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2015 (5) TMI 388 - AT - Income TaxValidity of reopening of the assessment - AO in the reopened assessment proceedings determined taxable income at NIL under the normal provisions of Act and book profit at ₹ 1321.27 crores under the provisions of section 115JB - Held that:- Once the reassessment proceedings is initiated validly on compliance with various conditions prescribed in the Act, the same cannot be held to be invalid merely because the assessment order ultimately did not disclose about any escaped income. Further, under the present provisions of section 147, “re-computation of loss” is also brought within the scope of “Income escaping assessment”. There was definite information with the AO about the escapement of income and the assessee has also accepted the same by offering additional income. These contentions are urged before us without bringing any material on record and that the assessee has not approached either the assessing officer or the Ld CIT seeking copies of satisfaction note/opportunity and the assessee is raising these contentions merely on presumptions. Thus the Ld CIT has rightly upheld the validity of initiation of reassessment proceedings. Computation of deduction u/s 80HHC for the purpose of excluding the same from the Net profit for the purpose of computation of “Book Profit” u/s 115JB - Held that:- In view of the subsequent decision of the Hon’ble Supreme Court in the case of ACG Associated Capsules P Ltd Vs. CIT [2012 (2) TMI 101 - SUPREME COURT OF INDIA ] wherein held that ninety per cent of not the gross interest/rent but only the net interest/rent, which has been included in the profits of the business of the assessee as computed under the heads ‘PGBP’ is to be deducted under clause (1) of Explanation (baa) to Section 80HHC for determining the profits of the business, we set aside the order of Ld CIT(A) on this issue and restore the same to the file of the assessing officer with the direction to determine the interest income in terms of the decision rendered by the Hon’ble Supreme Court in the case of ACG Associated Capsules P Ltd (supra). Exclusion of 90% of the following Miscellaneous income while computing “Profits of business” for the purpose of computing deduction u/s 80HHC - Held that:- Ld CIT(A) was justified in holding that the Income - Deployment of P&M - Hire charges, Income from Time charter,Income - commission & Rent received represents independent source of income unconnected with the business activity of the assessee and hence 90% of the same is required to be excluded for arriving at the Profits of Business. In respect of remaining items of receipts i.e. penalty recovered from Contractors, Insurance claim received, Cash discount received, we notice that the following receipts arise out of business activities carried on by the assessee, i.e., they are not independent source of income and hence 90% thereof are not required to be excluded from the net profit in order to compute “Profits of business” in terms of Explanation (baa) to Sec. 80HHC of the Act. The remaining two items are Miscellaneous recoveries and Miscellaneous Income do not find the details relating to these two receipts accordingly we restore examination of these two items to the file of the assessing officer. Commission/surcharge paid to State Oil marketing Organisation (SOMO) of Iraqi Government Agency - CIT(A) deleted the addition - Held that:- The facts prevailing in the instant case show that the assessee has not made any payment directly to Iraqi Government. It has paid purchase price to its supplier M/s Alcon Petroleum Ltd. The Ld CIT(A) has given a categorical finding that there is no evidence or material to support the alleged payment of illicit commission/surcharge over and above the purchase price by the assessee to the Iraq Government. Further, as per the contract signed between the assessee and M/s Alcon Petroleum Ltd, M/s Alcon has also not paid any surcharge to Iraqi Government or their agency for procuring the crude oil. Hence, we are of the view that the Ld CIT(A) was justified in deleting this addition by holding that there is no material to support this addition. - Decided in favour of assessee.
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