TMI Blog2008 (5) TMI 327X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. 5. Without prejudice to the above the CIT(A) erred in rejecting the proposal for enhancement made by the AO in the course of appeal proceedings for withdrawing the entire deduction under s. 80-I of the IT Act as there was loss of business of Rs. 4.12 crores in the relevant year." 2. At the outset the learned counsel for the assessee submitted that the CIT(A) has not gone into the issue of reopening because he has allowed the appeal on merits. He referred to r. 27 of the ITAT Rules and submitted that the assessee has a right to agitate the issue regarding reopening of assessment. He submitted that in this case, original assessment was completed under s. 143(3) on 15th Feb., 1999. Later on a notice under s. 148 was issued on 25th Feb., 2003 which is clearly beyond four years from the end of the assessment year. Since there is no failure on the part of the assessee to disclose any material facts the reopening was not valid. In this regard he relied on the decision of Hon'ble Madras High Court in the case of CIT vs. Elgi Finance Ltd. (2006) 205 CTR (Mad) 241 : (2006) 286 ITR 674 (Mad) and in the case of CIT vs. Premier Mills Ltd. (2008) 296 ITR 157 (Mad). 3. The learned Dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urn under s. 139 or in response to a notice issued under sub-s. (1) of s. 142 or s. 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year." The above proviso clearly shows that if original assessment has been completed under s. 143(3) then such assessment cannot be reopened beyond four years unless and until there is a failure on the part of the assessee to disclose any material facts. Now, in the case before us the CIT(A) has reproduced the following computation of income: "4. Relief under s. 80-I: Facts in brief: Following computation statement was filed with the return of income. Income for income-tax 1996-97 assessment (revised) Rs. Net profit as per P L a/c 80,90,31,779 Add: Depreciation as per books 36,62,93,621 Donation considered separately 36,63,373 Amortisation of deferred revenue Expenditure 69,47,281 Gain on cancellation of foreign exchange forward contracts 32,620 Disallowances: Under r. 68 1,14,178 Under r. 6D 4,34,868 G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nil" -------------- The above clearly shows that particulars regarding dividends and short-term capital gain were clearly available before the AO during original assessment proceedings. The learned Departmental Representative has not brought any material fact before us which was not disclosed in the original return of income: This means that there is no failure on the part of the assessee to disclose any material fact relevant for the assessment. Therefore, once the assessment is completed under s. 143(3), the same was not available for reopening. The Hon'ble Madras High Court in the case of Elgi Finance Ltd. has held that: "When the factual finding was that the assessee company had fully and truly disclosed all material facts necessary for computing the depreciation allowance in the course of the original assessments completed under s. 143(3) itself, the period of limitation applicable to the reopening for these two years would be a period of four years prescribed in the proviso to s. 147. The reassessments for the asst. yrs. 1992-93 and 1993-94 were clearly barred by limitation." Again, in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ---------------- From the above it is clear that deduction has been restricted to Rs. 6,78,75,783 and that figure has been derived after reducing UTI dividend and interest from TNEB from the gross total income. 7. Before the CIT(A) it was mainly argued that once deduction was determined under s. 80-I, it can be restricted only to the gross total income and again the components of the income cannot be examined in terms of s. 80A(2) as well as s. 80B(5) of the Act. Reliance was placed on the decisions in the cases of CIT vs. Arvind Mills Ltd. (2001) 171 CTR (Guj) 362 : (2002) 254 ITR 529 (Guj); CIT vs. Visakha Industries Ltd. (2001) 171 CTR (AP) 300 : (2001) 251 ITR 471 (AP) and CIT vs. Panna Knitting Industries (2002) 175 CTR (Guj) 616 : (2002) 257 ITR 195 (Guj). The CIT(A), after examining these arguments, was of the view that once tax was determined under s. 80-I then while restricting the same in terms of s. 80A(2) as well as ss. 80AB and 80B(5) of the Act, again the components of gross total income could not be examined. Therefore, he allowed the deduction to the extent of Rs. 9.89 crores. 8. Before us, the learned Departmental Representative mainly su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is eligible for deduction under s. 80-I in respect of Shankar Nagar Unit to a sum of Rs. 11,38,03,622, the same was restricted to Rs. 6,78,75,183. It is quite clear that Shankar Nagar Unit was eligible for deduction and in that unit the total profit was Rs. 51,16,81,863 and deduction of Rs. 11,66,48,272 was worked out as under: Profit from Shankar Nagar Unit 51,16,81,863 Add: Certain items such as donations, disal1owab1es, entertainment, etc. 6,51,26,015 ------------ 57,68,07,878 Less: Other income, depreciation, profit on sale of assets etc. 18,79,80,303 ------------ 38,88,27,575 Sec. 80-I deduction 30% 11,66,48,272 Thus, it is clear from the above that even the business profit from eligible unit i.e., Shankar Nagar Unit was Rs. 38.88 crores. At this stage a sum of Rs. 18,79,80,303 being other income i.e., not derived from industrial underta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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