TaxTMI 
TaxTMI 
TaxTMI 
2013 (8) TMI 667
X X X X Extracts X X X X
X X X X Extracts X X X X
....80HHC in respect of the export benefits received. The learned CIT(A) ought to have considered the fact that only profit element of DEPB can be reduced from the export profits for the purpose of working out the deduction u/s. 80HHC. The learned CIT(A) ought to have followed the decision of the Special Bench of the ITAT and allowed the appeal directing the Assessing Officer to consider the income arising out of DEPB. 3. Brief facts of the issue are that in this case the assessment was completed u/s. 143(3) and thereafter assessment was reopened u/s. 147 of Income-tax Act, 1961. The assessment was reopened on the grounds that the additional depreciation was allowed in excess and non-adherence to the additional conditions prescribed in order to be eligible for the proportionate deduction on 90% export benefits. 4. On appeal the CIT(A) confirmed reopening of assessment and also disallowance of additional depreciation as well as disallowance of deduction u/s. 80HHC of the Act. Against this the assessee is in appeal before us. 5. Regarding reopening of assessment, the learned AR submitted that assessment for A.Y. 2004-05 was originally completed u/s. 143(3) of the Act on 28.3.2005. Fur....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g claim on the part of the assessee with reference to the additional depreciation as well as deduction u/s. 80HHC. Hence, the assessment was reopened. The DR relied on the order of the CIT(A). The learned DR further submitted that the additional depreciation to the assessee could be granted only one time on plant and machinery installed during the previous year in which such undertaking begins to manufacture or produces any article or thing. It cannot be spread over or carried forward to more than one year. As such disallowance of 50% additional depreciation claimed by the assessee for this assessment year was disallowed in the reopened assessment. 7. Regarding 80HHC deduction, the learned DR submitted that the provisions of section 80HHC were amended with retrospective effect by Taxation Laws (Amendment) Act, 2005. As per the amended provisions of section 80HHC the exporters having export turnover more than Rs. 10 crores are to satisfy the additional conditions prescribed in or to be eligible for the proportionate deduction on 90% export benefits. Neither at assessment stage nor at appellate stage the assessee furnished any explanation regarding fulfilment of additional condition....
X X X X Extracts X X X X
X X X X Extracts X X X X
..../s. 148 on 31.3.2009 wherein he has taken the issue regarding withdrawal of additional depreciation and also withdrawal of deduction u/s. 80HHC in respect of sale proceeds of DEPB entitlement. 10. According to the AR this issue cannot be dealt with by the Assessing Officer in the re-assessment proceedings without any tangible fresh material to come to the conclusion that there is escapement of income from assessment and he pleaded that it is only change of opinion. He relied on the judgement of Supreme Court in the case of CIT vs. Kelvinator of India Ltd. (320 (ITR 561) wherein the Apex Court held as follows: "The concept of "change of opinion" on the part of the Assessing Officer to reopen an assessment does not stand obliterated after the substitution of section 147 of the Income-tax Act, 1961, by the Direct taxes (Amendment) Acts, 1987 and 1989. After the amendment, the Assessing Officer has to have reason to believe that income has escaped assessment, but this does not imply that the Assessing Officer can reopen an assessment on mere change of opinion, the concept of "change of opinion" must be treated as an in- built test to check the abuse of power. Hence after April, 1989,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pleted assessment. Though the reopening of assessment is within the period of 4 years from the end of the relevant assessment year the guiding principles which were laid down by the Supreme Court in the case of Kelvinator of India Ltd. (supra) must be fulfilled. In the present case there is no tangible material, no new information and no fresh material which came before the Assessing Officer after completion of original/regular assessment. The contention of the Department before us is that there is no view taken on the impugned issue in regular assessment and as such there is no change of opinion. This argument of the learned DR has no merit, as we have earlier observed that there is no tangible material to come to the conclusion that there is escapement of income from assessment. The reason must have a live link with the formation of belief. The Assessing Officer has power to reopen the assessment but he has no power to review the assessment. In the present case, the Assessing Officer is reviewing his own order with an intention to bring a new item to tax. Being so, reopening of assessment is not in accordance with law. The judgement of Apex Court in the case of Kelvinator of Indi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....profit or gain made by a person. E. D. SASSOON AND COMPANY LTD. v. CIT [1954] 26 ITR 27 (SC) relied on. As the DEPB credit has direct nexus with the cost of imports for manufacturing an export product, any amount realised by the assessee over and above the DEPB credit on transfer of the DEPB credit would represent profit on the transfer of the DEPB credit. Thus, while the face value of the DEPB credit will fall under clause (iiib) of section 28 of the Act, the difference between the sale value and the face value of the DEPB credit will fall under clause (iiid) of section 28 of the Act. The cost of acquiring the DEPB credit is not nil because the person acquires it by paying customs duty on the import content of the export product and the DEPB credit which accrues to a person against exports has a cost element in it. The DEPB credit represents part of the cost incurred by a person for manufacture of the export product and hence even where the DEPB credit is not utilised by the exporter but is transferred to another person, the credit continues to remain as a cost to the exporter. When, therefore, the DEPB credit is transferred by a person, the entire sum received by him on such tr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essee transfers the DEPB credit certificate in the second previous year, only ninety per cent. of the profits on transfer of the DEPB credit covered under clause (iiid) and not ninety per cent of the entire sale value including the face value of the DEPB credit will get excluded from the "profits of the business". Thus, where the ninety per cent of the face value of the DEPB credit does not get excluded from "profits of the business" under Explanation (baa), and only ninety per cent of the difference between the face value of the DEPB credit and the sale value of the DEPB credit gets excluded from "profits of the business", the assessee gets a bigger figure of "profits of the business" and this is possible when the DEPB credit accrues to the assessee in one previous year and transfer of the DEPB credit takes place in the subsequent previous year. The result in such case is that a higher figure of "profits of the business'" becomes the multiplier in the formula under sub-section (3)(a) of section 80HHC for arriving at the figure of profits derived from exports. To the figure of profits derived from exports worked out according to the formula under sub-section (3)(a) of section ....