TaxTMI 
TaxTMI 
TaxTMI 
2017 (5) TMI 428
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....ssumed that there was no utilization of reserve and thereby not properly applying Section 80HHDD(4) & (5) of the Income Tax Act?" 3. The brief facts of this case are that the assessee filed the return of income on 23.10.2000 declaring income of Rs. 21,77,124/-. The case was processed u/s 143(1) on 19.12.2000 at total income of Rs. 21,77,130/-. Since this was selected for scrutiny, Notice u/s 143(2) was issued on 31.10.2001 to present before the A.O. on 19.11.2001. On the date 19.11.2001 the case was adjourned for sine die. Further notice u/s 143(2) was issued on 2.1.2002 fixing the case for 9.1.2002. Fresh notice u/s 143(2) was issued on 1.11.2002 to present before the AO on 13.11.2002. On the said date adjournment was given for 19.11.2002. On 9.12.2002. Books of accounts comprising cash book, ledger, journal, cash vouchers, bank reconciliation's statement etc. as and when required for verification. 4. Counsel for the appellant has taken us to sub-clause (4) of Section 80HHD which reads as under: "(4) The amount credited to the reserve account under clause (b) of sub-section (1), shall be utilised by the assessee before the expiry of a period of five years next following the p....
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....plant [other than machinery or plant of the nature referred to in clauses (a), (b) and (d) of the second proviso to sub-section (1)] for the purposes of the business of the undertaking; and (b) until the acquisition of a new ship or a new aircraft or new machinery or plant as aforesaid, for the purposes of the business of the undertaking other than for distribution by way of dividends or profits or for remittance outside India as profits or for the creation of any asset outside India: Provided that this clause shall have effect in respect of a ship as if for the word "seventy-five", the word "fifty" had been substituted. Explanation.-Where the amount debited to the profit and loss account and credited to the Investment Allowance Reserve Account under this sub-section is not less than the amount required to be so credited on the basis of the amount of deduction in respect of investment allowance claimed in the return made by the assessee under section 139, but a higher deduction in respect of the investment allowance is admissible on the basis of the total income as proposed to be computed by the Assessing Officer under section 143, the Assessing Officer shall, by notice in....
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....prescribed ; or xx xx xx xx (vi) any university or other educational institution existing solely for educational purposes and not for purposes of profit, other than those mentioned in sub-clause (iiiab) or sub-clause (iiiad) and which may be approved by the prescribed authority, or xx xx xx xx Provided that the fund or trust or institution [or any university or other educational institution or any hospital or other medical institution] referred to in sub-clause (iv) or sub-clause (v) [or sub- clause (vi) or subclause (via) shall make an application in the prescribed form and manner to the prescribed authority for the purpose of grant of the exemption, or continuance thereof, under sub-clause (iv) or sub-clause (v) [or sub-clause (vi) or sub-clause (via)] : xx xx xx xx Provided also that in case the fund or trust or institution or any university or other educational institution or any hospital or other medical institution referred to in the first proviso makes an application on or after the 1st day of June, 2006 for the purposes of grant of exemption or continuance thereof, such application shall be [made on or before the 30th day of September of the relevant asses....
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....d that the contention raised by the ld. Counsel is having force that out of the reserve created u/s 80HHD if, any amount is to be put to tax than the same is governed by the provisions of Section 80HHD(5) and that section does not provide charging of the amount which was utilised even during the same year in which the amount was credited to the reserve account. The accounting entries of creation & utilization are only the transfer entries passed in the boos of accounts on 31st March of which the first entry was to transfer of amount out of the profits to the reserve account and the subsequent entry was of transfer by debiting the reserve account to the extent utilised for the purposes as per section 80HHD(4). Considering the submission made by ld. AR, I have found that the AO had made wrong interpretation of the provisions of section 80HHD(4) & (5) which is further against the intention and the objects of that section when it has been admitted that the assessee had utilised the money for the purposes as referred in subsection-4 of section 80HHD. The only dispute is as to the amount utilised during the same year as against within the period of 5 years. The contention raised by th....