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2015 (12) TMI 774 - CALCUTTA HIGH COURT

2015 (12) TMI 774 - CALCUTTA HIGH COURT - TMI - Rectification of adjustment made in intimation under section 143(1)(a) of the Income-tax Act, 1961, with regard to claim for deduction under section 80HHC - whether the Assessing Officer was justified in passing the order under Section 143(1)(a) with regard to the deduction under Section 80HHC? - Held that:- It is to be noted that Section 143(1)(a) empowers the Assessing Officer to compute the total income or loss after making adjustments, namely, .....

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hat there was reason to believe that the claim was inadmissible, he should have served notice on the assessee specifying the particulars of such claim or such loss or deduction or relief under Section 143(2) or if he had reason to believe that the income had escaped assessment should have served notice under section 148 of the Act. The Assessing Officer chose neither of the two avenues.

Thus the judgment of the Supreme Court in IPCA Laboratory Ltd. (2004 (3) TMI 9 - SUPREME Court ), .....

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under Section 148 of the Act, unlike the case in hand, where no such notice was issued. Therefore, the submission on behalf of the appellant cannot be accepted. - Decided in favour of the assessee. - ITA No. 304 of 2005 - Dated:- 26-11-2015 - Soumitra Pal And Mir Dara Sheko, JJ. For the Appellant Rep by: Mr M P Agarwal, Mr Arnab Chakraborty & Mr Kushagra Shah, Advs JUDGMENT Soumitra Pal, J. This appeal, relating to assessment year 1990-91, was admitted on the following substantial question o .....

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at is, the assessee, had filed its return showing an income of ₹ 97,310/- after claiming deduction of ₹ 36,51,903/- under Section 80HHC of the Income Tax Act, 1961. While processing the return under Section 143(1)(a) of the Act, the Assessing Officer computed income at ₹ 10,20,000/-. The assessee had profit of ₹ 42,68,504/- in the pipe division and a loss of ₹ 5,19,294/- in sheet division. The assessee had claimed deduction of ₹ 8,56,043/- under section 80HHC .....

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application under section 154 in this regard for rectification of the adjustment under Section 143(1)(a) was filed before Assessing Officer which was rejected. Aggrieved, the assessee preferred appeal before the CIT (A) which was allowed holding that the Assessing Officer was not entitled to make such adjustment under Section 143(1)(a). Against the order of the CIT(A), the Revenue preferred appeal before the Income Tax Appellate Tribunal which was dismissed. Against the order of the Tribunal, th .....

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adjusting the loss in different units, the Assessing Officer was justified in passing the assessment order under Section 143(1)(a) and thus the application under Section 154 was not maintainable. Mr. Arnab Chakraborty, learned advocate for the respondent relying on the order passed by the CIT(A) and the Tribunal submitted that the Assessing Officer was not justified in rejecting the application under Section 154. In order to appreciate the issue it is appropriate to refer to the relevant portion .....

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re turnover of the business (Pipe Division as well as Sheet Division) of the assessee firm and similarly combined profit was taken into consideration for the purpose of calculation of deduction u/s. 80HHC. I do not find any irregularities which may be rectified in the instant case. Therefore, petition u/s. 154 filed by the assessee firm has no merit and no rectification lies in the instant case. Hence the petition u/s. 154 is disposed of by denying any rectification of the total income processed .....

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so considering that this is a very old appeal it is being decided on the basis of facts and materials available on record. In this case the A.O. has recomputed the deduction claimed u/s. 80HHC and worked out the total income at ₹ 10,20,000/-. The A.O. has taken the entire turnover of the business and has taken the combined profit for calculation of deduction u/s. 80HHC. Identical issue was raised before the ITAT, Kolkata in the case of the Appellant for A. Yr. 1991-92. The ITAT observed th .....

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d the appeal. It directed the A.O. To recomputed the admissible deduction u/s. 80HHC. Considering the facts that this case is squarely covered by the decision of the ITAT, the appeal is allowed. The A.O. is directed to recompute the deduction u/s. 80HHC. For the statistical purpose the appeal may be treated as ALLOWED." As already noted, the Revenue being dissatisfied filed an appeal before the Tribunal. The Tribunal while dismissing the appeal and upholding the order of CIT(A) had passed a .....

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ng that reduction of relief under section 80HHC is not a matter to be covered by the provision of section 143(1)(a) of the Act. It is also seen that 143(1)(a) order was made on 24.09.92 when the situation with regard to the deduction u/s. 80HHC was debatable one. Therefore, the reduction of deduction under section 80HHC, while processing the return of income under section 143(1)(a), was beyond the A.O. s jurisdiction, and as such the same was rectified u/s. 154 of the A.O. Act. The Ld. CIT(A) ha .....

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ce within the provisions of law. But it is settled that it is not a matter to be covered under section 143(1)(a) of the Act, and as such he was required to rectify the same under section 154 of the Act by withdrawing the prima facie adjustment made by him to the returned income. The order of the ld. CIT(A) is modified accordingly. The order of ld. CIT(A) is, therefore, upheld for the reasons given by us. In the result, the appeal filed by the Revenue is dismissed." The real question is whet .....

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