Tribunal dismisses Revenue's appeals, grants assessee's appeal, invalidates Section 148 reopening, allows deductions.

The Tribunal dismissed the Revenue's appeals due to tax effect below Rs. 20 lakhs and allowed the assessee's appeal withdrawn by request. Regarding the jurisdiction of the Assessing Officer under Section 148, the Tribunal found the reopening invalid due to settled issues in favor of the assessee and non-disposal of objections. Disallowance of bad debts was deleted, reallocation of expenses to Daman unit was directed for reexamination, and various deductions were allowed under Sections 80-IB and 80HHC. The Tribunal also directed the deletion of penalty under Section 271(1)(c) in favor of the assessee.

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Issues Involved:
1. Maintainability of Revenue's appeals due to tax effect below Rs. 20 lakhs.
2. Withdrawal of assessee's appeal.
3. Jurisdiction of Assessing Officer under Section 148.
4. Confirmation of disallowance of bad debts and advances.
5. Reallocation of head office expenses to Daman unit.
6. Exclusion of other income while calculating deduction under Section 80-IB.
7. Exclusion of income from expenses attributable to that income.
8. Exclusion of deduction under Section 80-IB while computing deduction under Section 80HHC.
9. Application of Explanation (baa) to Section 80HHC for various receipts.
10. Treatment of duty drawback under Section 28(iii)(c) and denial of deduction under Section 80HHC.
11. Confirmation of penalty under Section 271(1)(c).

Issue-wise Detailed Analysis:

1. Maintainability of Revenue's Appeals:
The Revenue's appeals (I.T.A. Nos. 1351/Mum/2007 and 1315/Mum/2007) were dismissed as not maintainable since the tax effect was below Rs. 20 lakhs, in accordance with Board's Circular No. 3 of 2018.

2. Withdrawal of Assessee's Appeal:
The assessee's appeal (I.T.A. No. 3970/Mum/2009) was dismissed as withdrawn upon the assessee's request and no objection from the Departmental representative.

3. Jurisdiction of Assessing Officer under Section 148:
The assessee challenged the jurisdiction of the Assessing Officer under Section 148. The Tribunal found that the original assessment was completed under Section 143(3) and the reopening was based on three reasons:
- Wrong claim of deduction under Section 80HHC.
- Claiming expenditure for 80-IB unit against income of another unit.
- Not excluding 90% of labour charges while computing deduction under Section 80HHC.

The Tribunal held that the reopening was invalid as:
- The issue of deduction under Section 80HHC was covered in favor of the assessee by the Bombay High Court in Associated Capsules P. Ltd.
- The issue of allocation of expenses was settled in favor of the assessee in earlier years.
- The reopening on the basis of the same material amounted to a change of opinion, which is not permissible.

The Tribunal quashed the assessment order due to non-disposal of objections by the Assessing Officer, following the Bombay High Court's decision in KSS Petron Pvt. Ltd.

4. Confirmation of Disallowance of Bad Debts and Advances:
The Tribunal found that the assessee had provided necessary details for the sundry debtors and trading advances written off. It directed the Assessing Officer to delete the disallowance, as the amounts written off in the books of account should be allowed.

5. Reallocation of Head Office Expenses to Daman Unit:
The Tribunal observed that the issue was covered by its decision in the assessee's own case for the assessment year 2002-03. It restored the issue to the Assessing Officer for fresh examination, directing that only incremental and additional expenses should be allocated to the Daman unit.

6. Exclusion of Other Income while Calculating Deduction under Section 80-IB:
The Tribunal found that the issue was covered in favor of the assessee by its decision in the assessee's own case for the assessment year 2002-03. It allowed the appeal, directing the Assessing Officer to include other income while calculating the deduction under Section 80-IB.

7. Exclusion of Income from Expenses Attributable to That Income:
The Tribunal followed the Supreme Court's decision in ACG Associated Capsules Pvt. Ltd. v. CIT, holding that income should be netted against the expenses incurred under the same head. It directed the Assessing Officer to delete the addition.

8. Exclusion of Deduction under Section 80-IB while Computing Deduction under Section 80HHC:
The Tribunal followed the Bombay High Court's decision in Associated Capsules P. Ltd., holding that while computing the deduction under Section 80HHC, the deduction under Section 80-IB should not be excluded. It directed the Assessing Officer to allow the deduction under Section 80HHC.

9. Application of Explanation (baa) to Section 80HHC for Various Receipts:
The Tribunal found that the issue was covered in favor of the assessee by its decision in the assessee's own case for the assessment year 2002-03. It directed the Assessing Officer to decide the issue on the same lines, allowing the appeal.

10. Treatment of Duty Drawback under Section 28(iii)(c) and Denial of Deduction under Section 80HHC:
The Tribunal held that duty drawback is part of the profit and gains from business and profession, and the assessee is entitled to deduction under Section 80HHC. It followed the Supreme Court's decision in Topman Exports v. CIT, directing the Assessing Officer to allow the deduction.

11. Confirmation of Penalty under Section 271(1)(c):
Since the quantum appeal was decided in favor of the assessee, the Tribunal directed the deletion of the penalty confirmed by the Commissioner of Income-tax (Appeals).

Conclusion:
The Tribunal dismissed the two appeals of the Revenue and one of the assessee, and allowed the three appeals of the assessee. The order was pronounced on September 28, 2018.

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