TaxTMI 
TaxTMI 
2025 (1) TMI 1809
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....assessment order was passed on 29 December 2022. 2. Whether on facts and in the circumstances of the case and in law, the learned Additional/Joint Commissioner of Income-tax (Appeals), Madurai has erred in confirming the action of the Centralized Processing Center in restricting the amount of deduction under section 80JJAA of the Act of Rs. 30,10,31,823 up to business income of Rs. 6,22,44,206 instead of gross total income of Rs. 11,12,68,378. 2. Thereafter, the assessee vide letter dated 30.08.2024 filed following additional grounds: 3. That the adjustment as made by the CPC reducing the deduction allowable under section 80JJAA of the Act without giving an intimation in respect of the same in accordance with 1st proviso below section 143(1)(a) is illegal and bad in law. 4. That the CPC was not justified in reducing the appellant's claim for deduction under section 80JJAA in the Intimation issued under section 143(1) without specifying the sub-clause as per which the said adjustment has been made. 5. Assuming without admitting that sub-clause (ii) of clause (a) of sub-section (1) of section 143 has been applied in the present case, the qua....
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.... appeal observing as under: OBSERVATION AND DECISION: The appellant admits that the order u/s 143(3) is passed on 29 December 2022. The appellant has requested that In view of the above, we request your Honour to kindly merge captioned Appeal filed against the rectification order (Appeal no: NFAC/2020-21/10192468 dated 21 October 2022) with latest appeal filed against the Assessment Order (Appeal no: NFAC/2020-21/10201653 dated 27 January 2023) and consider detailed submission filed vide letter dated 23 February 2024 during ongoing appeal proceeding against the assessment order. The appeal against the 143(3) order lies with CIT(A) and against 143(1) lies with JCIT(A). Hence combining this appeals is not possible. 5.2 Ground 1 is against CPC restricting the claim under Section 80JJAA of the Act amounting to INR 30,10,31,823 to the of Rs. 6,22,44,207/- and not restricting the claim under Section 80JJAAto the gross total income of INR 11,12,68,378/- . In the 143(3) order the claim under Section 80JJAA itself is disallowed and a finding is given However, the interpretation of law is always Prospective unless stated otherwise. In the....
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....imed as a deduction is the additional employee cost and not the profit from business. Further, sub-section 4 of Section 80A of the Act was introduced vide Finance Act (No. 2) Act, 2019. The intention of introduction the said sub-section was to prevent abuse of tax incentive. The relevant extract of the Memorandum to Finance Bill 2009 wherein the intention is mentioned is provided below: The profit linked deductions in Chapter VIA are prone to considerable misuse. Further, since the scope of the deductions under various provisions of Chapter VIA overlap, the taxpayers, at times, claim multiple deductions for the same profits. With a view to preventing such misuse, it is proposed to amend the provisions of section 80A of the Income-tax Act to provide the following, namely :- (i) deduction in respect of profits and gains shall not be allowed under any provisions of section 10A or section 10AA or section 10B or section 10BA or under any provisions of Chapter VIA under the heading "C .- Deductions in respect of certain incomes" in any assessment year, if a deduction in respect of same amount under any of the aforesaid has been allowed in the same asse....
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....pect of certain incomes", and section 80H to 80VV comes under heading "C .- Deductions in respect of certain incomes. Hence the provisions under section 80A(4) and shall in no case exceed the profits and gains of such undertaking or unit or enterprise or eligible business, is applicable to section 10A or section 10AA or section 10B or section 10BA and section 80H to 80VV. The action of CPC restricting the deduction under section 80JJAAto the business income of Rs. 6,22,44,207/- is correct as per law and facts. Ground 1 is dismissed. 5. Before us, the Ld. counsel for the assessee filed a Paper Book containing pages 1 to 74 including the intimation order u/s 143(1) of the Act dated 22.09.2022. 6. Firstly, we take up the additional ground No. 3 raised by the assessee. In the additional ground, it is submitted that no intimation letter proposing adjustment was issued prior to issue of intimation order u/s 143(1)(a) of the Act and therefore, the intimation order issued is illegal and bad in law. 6.1 We have heard rival submissions of the parties and perused the relevant materials on record. The proviso below the section 143(1)(a) provides that before issuing intimation order u/....
