TMI Blog2013 (1) TMI 287X X X X Extracts X X X X X X X X Extracts X X X X ..... ch is damaging to the revenue also, there are other sufficient indications in the reasons recorded that in the original assessment the entire issue was examined threadbare by the AO. To the extent he was convinced that the claim was exaggerated, disallowances were made. Thus perusing minutely the portion of the reasons recorded it becomes clear that the AO in the original assessment had examined the claim of the assessee pertaining to deduction u/s 80HHC at considerable length. Various aspects were gone into and disallowances to the extent found required were made. Quite apart from there being nothing on the record to suggest that the AO formed a belief that the income chargeable to tax has escaped assessment due to the reason of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer for reopening the assessment. Relevant portion of such reasons read as under:- Thereafter, a scrutiny of the assessment order against the background of the material available on record, including the submissions of the Assessee, revealed the following: The Assessee claimed deduction u/s. 80HHC of the I.T.Act at Rs.23,38,76,292/-. The AO restricted the deduction to Rs.21,83,49,539/-. This difference arose because the AO reduced 90% of the interest income, provisions written back, proceeds from sale of scrap and exchange gain. Such deduction amounted to Rs.2,37,90,110/-. The AO also reduced the gain on cancellation of forward currency contract of Rs.6,49,83,003/- and 90% of the export incentives of Rs.13,23,41,400/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DEPB was not to be included while adding back 90% of the export incentives in the ratio of the export turnover to the total turnover, to the profits of the business. In other words, the profits of the business ought to have been computed at Rs.64,15,41,324/- in place of Rs.72,78,31,796/-, which was the figure computed by the AO after adding the proportionate export incentives of Rs.8,62,90,472/-, inclusive of the DEPB. 30% of the profits of business of Rs.64,15,41,324/- works out to Rs.19,24,62,397/-. Therefore, the deduction u/s. 80HHC was allowed in excess by the sum of Rs.21,83,49,539 Rs.19,24,62,397 = Rs.2,58,87,142. Further, from the details of export incentives totaling Rs.13,24,41,400/-, as detailed above, it will be seen that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an the sum of Rs.16,19,01,763/- disclosed by the assessee. On the other hand, the loss of Rs.68,43,896/- could not be allowed to be adjusted if the assessee had not purchased and sold the credits but had only sold the credits that it had earned. In any case, the loss booked on valuation of DEPB 'Licenses' of Rs.2,27,16,467/- should have been allowed to be adjusted against DEPB income. This would mean that even without inquiring into the details of the income earned and the loss suffered from the alleged transfer of DEPB, the export incentives earned on account of DEPB would have to be adopted at Rs.13,23,41,400 + Rs.2,27,16,467 = Rs.15,50,57,867/-. Thus, notwithstanding the excess claim allowed by the AO on the basis of the submissions of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sides such observation which is damaging to the revenue also, there are other sufficient indications in the reasons recorded that in the original assessment the entire issue was examined threadbare by the Assessing Officer. To the extent he was convinced that the claim was exaggerated, disallowances were made. If one peruses minutely the portion of the reasons reproduced above, it becomes clear that the Assessing Officer in the original assessment had examined the claim of the assessee pertaining to deduction under section 80HHC of the Act at considerable length. Various aspects were gone into and disallowances to the extent found required were made. Quite apart from there being nothing on the record to suggest that the Assessing Officer fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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