2010 (4) TMI 206 - BOMBAY HIGH COURT

Reopening of an completed assessment – income escaping assessment – reason to belief - assessment was reopened on four grounds – (i) adjustment of loss sustained by the Plantation division – Held that: Assessing Officer, while issuing a notice for reopening the assessment observed that the provisions of Rule 8 are applicable “only in the case of income” and the claim of the assessee to set off 40per cent. of losses against normal business profits could not be allowed. – view of AO is not correct and assessee is eligible to adjust loss – (ii) Computational Error in the Assessment Order – Held that: in this case the Revenue has an efficacious remedy open to it in the form of a rectification under Section 154 for correcting the computational error and that consequently recourse to the provisions of Section 147 was not warranted. – (iii) The investment under Section 54EC - For the purposes of the provisions of Section 54EC, the date of the investment by the assessee must be regarded as the date on which payment was made and received by the National Housing Bank (Not the date on which certificate was issued). This was within a period of six months from the date of the transfer of the asset. Consequently, the provisions of Section 54EC were complied with by the assessee. There is absolutely no basis in the ground for reopening the assessment. – (iv) - The loss incurred by the eligible unit under Section 10B: - All the four units of the assessee were eligible under Section 10B. Three units had returned a profit during the course of the assessment year, while the Crab Stick unit had returned a loss. The assessee was entitled to a deduction in respect of the profits of the three eligible units while the loss sustained by the fourth unit could be set off against the normal business income. In these circumstances, the basis on which the assessment is sought to be reopened is contrary to the plain language of Section 10B. – Notice issued u/s 148 set aside