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....ation issued as per the said proviso below section 143(1)(a) of the Act with respect to the adjustment carried out. In the affidavit dated 30.08.2024 filed by one 'Shri Amit Chitale', it is mentioned that despite thorough search, the said intimation letter couldn't be located/traced in their records. It is noted by us that in the affidavit it is not mentioned what is the designation of Shri Amit Chitale and in what capacity said deposition had been given. We are of the opinion that since it is the assessee, who has raised additional ground challenging the fact that no intimation letter proposing adjustment was issued to the assessee, then onus is on the assessee to file an affidavit from the Principal Officer of the company or any other authorized person stating that such intimation letter was never issued to the assessee. But the assessee has filed affidavit stating that said intimation letter was not traceable in the record of the assessee, and the authority of the person making affidavit is also not clear. The assessee could have filed an application before the Income-tax Authority under Right to Information Act for collecting said intimation letter or confirming tha....
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....entage of the expenditure incurred by the assessee. The ld counsel referred to the decision of hon'ble Supreme Court in the case of CIT Vs Reliance Energy Ltd in Civil Appeal No. 1328 of 2021 and others and submitted that scope of sub section (5) of section 08IA of the Act is limited to determination of quantum of deduction under subsection (1) of section 80IA of the Act by treating 'eligible business' as the 'only source of income' and subsection (5) can't be pressed into service for reading limitation of deduction under subsection (1) only to 'business income'. The ld counsel also referred to commentary authored by sh AC Sampath Iyengar to emphasize that deduction u/s 80JJAA of the Act is quantified or computed based on expenditure incurred by the assessee for the purpose of creating employment opportunities. 8.1 The brief facts qua the issue in dispute are that after issue of the intimation order dated 22/09/2022, the return of income filed by the assessee was selected for scrutiny assessment and during scrutiny assessment, the Assessing Officer examined the claim of deduction u/s 80JJAA of the Act. In the queries raised, the Assessing Officer ....
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....tself is clear on the concept of merger between an intimation and the assessment has been dealt with by various Hon'ble Courts and the Benches of the Tribunal. The Hon'ble High Court of Madras in the case of Tamil Nadu, Magnesite Ltd. Vs. Commissioner of Income Tax Writ Petition No. 17819/2001 held that after passing of an order u/s 143(3) of the Act, the intimation u/s 143(1) of the Act get merged with the order u/ s 143(3) of the Act and intimation order u/s 143(1)(a) of the Act does not survive independently for rectification by the Assessing Officer. The Hon'ble High Court of Calcutta in the case of CESC Ltd. v. DCIT (2004) 134 Taxman 647 (Cal) held that when assessee accepted in the intimation has been reversed in the regular assessment and the assessee has preferred appeal which is pending, the theory of merger is bound to apply in the present case for the reason that the intimation issued u/s 143(1)(a) of the Act is no longer operative. The Co-ordinate Bench of the Delhi Tribunal in South India Club v. ITO (2024) 163 taxmann.com 479 (Delhi) held that exemption claimed u/s 11 of the Act was denied vide the intimation u/s 143(1) of the Act and subsequently the matt....
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.... accepted and no addition has been made separately. The ld counsel referred before us to the decision of the Coordinate bench of Mumbai in the case of National Stock Exchange of India Limited vs DCIT in ITA No. 732/Mum/2023 for AY 2020-21 and submitted that no appeal lied against assessment order, but we find that in said case the adjustment which was made in intimation order, was not made in the assessment order passed after discussion. Thus, facts of that case are different from the facts of instant case before us. 8.3 In light of the above discussion, upon examining the facts of the present case, it is evident that the adjustment proposed in the order issued under Section 143(1) of the Act pertains to the deduction claimed under Section 80JJAA of the Act. Notably, the same issue has also been addressed in the order issued under Section 143(3) of the Act, which is currently under appeal before the Learned First Appellate Authority. The primary question in the order under Section 143(1)(a) is whether the deduction under Section 80JJAA should be restricted to the business income or extended to the gross total income. The assessee contends that the deduction, being calculated bas....