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TMI Blog2009 (6) TMI 575X X X X Extracts X X X X X X X X Extracts X X X X ..... as held that "having accepted interest income as part of the business profits, the same could not be excluded from business profits, while calculating deduction under section 80HHC of the Income-tax Act", which is not the question involved in the present case ? (3) Whether the Income-tax Appellate Tribunal ought to have held that the order passed by the Assessing Officer allowing deductions under section 80HHC(1) and (1A) of the Income-tax Act, by not excluding certain receipts from the business profits under Explanation (baa) to section 80HHC(4C), is prejudicial to the interest of the Revenue and therefore the Commissioner was justified in revising the same under section 263 of the Income-tax Act ?" 2. The facts, in brief, are that the assessee a partnership firm engaged in the business of manufacture and sale of processed ore, filed a return for the assessment year 1993-94 and claimed deduction under section 80HHC of Rs. 2,13,98,095. The Assessing Officer finalised the assessment under section 143(3) of the Act on November 30, 1995. In this order, he has considered the truck lease income of Rs. 18,58,810, machinery lease income of Rs. 3,95,500 and service charges of Rs. 30,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontractor v. Gujarat Electricity Board [1972] 4 SCC 764 and a Division Bench judgment of this court in Inventors Industrial Corporation Ltd. v. CIT [1992] 194 ITR 548 (Bom) to state that the issue which goes to the root of jurisdiction can be raised at any point of time. He points out that in R. J. Singh Ahluwalia (supra) before the hon'ble apex court, a point not raised earlier before any of the lower courts was allowed to be raised and as sanction was found to be invalid, the conviction and sentence was set aside. He further states that the said judgment has been followed by the Division Bench of this court in Inventors Industrial Corporation Ltd. v. CIT [1992] 194 ITR 548 (Bom). Therein the ground going to the very root of the matter and challenging the jurisdiction of the Income-tax Officer to make reassessment was allowed to be raised for the first time in the second round of appeal against the order of the Income-tax Officer based on version. In this background, he invites our attention to the judgment of this court in CIT v. Design and Automation Engineers (Bombay) (P.) Ltd. [2008] 13 DTR (Bom) 145 ; [2010] 323 ITR 632 to urge that when two views of the matter are poss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee can argue the said substantial question of law. A perusal of the order passed by the revisional authority clearly shows that the said authority has found that income under the above three heads could not have been retained as business receipts and, therefore, was not operational income. It is apparent that if income under the three heads is not operational income, the same needs to be treated in the manner as stipulated in section 80HHC(4C), Explanation (baa)(1). The Commissioner of Income-tax, therefore, is justified in recording that the treatment accorded to the said income by the Assessing Officer is erroneous and has prejudiced to the Revenue. 7. The ingredients of section 263 are, therefore, satisfied in the matter and it cannot be said that recourse to section 263 was misconceived. No substantial question of law, therefore, arises. As we are not framing any substantial question under section 263, the other arguments advanced by the respective counsel need not be considered at this stage. 8. Mere perusal of the impugned order of the Income-tax Appellate Tribunal is sufficient to show that the Income-tax Appellate Tribunal, after mentioning the facts, has found that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lief under section 80HHC of the Act, was, therefore, not required to be gone into. In the present matter, the treatment given to expenditure included under three heads, namely, truck lease income, machinery lease income and service charges has been corrected by the Commissioner of Income-tax in revision with the specific finding that said income did not constitute a business receipt. Hence, unless and until the Income-tax Appellate Tribunal in appeal found that profits from these three activities constituted business receipt or operational income, it could not have allowed the appeal filed by the assessee before it. This aspect is not gone into at all by the Income-tax Appellate Tribunal and mechanically the judgment in the case of Alfa Laval India Ltd. v. Deputy CIT [2004] 266 ITR 418 (Bom) has been followed, though it is not applicable. 9. In these circumstances, the present tax appeal filed by the Department needs to be allowed. But, instead of remanding the matter back to Income-tax Appellate Tribunal, we find it proper to place the matter before the Commissioner of Income-tax to appropriately evaluate and consider the contention of the assessee that the said receipts were ope ..... X X X X Extracts X X X X X X X X Extracts X X X X
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