TMI Blog1992 (4) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... d on the basis of the calculation made in the returns of income. To clarify the matter further, interest income was also a part and parcel of the computation of the said deduction. 3. The ITO subsequently opined that excess deduction under section 80HH had been allowed to the assessee since income on account of interest had to be excluded as the same was taxable under the head " Income from other sources " and not under the head " Business ". He, accordingly, issued notices under section 148 on 30-3-1985 for the assessment year 1976-77 and on 15-3-1985 for the assessment year 1982-83. 4. In response to the aforesaid notices, the assessee filed returns of income for both the years once again on the same lines on the basis of which the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aspects of the matter as also the relevant provisions, the ITO withdrew the 'excess deduction' allowed under section 80HH of the Income-tax Act, 1961 in the original assessments. 6. Being aggrieved with the orders passed by the ITO, the assessee filed appeals before the CIT(Appeals). In the course of these proceedings, detailed arguments were advanced, but it would suffice if we summarise these as follows :--- (a) That reasons for initiation of reassessment proceedings were not made available in spite of a specific request. (b) That the assessee had furnished fully and truly all material facts necessary for completion of the assessments and there was no failure or omission on its part. (c) That although the quantum of income from in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... true information at the time of the original assessments. (4) That the ITO was fully justified in invoking the provisions of section 147(a) since the opinion originally formed by him was based on incorrect and incomplete particulars. (5) Although the assessee's stand had been accepted in the assessment years 1974-75 and 1979-80, the ITO was justified in taking a different view since the principle of res judicata did not apply. That apart, the provisions of section 80HH were absolutely clear, inasmuch as they provided for deduction at the rate of 20 per cent of the profits and gains derived from an Industrial Undertaking and this could not include income derived from any other sources such as interest. (6) That the alternative submiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. (iv) That the reopening itself was invalid, inasmuch as the ITO had not recorded any reasons, but had merely mentioned some calculations on the order-sheet. (v) That it was a case of 'change of opinion' on the same set of facts and, accordingly, not permissible. 8. As an alternative submission it was contended that the interest paid be adjusted against the income from interest while calculating the add back. In support of the aforesaid arguments, the learned counsel placed reliance on the following decisions :--- (1) Dunlop Rubber Co. Ltd. (London) v. ITO [1971] 79 ITR 349 (Cal.) (2) Genl. Mrigendra Shum Sher Jung Bahadur Rana v. ITO [1980] 123 ITR 329 (Delhi) (3) ITO v. Madnani Engg. Works Ltd. [1979] 118 ITR 1 (SC) (4) CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also in support of the order of the CIT (Appeals), the learned Departmental Representative placed reliance on the following decisions :-- (1) ITO v. Sudhir Kumar Bhose [1972] 84 ITR 60 (Cal.) (2) R.B. Ram Rattan Prem Nath v. CIT [ 1969] 71 ITR 624 (MI.) (3) Kantamani Venkata Narayana Sons v. First Addl. ITO [1967] 63 ITR 638 (SC). 10. In his short reply, the learned counsel stated that an assessee was bound to disclose the mere fact that it had earned interest and nothing more and it was up to the ITO to draw his own conclusions. As regards the question of res judicata, the learned counsel stated that there could be a departure only if fresh facts existed and which were not there in the other years. In support of the aforesaid s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts as compared to other years but there are none brought on record by the revenue. 14. The stand of the department is that there is no proper disclosure since the assessee has not shown interest income under the head " Income from other sources " in the returns of income. In our opinion, this view is incorrect as the assessee reflected interest income as a part of its business profits since that is what it had been consistently doing in the assessment years prior to assessment year 1976-77 as also those prior to assessment year 1982-83. As already stated earlier, the ITO had accepted assessee's viewpoint in some of the years under section 154 and the CIT(A) in 1979-80 in appellate proceedings. In our opinion, the assessee was not expect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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