TMI Blog2013 (9) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... , it is reasonable for the Assessing Officer to presume that the workings made to claim exemption under section 10B and deduction under section 80HHC in the two years under consideration would result in escapement of income. - reopening of the assessment is valid - Decided against assessee. Exemption u/s 10B - 100% EOU - Held that:- the relevant details, viz., whether the sale proceeds were received by way of foreign exchange or not, whether the assessee has received the drawback benefits, etc., are not available on record. In the absence of such details - factual details require verification at the end of the Assessing Officer. - matter remanded back. - - - - - Dated:- 28-9-2012 - Order The order of the Bench was delivered by B. R. Baskaran (Accountant Member).-All these three appeals are directed against the orders passed by the learned Commissioner of Income-tax (Appeals)-II, Kochi and they relate to the assessment years 1999-2000, 2000-01 and 2002-03. The assessee has filed appeals relating to the assessment years 1999-2000 and 2000-01 and the Revenue has filed appeal for the assessment year 2002-03. All these assessments were completed under section 147 read with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee is free to argue appeals on merit before the Tribunal. Accordingly, these appeals were posted for hearing and parties were heard. We shall first take up the appeal filed by the Revenue for the assessment year 2002-03. We have already noticed that the hon'ble jurisdictional High Court of Kerala has set aside the order passed by the learned Commissioner of Income-tax (Appeals) also for the assessment year 2002-03. To recapitulate, the learned Commissioner of Income-tax (Appeals) had set aside the assessment order on the legal ground that the reassessment notice was bad in law. However, before the hon'ble High Court, the assessee has conceded that the reassessment notice was issued by the Assessing Officer, only after the expiry of the time limit prescribed for issuing notice under section 143(2) of the Act. Hence the hon'ble High Court, while restoring the appeals to the Tribunal, also set aside the order of the learned Commissioner of Income-tax (Appeals) for this assessment year. Hence, in effect, the order of the learned Commissioner of Income-tax (Appeals) does not exist in the eye of law. In the absence of the order of the learned Commissioner of Income-tax (Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessed as income from other sources. (2) Interest on LERMS deposits is to be excluded from export turnover. (3) Gain on account of exchange fluctuation rate is to be excluded from export turnover. (4) Turnover of export oriented unit is to be included in the total turnover for computation of 80HHC. (5) CAPs Sea Foods Division (for which deduction under section 10B is claimed is fully by the funds transferred from the account of the parent unit including loans taken). So the full interest expense claimed by the assessee in the computation of chargeable income is to be disallowed as per section 14A. (6) Interest on income-tax refund is to be assessed. For the above reasons, I have reason to believe that income chargeable to tax has escaped assessment. Issue notice under section 148." According to the learned authorised representative, the reasons recorded by the Assessing Officer for both years are vague and the Assessing Officer has not given any specific finding. Thus, according to the learned authorised representative, the assessments for both years have been reopened only for conducting further enquiries, which shall not justify reopening. In this regard, the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disposed of. Now, we shall take up the grounds raised on merits for both assessment years. Ground No. 3 in both years relates to the claim of deduction under section 10B of the Act in respect of the profit relating to the 100 percent export oriented unit. The facts relating to the same are that the assessee is engaged in the business of export of marine products, either directly or through export houses. Exports are done from the head office at Cochin and also from CAPs Sea Food Unit (CAPs unit) located at a place called "Vypeen". The assessee claimed exemption under section 10B of the Act in respect of both units. The Assessing Officer took the view that the assessee can claim exemption under section 10B only if it undertakes direct exports and the said exemption cannot be allowed if exports are made through the export houses. Accordingly, he denied exemption claimed by the assessee under section 10B of the Act. The learned Commissioner of Income-tax (Appeals) also confirmed the view of the Assessing Officer. The learned authorised representative placed reliance on the decision dated August 20, 2010 of the hon'ble jurisdictional Kerala High Court passed in the assessee's own ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he record, are that the assessee claimed deduction under section 80HHC if the Act in respect of service charges also. The Assessing Officer treated the same as "other income" and proposed to exclude 90 percent thereof while computing "profits of business" as per Explanation (baa) to section 80HHC of the Act. The Assessing Officer treated a sum of Rs. 3,18,772 out of the service charges relating to the assessment year 1999-2000 as "income from other sources" for want of disclaimer certificates. The treatment made by the Assessing Officer can be summarised as under : Assessment year Service charges treated as other receipts Service charges treated as income from other sources (Rs.) (Rs.) 1999-2000 32,84,372 3,18,772 2000-01 11,36,995 In the appellate proceedings, the learned Commissioner of Income-tax (Appeals) noticed that the Assessing Officer did not exclude 90 percent of the service charges, as opined by him in the assessment order. Accordingly, he issued enhancement notice to the assessee. Before the learned Commissioner of Income-tax (Appeals), it was submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urces" and hence we are inclined to agree with the view taken by the learned Commissioner of Income-tax (Appeals). Ground No. 5 in both years relate to the validity of charging interest under section 234D of the Act. This issue has since been settled by the hon'ble Kerala High Court in the case of CIT v. Kerala Chemicals and Proteins Ltd. [2010] 323 ITR 584 (Ker). Accordingly, we set aside the orders of the learned Commissioner of Income-tax (Appeals) on this issue and restore the same to the file of the Assessing Officer with the direction to examine the issue of chargeability of interest under section 234D of the Act in accordance with the decision of the jurisdictional High Court referred supra. Ground No. 6 raised in the assessment year 1999-2000 relates to the chargeability of interest under section 234B of the Act. We set aside this issue also to the file of the Assessing Officer as it is consequential in nature. Ground No. 7 in the assessment year 1999-2000 and ground No. 6 in the assessment year 2000-01 are general in nature. In the written submissions, the assessee has stated that the interest received on fixed deposit amounting to Rs. 2,86,911 requires consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X
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