TaxTMI 
TaxTMI 
2014 (6) TMI 7
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....r erred in holding that the assessment order passed by Ld. AO was erroneous and prejudicial to the interest of revenue. 3. That having regard to facts & circumstances of the case, Ld. CIT has erred in law and on facts in setting aside the assessment order u/s 263 and directing Id. A.O. to recalculate the deduction u/s 80IB and 80HHC and revise the assessment order passed on 29.12.2009. 4. That having regard to facts & circumstances of the case, Ld. CIT has erred in law and on facts in passing the impugned order u/s 263 is bad in law in as much as no adequate opportunity of hearing was granted and framing the impugned order without considering the principles of natural justice and without the authority of law." 2. All the grounds taken by the assessee are directed against the action of the Id. CIT in invoking his powers u/s 263 of the IT Act and holding the assessment order dated 29.12.2009 to have not been framed in accordance with the law and the same being erroneous and prejudicial to the interests of the revenue, and in setting aside the assessment to the Assessing Officer and directing him to recalculate the deductions under Sections 80IB and 80HHC of the Act and revis....
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.... no order shall be made u/s 263 (1), after the expiry of two years from the end of the financial year in which the order sought to be revised was passed; that the decision in 'CIT vs. Alagendran Finance Ltd.', 293 ITR 1 (SC)' relied on by the assessee in this regard, was not relevant, since the re- assessment had been completed u/s 153A; that the second proviso to Section 153A prescribes that assessment or re-assessment, if any, relating to any assessment year falling within the period of six assessment years referred to in Section 153A, pending on the date of the search, shall abate; that the objective of this proviso is to eliminate multiplicity of assessment or reassessment proceedings which are pending on the date of the search and which are now required to be undertaken afresh in view of Section 153A; that abatement means that the assessee is required to file fresh return in pursuance of notice u/s 153A and the assessment will be framed with respect to such fresh return; that hence, all assessments completed on the basis of returns filed earlier become irrelevant; that so, the assessment order passed u/s 153A on 29.12.2009 is relevant for the purpose of revision u/....
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....) Ltd.', 137 TTJ 627 (Pune 'B'), 'LMJ International Ltd. vs. DClT', 14 DTR 540 (KoI), 'Sinhgad Technical Education Society vs. ACIT', 57 DTR 241 (Pune 'B') and 'LMJ International Ltd. vs. DClT', 119 TTJ 214 (KoI), 6. The contention thus is that when a particular issue could not have been raised in the assessment u/s 153A of the Act, powers u/s 263 with regard thereto could, obviously, not have been exercised by the Id. CIT. In this regard, reliance is placed on 'Paul John Delicious Cashew vs. ITO', 94 ITD 131 (Cochin) and 'Inder Kumar Bachani vs. ITO', 99 ITD 621 (Lkw). 7. It has, likewise, been contended that the position remains the same with regard to the deduction u/s 80IA which, like the issue of deduction u/s 80HHC, also travelled to the stage of the Hon'ble High Court and got merged with the order passed by the Hon'ble High Court. 8. The Ld. DR, on the other hand, has strongly supported the impugned order. It has been contended that the Ld. CIT, while exercising power u/s 263 of the Act, has relied on the decision of the Hon'ble jurisdictional High Court; that therefore, the concept of merger, a....
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....t that the said decisions relates to the assessment year 1992-93 but the clause (baa) to sec. 80HHC(4) has been inserted by the Finance Act, w.e.f 1.4.1992 i.e. relevant to the assessment year 1992-93 onwards. It is further submitted that the order of the Ld. CIT(A), Karnal in the case of the assessee has been contested before the Ld, ITAT Delhi Bench which is still pending. In view of the amendments made to the Statute, the duty draw back has been considered for calculation of deduction u/s 80HHC whereas the assessee has made sales to export house and the deduction is allowable by taking into consideration the sec. 80HHC(3A) and profit is to be taken into account as defined in section 80HHC(4B)(baa) where the definition of "profits of business" is given as reproduced below:- (baa) "Profits of the business" means the profits of the business as computed under the head "Profits and gains of business or profession" as reduced by- (1) ninety per cent of any sum referred to in clauses (iiia), (iiib) and (iiic) of section 28 or of any receipts by way of brokerage, commission, interest, rent, charges or any other receipt of a similar nature included in such profits; and (2) the p....
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....f the industrial undertaking. In the assessee case it would, be observed that the facts are in favour of the assessee wherein the direct nexus between the profit and gains and the industrial undertaking is there. The assessee further relied upon the judgement of the Hon. ITAT Hyderabad Bench in the case of A.P Industrial components limited vs. DCIT reported at (2002) 74 TT.J (Hyd) 272 and followed by the Ld. CIT(A), Ludhiana-I in the case of M/s Liberty Shoes Limited, Railway Road, Karnal wherein a similar issue has been discussed and allowed in favour of the assessee while calculating the deduction u/s 80IB. The assessee has also relied upon the judgement of Hon'ble Madras High Court in the case of CIT Vs. Madras Motors Ltd. 257 ITR 60(Mad) and also the order of Ld. CIT(A), Karnal in the assessee's own case. I have gone through the explanation furnished by the assessee and also gone through the appellate orders referred to by the assessee. On perusal of the return of income filed by the assessee, it is noticed that deduction u/s 80IB claimed @ 25% amounting to Rs.25706739/- has been claimed on business profits of Rs. 10,28,26,956/- which also includes export incentives amo....
