TaxTMI 
TaxTMI 
2007 (12) TMI 169
X X X X Extracts X X X X
X X X X Extracts X X X X
....10 units located at different parts of the country manufacturing various products. For the assessment year 2001-02, return of income was filed by the assessee on November 30, 2001, declaring gross total income of Rs. 2,73,15,648. In the return of income, the assessee had claimed deduction under section 80-IB in respect of two units, one situated at Vijaywada and another known as Sachin Plant-II. The eligible profit of Vijaywada Plant computed by the assessee was Rs. 3,86,52,957 and deduction under section 80-IB (30 per cent. of 3,86,52,957) claimed was at Rs. 1,15,95,887. Similarly, the eligible profit of Sachin Plant-II computed by the assessee was Rs. 1,18,29,143 and deduction claimed under section 80-IB (30 per cent. of Rs. 1,18,29,143) was at Rs.35,48,743. In the return of income for the assessment year 2001-02, the assessee had also claimed deduction under section 80HHC in respect of manufacturing exports made from goods manufactured at Plant I of Sachin Unit and the Panvel Unit and trading goods on which no deduction under section 80-IB has been claimed. The assessee computed trading export profit eligible for deduction at Rs. 17.17 lakhs and manufacturing export pro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to return of income of the assessee for the assessment year 2001-02, the assessee has profits from manufacturing export activity of Rs.255,98,340.80. Similarly, the assessee has profits from trading exports activity of Rs. 17,17,307. Thus, the assessee has profits from both manufacturing export activity as well as trading export activity. The principle laid down by the hon'ble Supreme Court in the case of IPCA Laboratory Ltd. [2004] 266 ITR 521 is that if the assessee has loss from one export activity and profit from another, such profits should be netted against the losses, and section 80HHC can only be claimed on the net figure. Further, the assessee has claimed excess depreciation of 10 per cent. instead of 5 per cent. on building used for poultry business. From appendix I pertaining to the Table for allowance of depreciation, if may be seen that depreciation is allowable at 10 per cent. on buildings other than used for residential purposes. Thus, depreciation rate of 5 per cent. for buildings used for residential purposes and for building used for business purposes is allowable at 10 per cent. In view of the above, I have reason to believe that the income chargeable to ta....
X X X X Extracts X X X X
X X X X Extracts X X X X
....wala submitted that reopening of the assessment relying upon the decision of the apex court in the case of IPCA Laboratory Ltd. [2004] 266 ITR 521 is wholly misconceived. Mr. Pardiwala further submitted that reopening of the assessment based on the construction of section 80-IB(13) read with section 80-IA(9) is also without any merit because, in the present case, it is admitted by the respondents in their affidavit in reply that the assessee had not exported goods manufactured in the industrial units eligible for deduction under section 80- IB. Once it is admitted that the goods manufactured in the industrial units eligible for deduction under section 80-IB have not been exported, then section 80-IB(13) read with section 80-IA(9) would have no application in the computation of deduction under section 80HHC. In other words, where the goods exported were not manufactured in the industrial unit on which section 80-IB has been claimed, the question of excluding section 80-IB deduction while computing section 80HHC deduction does not arise at all. Accordingly, Mr. Pardiwala submitted that in the absence of any reason for reopening the assessment, the notice issued under section 148 o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssessment the Assessing Officer failed to consider section 80-IB(13) read with section 80-IA(9) of the Act. If that provision was considered, there would be negative profit and in that event deduction under section 80HHC would not have been allowed in the regular assessment. The contention of the Revenue that in the present case, there is negative profit from the export activity is wholly misconceived, because, in the reasons recorded for reopening the assessment, the Assessing Officer has clearly recorded that the assessee has profits from the manufacturing export activity as well as profits from the trading export activity. In view of the categorical finding recorded by the Assessing Officer to the effect that there is profit from the export activity, it is not open to the Revenue to allege that there is negative profit from the export from the export activity. When there is profit from the export activity, the question of adjusting any losses as enunciated by the apex court in the case of IPCA Laboratory Ltd. [2004] 266 ITR 521 does not arise at all. The next contention of the Revenue is that the deduction under section 80-IB allowed is Rs. 5,04,82,100 whereas gross total ....