TMI Blog2009 (11) TMI 538X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-section (a) of section 80HHC of the Act, the assessee had not received sale proceeds in convertible foreign exchange within the time prescribed under section 80HHC(2)(a) of Act, on the sale of such goods exported out of India and found that the claim for deduction under section 80HHC which had been wrongly calculated and claimed which amounted to Rs.11,69,152 on which a tax liability off Rs. 7,42,075 had accrued and as such sought for rectification proceedings by issue of notice under section 154 of the Act and an order also came to be passed on August 31, 1998, under section 148 of the Act rectifying the original assessment order dated October 23, 1997. The assessee's claim before the Commissioner of Income-tax seeking for extension of time had been rejected on December 30, 1998. The assessee being aggrieved by the order of rectification filed appeal before the Commissioner of Income-tax (Appeals) and a revision before Commissioner of Income-tax, Karnataka-I. The appeal came to be withdrawn. This very order which was questioned by the assessee before the Commissioner of Income-tax in revision under section 264 of the Act, which authority by order dated December 30, 1998, canc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eering Works P. Ltd. [1992] 198 ITR 297 ?" 4. We have heard Sri M. V. Seshachala, learned counsel for the Revenue and Sri Kulkarni, learned counsel for the respondent/assessee. 5. Sri M. V. Seshachala appearing for the Revenue relies upon the judg-ment of CIT v. Sun Engineering Works P. Ltd. [1992] 198 ITR 297 drawing our attention to paragraph 25 to contend that in reassessment proceedings the assessee cannot claim recomputation of the income or redoing of assessment which had earlier taken place and accordingly seeks that the questions of law framed in these appeals be answered in favour of the Revenue. Per contra, Sri Kulkarni contends that it is no doubt true that in the original return of income filed the assessee had not claimed the benefit under section 10B of the Act. However, when the Assessing Officer sought to initiate and reopen the proceedings under section 147/148 of the Act, the assessee was fully justified in contending that the entire income of the assessee having been earned out of the 100 per cent. export oriented unit was exempt under section 10B of the Act and it does not prevent the asses-see from claiming the benefit accrued thereunder and he also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and as such deduction under section 80HHC(2)(a) of the Act was not allowed. It is precisely this amount which was the subject-matter of reopening the assessment and which was sought to be brought within the total turnover. In the reassessment proceedings, the assessee for the first time has taken up the contention that the entire income, viz., sale pro-ceeds received under section 80HHC was exempted from tax in view of section 10B. In fact, the assessee has made a claim in reply to the reas-sessment proceedings. However, the Assessing Officer rejected the same on the premise that it is impermissible to do so in view of Sun Engineering Works P. Ltd. [1992] 198 ITR 297. In. the said judgment, it is noticed by their Lordships that at paragraph 27 which reads as follows (page 321) : "Indeed, in the reassessment proceedings for bringing to tax items which had escaped assessment, it would be open to an assessee to put forward claims for deduction of any expenditure in respect of that income or the non-taxability of the items at all. Keeping in view the object and purpose of the proceedings under section 147 of the Act which are for the benefit of the Revenue and not an assessee, an ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... favour of the Revenue since the said ques-tion is concluded which encompasses within itself the entire income and hence we will have to clarify here that it is only escaped income which is the cause of action for issuing notice under section 148 which can be the subject-matter of consideration and the assessee would be fully justified in raising all such claims including the taxability of the income to the extent of reopening of assessment. Clarifying this aspect, we answer question No. 1 in the negative formulated hereinabove, i.e., in favour, of the Revenue, and against the assessee to the extent hereinabove. 11. In so far as question No. 2 is concerned, having perused the judgment of the hon'ble Supreme Court in Sun Engineering Works P. Ltd. case [1992] 198 ITR 297 we have no hesitation to hold that in a reassessment pro-ceedings which relate to the income which has escaped assessment where the assessee would be entitled to put forward the claims for deduction of any expenditure in respect of that income (that income which is referable to escaped income) and also about the taxability of items which were sought to be taxed in the reassessment proceedings only can be agitat ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