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....e I.T. Act with retrospective effect from 01.04.1998, the case of the appellant is not covered in either of the clauses (iiia), (iiib)), (iiic) or (iiid) of Sec. 28 of the I.T. Act because the total export turnover of the appellant exceeded Rs.10 crore. Therefore, it is held that no deduction u/s 80HHC was allowable in respect of the DEPB income amounting to Rs.14,82,847/-. Therefore, it is held that out of the total export incentives received at Rs. 9,19,51,993/-, benefit u/s 80-HHC r.w.s. 28 would be available in respect of Rs.9,04,69,146/-only. The AO is directed to recompute the deduction u/s 80HHC accordingly. Hence, ground of appeal No. 3 succeeds partly. 12. The Tribunal, vide order dated 27.08.07 (APB 25-33), dealt with both these issues in extenso and held as follows (relevant portions):- "It is pertinent to mention here that the Tribunal has considered the issue in the case of ACIT vs Mtrs Kamini Jain, proprietor M's KTM Exports (ITA No. 1821 & 2177/Del/2006) vide order dated 10th Aug 2007 by following the earlier decision of the Tribunal in the case of Sharda Exports (ITA No.3921/Del/2004) and the decision of the Hon'ble Apex Court in the case of CIT vs Bab....
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....income from the manufacturing and sale of textile goods to M/s IKEA Trading (India) Ltd., (an Export/Trading House) as supporting manufacturer. In the assessment framed under Section 143 (3) of the Act, the Assessing Officer did not accept the contention of the assessee for computing deduction allowable to him under Section 80 HHC of the Act as per the provision of Section 80 HHC (IA) read with Section 80 HHC (3A) read with clause (baa) of explanation of Section 80 HHC of the Act, as the respondent is a supporting manufacturer, and allowed deduction of Rs. 1,40,49,120/- under Section 80 HHC of the Act, instead of Rs.7,19,78,869/-, as claimed by the assessee. On appeal by the assessee, the Commissioner of Income Tax (Appeals), Karnal, set aside the order of the Assessing Officer and held that the assessee was entitled to the deduction under Section 80 HHC of the Act, as supporting manufacturer in the same manner, as in the case of direct exporter. The said decision of the CIT (A) has been upheld by the ITAT vide order dated 31.8.2007, against which the instant appeal has been filed, raising the aforesaid substantial question of law. After hearing counsel for the appellant, we fin....
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..... 68 ITD 358(Del) and the decision of the ITAT Delhi in the case of ITO Vs. Jatinder Tayal Prop. Alishan Textiles in ITA No. 5177/Del/2004, following the principle of judicial discipline held that the assessee was entitled to the deduction u/s 80HHC as supporting manufacturer in the same manner as in the case of a direct exporter. The department filed further appeal before the ITAT. The Hon'ble ITAT upheld the order of the CIT{A) relying on the decision of the Tribunal of Delhi Bench m the case of ACIT Vs. Mrs Kamini Jain (ITA No. 1821 & 2177/Del/2006) which in turn was based on the Apex Court judgment in the case of Baby Marine Exports (290 ITR 323), the decision of ITAT Delhi Bench in the case of Sharda Exports (ITA NO.3921/Del/2004) and Eastern Leather Products Vs. DClT. The order of Hon'ble ITAT was not accepted by the department and further appeal u/s 260A was moved before Hon'ble Punjab & Haryana High Court on this issue. The Hon'ble High court also held in favour of the assessee, dismissing the appeal of the department holding that the matter was no longer res integra. Now the issue is before the Hon'ble Apex Court in SLP (Civil) No. 16456/2009 connected ....
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....um). 17. Then, undisputedly, as a result of the search conducted, no incriminating material was found and so, the issues of deduction under Sections 80HHC and 80lB of the Act could not have been the subject matter of assessment u/s 153A of the Act. It has been so held in 'ACIT vs. SRJ Peety Steels (P) Ltd.', 137 TTJ 627 (Pune 'B'). 18. A perusal of paras 3 and 4 (as reproduced hereinabove) of assessment order u/s 153A also shows that this order relates back to the assessment order dated 30.11.04, passed u/s 143 (3), and neither of the issues at hand are the subject matter of assessment in the order passed u/s 153A. 19. Now, once the issue of deductions under Sections 80HHC and 80lB of the Act could not be the subject matter of assessment u/s 153A, obviously, the order passed u/s 153A is not revisable by invoking the provisions of Section 263. It has been so held in 'Paul John Delicious Cashew vs. ITO', 94 ITD 131 (Cochin) and 'Inder Kumar Bachani vs. ITO', 99 ITD 621 (Lkw). 20. Therefore, the only order which was revisable was that dated 30.11.04, passed u/s 143 (3) of the Act and not that dated 29.12.09, passed u/s 153A of the Act. The I....