TaxTMI 
TaxTMI 
2011 (5) TMI 685
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.... restricting the claim under section 80HHC of the Act to a sum of Rs. 1,22,83,280. 2. On the facts and in the circumstances of the case in law, the learned CIT, while reopening the assessment, erred in not appreciating the fact and the law that the view taken by the learned AO was sustainable in law, the High Courts of Kerala and Madras had diverse views on the same issue and that at the time of framing the assessment on 15th March, 2004, both the judgments of the respective High Courts including that of the Delhi Tribunal, Special Bench, had been pronounced, therefore, the order passed was after due application of mind by the learned AO and well keeping in view the law of the land existing at the time of framing the assessment and therefore also, the order passed was not erroneous or prejudicial to the interests of the Revenue. Without prejudice to the above, the grounds of appeal on merits are as under : 3. On the facts and in the circumstances of the case and in law, the learned CIT, erred on erroneous and insufficient grounds, in calculating the deduction under section 80HHC of the IT Act, 1961, available to the assessee at Rs. 1,22,83,280 as against Rs. 2,17,76,592 cla....
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....0th Jan., 2006. CIT however passed the impugned order under section 263 holding that the turnover of all the business entities of the appellant were to be aggregated as "total turnover" for computation of deduction under section 80HHC irrespective of the fact that appellant had maintained separate books of account for his export business. According to the CIT, the claim under section 80HHC was erroneously allowed by the AO. CIT aggregated the turnover of all the units to arrive at "total turnover" for calculating deduction under section 80HHC. CIT by this order under section 263 held that the deduction under section 80HHC was to be allowed at Rs. 1,22,83,280 against sum of Rs. 2,13,25,983 allowed in the assessment order. Aggrieved the assessee is in appeal. 4. Learned counsel for the assessee has filed a brief synopsis and case law compilation. It is pleaded that the very assumption of jurisdiction by CIT under section 263 was bad in law on account of the following reasons : (i) The claim of deduction under section 80HHC was subject-matter of regular assessment, there is enough material on record that while allowing deduction there was due application of mind by the AO and he has....
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....n Explanation (c) to section 263(1) and in view of catena of judgments on this aspect. 4.1. Learned counsel contends that Hon'ble Madras High Court in the cases of the Madras Motors Ltd. (supra) and Shiva Distilleries Ltd. (supra) have taken a view that if separate books of account are maintained and same export is not carried on by other unit, total turnover of such separately kept books of account alone is to be taken turnover for calculating deduction under section 80HHC. Hon'ble Kerala High Court in Parry Agro Industries Ltd.'s case (supra) may have taken a contrary view, it only establishes legal debate on the turnover issue. In this eventuality also Hon'ble Supreme Court in the case of CIT v. Vegetable Products Ltd. [1973] 88 ITR 192 case has held that when more than one meaning is possible then the view favourable to the taxpayer should be adopted. 4.2. Learned counsel to demonstrate that AO had applied due mind to calculation for deduction under section 80HHC, adverted to various pages of paper book: - Paper book 2-3-Computation of income showing that assessee was having business income from 3 concerns and deduction under section 80HHC was claimed. - Paper b....
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.... of 1999, dated 23-5-2000. (v) Hooghly Mills Co. Ltd. v. Asstt. CIT [1999] 71 ITD 264 (Cal.). (vi) Sadhu Ram & Sons v. CIT (IT Appeal No. 223 (Asr.) of 2003 and C.O. No. 1 (Asr) of 2006] dated 19-1-2007. (vii) Marico Industries Ltd. v. Asstt. CIT [2009] 27 SOT 73 (Mum.) URO. 4.4. When there was debate on any issue and AO adopts one of the possible views, it cannot be said that his order was erroneous or prejudicial to the interest of Revenue. Consequently power under section 263 cannot be invoked, as held by Supreme Court in the case of Max India Ltd. (supra) and Malabar Industrial Co. Ltd. (supra). 5. Learned CIT Departmental Representative contends that there was a clear error in the assessment order under section 143(3), inasmuch as AO failed to aggregate the total turnover of all the business units owned by the assessee, in terms of Kerala High Court judgment in the case of Parru Agro Industries Ltd. (supra) and the same was prejudicial to the interest of Revenue. Apropos merger, the issue in appeal did not pertain to aggregation of total turnover, therefore, this issue cannot be said to have merged in the order of CIT (A). It is further submitted that on merits also appel....
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....urt in case CIT v. Saluja Exim Ltd. [2010] 329 ITR 603 have held that such issue is riot amenable to be revised under section 263. Therefore in our view CIT erred in assuming jurisdiction under section 263 on an issue which he accepts being debatable. 6.3. The issue of deduction under section 80HHC was appealed against, the CIT (A) vide his order dt. 6th Dec, 2004 dealt with the issue of deduction under section 80HHC and action of the AO in reducing the deduction under section 80HHC was sustained. It is also undisputed that CIT(A) apart from being appellate authority has co-terminous powers of AO and has powers of enhancement of assessment. If there is an appeal on the calculation of deduction under section 80HHC, it is logical that CIT(A) will consider the aspects of calculation. Therefore, in our view AO's order also got merged into the CIT(A)'s order which cannot be revised. 6.4 Mumbai Tribunal in the case of Sonal Garments (supra) in similar situation, has held that "it has been demonstrated by the chronology of events that computation of deduction under section 80HHC was a subject-matter of appeal before CIT(A). The CIT(A) has given some findings on the computation of deduct....