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2012 (7) TMI 647 - ITAT HYDERABADInitiation of re-assessment proceedings - excessive claim allowed u/s. 80HHE - No assessment u/s. 143(3) and only the return was processed u/s. 143(1) - Held that:- As per clause (b) of Explanation 2 to proviso to section 147 where a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the AO that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return, the AO is entitled to reopen the assessment - as decided Rajesh Jhaveri Stock Brokers (P) Ltd [2007 (5) TMI 197 - SUPREME COURT] that the Assessing Officer is having jurisdiction to issue notice u/s 148 for bringing to tax income escaping assessment on the ground that the assessee claimed excessive relief or deduction - against assessee. Reducing deduction claimed by the assessee u/s. 80HHE - grounds raised by assessee against aggregation of the profits of the 100% EOU with the losses of the training division for purposes of calculating the deduction u/s 80HHE - Held that:- From the business profits figure the AO has reduced 90% of the commission, brokerage, etc. as also interest receipt which he has considered to be income from other sources and has arrived at a figure and thereafter applied the formula to determine the 80HHE deduction ignoring assessee’s contention that the total turnover of only the eligible business should be taken note of for the purpose of applying the formula laid down in sub-section (3) - the view canvassed on behalf of the assessee is to be preferred over the view put forth on behalf of the income tax department as it is only the profits of the eligible business which have to be split in the same proportion as the export turnover in the said business bears to the total turnover in the said business Thus, the total turnover for the purpose of section 80HHE only the turnover of the computer software both in Indian and abroad has to be considered and turnover of business not connected with software business cannot be considered to include in the total turnover. Similarly amount received towards employee’s compensation cannot form part of the total turnover - in favour of assessee.
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