TaxTMI 
TaxTMI 
2017 (2) TMI 784
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....dinary jurisdiction were not satisfied. 2. The learned CIT erred in fact and in law in initiating the proceedings u/s.263 of the Act beyond the period of limitation. 3. The learned CIT erred in fact and in law in computing the time limit for initiating the proceedings u/s.263 of the Act from the end of the financial year in which the order u/s.147 was passed and not from the end of the financial year in which order u/s.143(3) of the Act was passed. 4. The learned CIT earned in fact and in law calculating the time limit for passing the order u/s.263 of the Act from the end of the financial year in which the order u/s.147 was passed ignoring the fact that the issue of incremental subsidy and set off of brought forward unabsorbed depreciation was not there in the reassessment proceedings u/s.147 and there is no discussion in the reassessment order on these issues. 5. The learned CIT erred in fact and in law in passing the order u/s.263 of the Act beyond the period of limitation. 6. The learned CIT erred in fact and in law in setting aside the order passed u/s.154 dated 28.02.2012 despite the fact that the AO had correctly applied the law wh....
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....the Act was passed vide order dated 14/12/2011. As per the reasons recorded by the AO, the case of the assessee was reopened questioning eligibility of deduction u/s.10B of the Act on export of Copper Claded Glass Epoxy Laminates/Sheets (CCGL). While computing the assessed income under section 147 of the Act, the AO denied the deduction under section 10B in respect of "incremental turnover subsidy" of Rs. 42,70,068/-. 5. Aggrieved by the reduction of the incremental subsidy for the purpose of computation of deduction under section 10B of the Act, the assessee moved petition for rectification of the re-assessment order under section 154 of the Act. The AO vide order under section 154 dated 28/02/2012 rectified the alleged mistake by restoration of subsidy amount in the profits of the business for the purpose of computation of deduction under section 10B of the Act. 6. The Commissioner of Income Tax found the aforesaid order passed under section 147 dated 14/02/2011and subsequent order under section 154 dated 28/02/2012 to be erroneous in so far as prejudicial to the interests of the Revenue and accordingly issued show-cause notice under section 263 of the Act dated 17/10/2013 ....
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.... order and therefore there is no error in the order of the AO passed under section 147 of the Act. It was contended that owing to the fact that the reopening was done on limited aspect of disallowing deduction under section 10B on manufacture of CCGL, the issue of incremental subsidy cannot be reviewed in proceedings under section 263 with reference to order under section 147 of the Act. The Ld.AR for the assessee also took a stand that the CIT has assumed the jurisdiction under section 263 of the Act in contravention of the limitation period prescribed under section 263(2) of the Act. 9. The Ld.AR submitted that the CIT has computed the period of limitation from the date of passing of order under section 147 dated 14/12/2011 wherein reopening was done on the issue of disallowing claim of deduction under section 10B on manufacture of CCGL. As can be seen from the reasons rendered under section 148(2), the issue of incremental turnover subsidy was not subject matter of reopening of the assessment under section 147. Therefore the time limit ought to have been computed from the date of passing regular assessment order earlier under section 143(3). The regular assessment order was p....
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....l High Court in the case of CIT vs. Gujarat Forging (P) Ltd. in Income Tax Reference No.42 of 1996, order dated 02/07/2008 and decision of Hon'ble Bombay High Court in the case of Ashoka Buildcon Ltd. vs. ACIT reported in (2010) 325 ITR 574 (Bom.) to buttress his point that in respect of issues which are not subject matter of reassessment proceedings, period of limitation provided for in section 263(2) would commence from the date of original assessment order and not from the date on which order of reassessment has been passed. 11. The Ld.AR next submitted that notwithstanding the arguments advanced on non-maintainability of action under section 263 of the Act due to bar of limitation, the action of the CIT cannot be sustained in the absence of any error in allowing deduction towards incremental subsidy under section 10B of the Act. The issue of eligibility of deduction on incremental subsidy stands settled in favour of assessee by the CBDT Circular No.39/2016, wherein it has been noted that subsidy is part and parcel of profit and gains of business for the purpose of deduction. The Ld.AR also canvassed that the aforesaid issue on merit has to be decided in favour of the assesse....
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....or were not subject matter of reassessment proceedings at all. It is the case of the assessee that since the alleged errors pointed out by the CIT in the revisional order are totally unconnected to the reassessment proceedings or rectification thereon, the doctrine of merger will not apply. The reassessment order passed in subsequent period is independent of the original assessment order. Therefore, the period of limitation will run from the date of the original assessment order in respect of issues which emanate from that order and bar of limitation cannot thus be reckoned from reassessment order or rectification order framed later. Thus, the entire proceedings under section 263 of the Act is vitiated due to bar of limitation. 14. The contention of the assessee is required to be seen in the light of two set of errors pointed out by Commissioner in action under section 263 of the Act which is in challenge. The first alleged error is wrongful set off of unabsorbed depreciation while computing the business income. We find that the set off was duly claimed in the original assessment order was admitted in full. Similar set off was granted in repetition while making the revised compu....