AI Drafter 
TaxTMI 
TaxTMI 
2018 (2) TMI 1635
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....n of Rule 8D(2)(iii) of the IT Rules. He has further erred in applying Rule 8D(2)(iii) by holding that the word 'investment' used in this Rule would include shares/securities held as stock in tread. 4. The assessee craves right to add, alter or amend any of the grounds of the appeals. 5. The appropriate cost be awarded to the assessee." The Revenue has raised the following grounds as under:- "1. Whether on the facts and circumstances of the case, the ld. CIT(A) was justified in allowing set-off of lossess of units of Rs. 1,36,34,565/- of earlier years from gross deduction u/s 80A (4) of Rs. 98,13,07,575/- instead of Rs. 95,11,66,028/- claimed by the assessee. 2. Whether on the facts and circumstances of the case, the ld. CIT(A) was justified in allowing deduction u/s 80IA on interest income including penal interest income and on other income. 3. Whether on the facts and circumstances of the case, the ld. CIT(A) was justified in allowing relief to the assessee out of addition u/s 14A of Income Tax Act. 4. The appellant craves its rights to add, amend or alter any of the grounds on or before the hearing." 2. Ground Nos. 1 to....
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.... tax has escaped assessment. As per explanation 2 an income has been made a subject matter of excessive relief under this Act, the same would be deemed to be a case where income chargeable to tax has escaped assessment. In the case of the assessee the profit of Industrial undertaking on which deduction u/s 80IA was allowed of Rs. 98.13 Crores but after considering the previous year loss of Rs. 1,36,34,565/- the current deduction u/s 80IA of the Act is eligible to the assessee comes to Res. 96.76 Crores. As against this, the assessee has claimed deduction u/s 80IA of Rs. 95.11 Crores. Therefore, the assessee was not allowed any excessive relief under the Act nor has the income chargeable to tax has been under assessed. The assessee filed complete details of claim of deduction u/s 80IA along with the audit financial statement of each undertaking with audited report in Form No. 10CCB vide letter dated 14.07.2010. Therefore, the AO allowed the claim after considering the material on record including details as well as audited financial statements of each undertaking along with audit report. The ld. AR has thus submitted that where the AO initiated the proceedings u/s 154 which was pend....
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....on 154 of the Income Tax Act, 1961 The assessment/refund order u/s 143(3) for the assessment year 2008-09 made on 22.12.2010 requires to be amended as there is a mistake apparent from the record within the meaning of Section 154/155 of the Income Tax Act, 1961. The rectification of the mistake, as per particulars given below, will have the effect of enhancing the assessment/reducing the refund/increasing your liability. In respect of allowing units loss of A.Y. 2007-08 has been not set off an per provisions of Sec. 80IA CS before the profit of the subsequent year as under:- S.No. Unit Initial year Profit of the year 08-09 Loss of the A.Y. 07-08 1. EPIP Sitapura-1st A.Y. 2005- 06 Rs. 16770973 Rs. 5020008 2. Borhada A.Y. 2005-06 Rs. 38561187 Rs. 8614556 Total 1,36,34,564 It is apparent from the notice u/s 154 of the Act that the AO proposed to rectify the mistake in respect of the loss of Rs. Rs. 1,36,34,564/- to be adjusted against the profits of the eligible undertaking for deduction u/s 80IA of the Act. In response to the said notice issued u/s 154 the assessee filed its reply dat....
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....95,11,66,028/- while working out the deduction u/s 80IA. 2. In view of above facts and circumstances I have sufficient reasons to believe that an amount of Rs. 1,36,34,565/- has escaped assessment within the meaning of sec. 147 of the I.T. Act, 1961. 3. Issue notice u/s 148 for the A.Y. 2008-09 in which the sand transaction falls." It is apparent that the reasons for issuing the notice u/s 154 as well as the reasons recorded for reopening of the assessment u/s 147/148 of the Act are same to re-compute the deduction u/s 80IA after adjustment of loss of Rs. 1,36,34,564/-. The assessee has raised a legal objection against the initiation of proceeding u/s 147/148 while the proceeding u/s 154 of the Act were pending and not reached to the finality either by dropping the same or passing any order u/s 154 of the Act, the initiation of proceeding u/s 147/148 is not permissible. The Bench asked the ld. CIT DR to produce the assessment record to show that the status of the proceeding u/s 154 on the date of initiating of proceedings u/s 147/148 of the Act. It was found that the AO has not passed any order either for dropping the proceeding or concluding the proceeding u/s....
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....ing reliance on the decision reported in Premier Automobiles Ltd. (supra), when once the assessment order has been the subject matter of rectification under Section 154, the self same issue cannot be the subject matter of reassessment by taking recourse to Section 147 of the Act. Thus, on the facts that are available today, as far as the assessment year 2003-2004 is concerned, there are two proceedings, one under Section 154 and another under Section 147 of the Act. The jurisdiction given under both the Sections thus operating on different fields, (as far as this assessment year is concerned), and with the doubt in the mind of the Officer as to which direction he has to go, I have no hesitation in holding that the notice lacks the very basis for assumption of jurisdiction under Section 147 of the Act. For the reasons that there cannot be two parallel proceedings on the self same issue as one based on the view that there were materials available on record which warranted exercise of jurisdiction under Section 154 and the other initiated under Section 147 that there was escapement of income from tax on account of the failure of the assessee from disclosing the full and correct partic....
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....ng the notice to the assessee under section 148 and we, accordingly, hold the same as void ab initio and quash the proceedings initiated by the Assessing Officer under section 147. Accordingly, this issue is decided in favour of the assessee and Ground Nos. 1 to 3 are allowed. As the assessee succeeds on the issue of the validity of the notice under section 148, we do not consider it necessary to go into the merits of the case." It is manifest from the record that all relevant materials and facts necessary for assessments were available with the Assessing officer at the time of original assessee passed u/s 143(3) of the Act and further the claim of deduction allowed while passing the order u/s 143(3) would not be excessive even if proposed adjustment of loss of previous year is made against the profit of the current year. The assessee reminded the AO in its reply to the notice u/s 154 that even after the adjustment of loss of Rs. 1.36 Crores allowable deduction would be more than Rs. 95.11 Crores allowed in the original assessment. Thereafter, the AO without bringing the proceedings u/s 154 of the IT Act to a logical conclusion had initiated the proceedings u/s 147 of the Act on....
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....of the Income-tax Act may not be issued merely on change of opinion. 46. In normal circumstances, on receipt of a notice of reassessment under section 148 of the Income-tax Act, the assessee should file a return, ask for the reasons and then file its objection. However, where the condition precedent for issuance of a notice are absent, the notice might be challenged by filing a writ petition under article 226 of the Constitution of India. 47. In Calcutta Discount Co. Ltd. v. ITO [1961] 41 ITR 201, the Supreme Court held that in exercise of power under article 226, the court might examine whether the conditions precedent for exercise of jurisdiction to reassess existed. The Supreme Court, inter alia, held as follows (page 207 and 208) : "The existence of such alternative remedy is not however always a sufficient reason for refusing a party quick relief by a writ or order prohibiting an authority acting without jurisdiction from continuing such action. In the present case, the company contends that the conditions precedent for the assumption of jurisdiction under section 34 were not satisfied and came to the court at the earliest opportunity. There....