Case Number: ITA 403/DEL/2019
Appellant: SGDC India P. Ltd., New Delhi
Respondent: DCIT, Circle-24(2), Delhi
Assessment Year: 2009-10
Case Filed On: 2019-01-21
Order Type: Final Tribunal Order
Date of Order: 2019-06-28
Pronounced On: 2019-06-28
Result: Appeal Allowed
The appeal was filed by SGDC India P. Ltd. (formerly known as Silverglades Gold Development Co. Pvt. Ltd.) against the order of CIT(A)-31, New Delhi, dated 28.12.2018, for the assessment year 2009-10. The primary issue in this case involved the taxability of interest-free security deposits received by the appellant and the validity of reassessment proceedings initiated by the Assessing Officer (AO).
SGDC India P. Ltd. filed this appeal challenging the decision of the CIT(A) regarding the taxability of interest-free security deposits received during the assessment year 2009-10. The appellant argued that these deposits were not taxable and that the reassessment proceedings initiated by the AO were based on a change of opinion without any tangible material.
During the hearing held on 22.04.2019, the appellant was represented by Shri R.S. Singhvi, CA, and the Revenue was represented by Shri P.V. Gupta, Sr. DR. The appellant’s counsel contended that the reassessment proceedings were invalid as they were based on a change of opinion and not on any new tangible material. The counsel further argued that the interest-free security deposits were not taxable as they were received for the purpose of maintenance and running of the golf course and were refundable to M/s Silverline Holding Pvt. Ltd.
The ITAT, comprising Shri R.K. Panda, Accountant Member, and Ms Suchitra Kamble, Judicial Member, observed that the reassessment proceedings were initiated based on the assessment order for the assessment year 2013-14, wherein similar deposits were treated as taxable. However, the same issue was examined and accepted without addition in the assessment year 2012-13. The Tribunal held that the reassessment proceedings were invalid as they were based on a change of opinion and reappraisal of facts already on record, without any new tangible material.
The Tribunal referred to several judicial precedents, including CIT vs. Kelvinator of India Ltd. (2010) 320 ITR 561 (SC) and PCIT vs. Tupperware India P. Ltd. (2016) 284 CTR 68 (Del), to support its conclusion that reassessment proceedings must be based on tangible material and not merely on a change of opinion.
The appeal filed by SGDC India P. Ltd., New Delhi, against the DCIT, Circle-24(2), Delhi, for the assessment year 2009-10, was allowed. The Tribunal held that the reassessment proceedings initiated by the AO were invalid as they were based on a change of opinion without any new tangible material. Consequently, the addition made on account of interest-free security deposits was deleted.
Order Pronounced: 28.06.2019
This case highlights the importance of having tangible material for initiating reassessment proceedings and reinforces the principle that a mere change of opinion cannot justify reopening an assessment.
For further details, refer to the complete judgment text available in the records of the ITAT, Delhi Bench.
ITA 403/DEL/2019: SGDC India vs DCIT – Appeal on Interest-Free Security Deposits
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