, Section 148, 10B, 147, HIGH COURT OF MADRAS

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1 month 10 hours ago #7413 by amit
Section - 148, 10B, 147, 56G
Order Date - 04-10-2018
Favouring - Set Aside
Appellant - MBI Kits International
Respondent - ITO
Citation - 1018Taxpundit162
Appeal No. - WMP No.8070 of 2017
Asstt. Year - 2010-11



The petitioner is aggrieved against the proceedings of the respondent dated 13.02.2017 in rejecting the objections filed by the petitioner against the reopening of the assessment under Section 148 of the Income Tax Act, in respect of the Assessment Year 2010-11.

2. The case of the petitioner is as follows:

The petitioner is an assessee under the respondent. The petitioner firm was formed under Partnership Deed dated 20.03.2000 with an object to carry on the business of manufacturing and testing chemicals. The Madras Export Processing Zone issued a letter of permission dated 28.03.2000. The Government of India, Ministry of Commerce by letter dated 29.03.2000, granted permission to the petitioner to carry on its business of manufacturing of test kits used for checking iodized salt. The petitioner was granted permanent Registration Certificate by the Director of Industries and Commerce dated 31.05.2000. The petitioner commenced its business of production on 25.05.2000. The petitioner filed its return of income for the Assessment Year 2010-11 on 24.09.2010, claiming deduction under Section 10B of the said Act to the tune of Rs.97,34,667/-. After scrutiny, an order of assessment under Section 143(3) was passed on 28.01.2013, accepting the claim of deduction under Section 10B, however by making minor additions. The petitioner filed an appeal as against the additions and the Appellate Authority, through his order dated 30.06.2016, deleted the additions and allowed the appeal. Thereafter, a notice under Section 148 dated 03.01.2017 was served on the petitioner for reopening of the assessment, on the reason that the income of the petitioner chargeable to tax for the assessment year 2010-11 has escaped assessment. The petitioner filed its return on 19.01.2017, declaring its taxable income at nil, as was declared in original return. The petitioner through the letter dated 19.01.2017, also sought reasons for reopening the assessment. The respondent, through the communication dated 25.01.2017, informed the reasons for reopening of the assessment. It was stated that the petitioner has extended its 10B holiday period to the eleventh year and hence, become ineligible for deduction under Section 10B. The petitioner, through the letter dated 02.02.2017, objected to the reopening on the ground that the same was beyond four years of the end of the relevant assessment year and that the petitioner firm commenced its business of manufacturing activity only after 01st April 2000 and consequently, the initial year, when the undertaking commenced manufacturing activity being the assessment year 2001-02, the claim of deduction under Section 10B was well on the tenth year itself. The petitioner also contended that the reopening was made merely based on change of opinion without there being new tangible material to deny the claim under Section 10B. However, the respondent, through the impugned communication, rejected the objection filed by the petitioner. Hence the present writ petition.

3.The respondent filed a counter affidavit wherein it is stated as follows:

The petitioner was an assessee under the respondent. The petitioner was formed under Partnership Deed dated 20.03.2000. The petitioner had executed a legal agreement with MEPZ dated 28.03.2000, pursuant to the letter of permission granted by the said Authority on 28.03.2000. The petitioner was granted permission to carry on business by the Ministry of Commerce, Government of India, on 29.03.2000. The petitioner was granted permanent Registration Certificate by the Directorate of Industries and Commerce dated 31.05.2000. The petitioner commenced its business of production on 28.03.2000 and not on 25.05.2000, as claimed by the petitioner. The same is evidenced by the relevant entry in column No.7 of Annexure A to Form No.56G in support of claim of deduction under Section 10B for

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