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2016 (11) TMI 1311 - ITAT HYDERABAD

2016 (11) TMI 1311 - ITAT HYDERABAD - TMI - Revision of order u/s 143(3) and also u/s 154 by a combined order u/s 263 - Held that:- The objection of the assessee, that the CIT ought to have passed independent and separate orders, is not sustainable because the order u/s 154 is only a rectification of a mistake apparent from record of an order passed under the provisions of the I.T. Act and therefore, forms part of the order which is rectified. The order u/s 154 has no independent existence and i .....

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covered against the assessee by the decision of the Coordinate Bench of this Tribunal in the case of My Home Power Ltd vs. Dy.CIT [2012 (11) TMI 288 - ITAT HYDERABAD] wherein the Coordinate Bench of this Tribunal has held that it is not a revenue receipt but is a capital receipt. Thus, while holding that such receipt is not eligible for a deduction u/s 80IA, the Tribunal has also held that the addition cannot be made as it is a capital receipt. Therefore, assessment order is clearly erroneous i .....

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,012 as unaccounted investment u/s 69 of the I.T Act. As seen from the table reproduced above from the CITís order u/s 263, the unaccounted income from remnant seed for the A.Y 2006-07 is ₹ 2,65,61,097, is included in the returned income of the assessee and further the addition of ₹ 2,07,32,443 is also made in the A.Y 2006-07. Therefore, if the same is brought to tax in the A.Y 2007-08 also because the assessee has offered it, it is clearly a double taxation of the same amount. We ha .....

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014 - Dated:- 18-11-2016 - Smt. P. Madhavi Devi, Judicial Member and Shri B.Ramakotaiah, Accountant Member For Assessee : Shri S. Rama Rao For Revenue : Shri J. Siri Kumar, CIT(DR) ORDER Per Smt. P. Madhavi Devi, J. M. All the above appeals are for the A.Y 2007-08. ITA No.968/Hyd/2011 is an appeal against the order of the CIT u/s 263 of the I.T. Act revising the assessment order u/s 143(3) of the Act while ITA No.969/Hyd/2011 is an appeal against the order of the CIT u/s 263 revising the order u .....

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d together and are disposed of by this common and consolidated order. Brief facts of the case leading to these appeals are as under: 2. The assessee is a company engaged in the business of seed production and also deriving income from lease rentals and renewable power generation. There was a search & seizure action u/s 132 of the I.T. Act in the case of the assessee s group of industries on 13.03.2007. Consequent to the search, a notice u/s 153A was issued to the assessee calling for various .....

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payments for the purchase of the above lands are all out of its unaccounted income from sale of remnant seeds. The AO brought the difference of the undisclosed income utilized for the purchase of the lands to tax as undisclosed income of the assessee. As regards the investment of unaccounted income is concerned, the assessee offered the same in the A.Ys 2006-07 and 2007-08 as under: A.Y Unaccoun ted sale of remnant seed as per seized document Unaccounted investment in land at Chennai and Hydera .....

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has held that the entire investment in the lands is made in the A.Y 2006-07 itself vide his order dated 31.12.2009. Similarly, vide order dated 31.12.2008, for the A.Y 2007-08, AO has treated a sum of ₹ 5,31,350 only as undisclosed income of the assessee on account of unaccounted cash payments for purchase of the land at Kandlakoya, Hyderabad. He did not make any further addition but accepted the unaccounted income declared by the assessee towards the investments in land at Ibrahimbagh and .....

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ssment order for the A.Y 2006-07. It was stated that since the AO was of the view that the said amount should be assessed in the A.Y 2006-07 itself, it was prayed that the same should be deleted from the assessed income for the A.Y 2007-08 as it amounts to double addition and that the assessment order should be modified accordingly. The AO, after considering the assessee s application, accepted the assessee s contentions and held that the amount of ₹ 1,68,48,000 returned/surrendered by the .....

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rder and observed that during the assessment proceedings u/s 143(3) of the Act, the AO has not considered that the assessee has also claimed profit from the sale of carbon credit as the deduction u/s 80IA of the Act, though the said profit is not derived from the industrial undertaking. He further observed that during the assessment proceedings for the A.Ys 2006-07 & 2007-08, the assessee has explained the source of unaccounted investments as the income from unaccounted sale of remnant seeds .....

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has escaped assessment. Thus, according to the CIT, the assessment order is both erroneous and also prejudicial to the interests of the Revenue. He accordingly issued a show cause notice to the assessee and the assessee submitted its written submission to the CIT. However, the CIT was not convinced with the assessee s contentions and directed the AO to complete the assessment for the A.Y 2007-08 afresh after giving the assessee a fair opportunity of hearing. Against this order of the CIT revisin .....

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before making the final assessment and also while passing the order u/s 154 of the Act. Thus, according to the learned Counsel for the assessee, the assessment order cannot be termed as erroneous and hence is not revisable u/s 263 of the I.T. Act. It was submitted that a detailed note on taxability of the receipts on sale of carbon credits was submitted to the AO during in the course of assessment proceedings and all the facts pertaining to it were explained to the AO and the AO after examining .....

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oney was later sent to them from Hyderabad through Angadias. It was submitted that since the AO has held that the entire investment in land was made during the previous year relevant to A.Y 2006- 07 itself, and since the assessee has offered the income from the sale of remnant seeds in the return of income for A.Y 2007-08 as well, not reducing the same from the assessed income for A.Y 2007-08 results in nothing but double addition which was rightly rectified by the AO during the 154 proceedings. .....

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ted the orders of the authorities below on the maintainability of the combined order of the CIT and also on the merits of the said order. 6. Having regard to the rival contentions and the material on record, we find that the CIT has revised the order u/s 143(3) and also u/s 154 of the Act by a combined order u/s 263 of the Act. The objection of the assessee, that the CIT ought to have passed independent and separate orders, is not sustainable because the order u/s 154 is only a rectification of .....

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ngle order. Ground of appeal No.2 is accordingly dismissed. 7. As regards Ground No.4 with regard to entitlement of the assessee for claiming deduction u/s 80IA of the Act in respect of the receipts from the sale credit of carbon credits, we find that the CIT has held that the same is not allowable as a deduction u/s 80IA as it is not derived from an industrial undertaking. As far as this issue is concerned, we find that the allowability of the deduction u/s 80IA in respect of receipts from the .....

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order is clearly erroneous in so far as allowing the deduction u/s 80IA is concerned. But since it is held to be a capital receipt and cannot be brought to tax, it is not prejudicial to the interest of the Revenue. 8. The other ground on which the assessment has been revised, is that the unaccounted income from the sale of remnant seed of ₹ 2.89 crores, has escaped assessment by virtue of the rectification order passed u/s 154 of the Act. It is the case of the assessee that the assessee ha .....

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made in the A.Y 2006-07 itself, not making any adjustment to the unaccounted income from the sale of remnant seeds in the A.Y 2007-08 also, will result in double taxation. The assessee has also filed a copy of the assessment order for A.Y 2006-07 wherein at page 10 of the assessment order, the AO has observed that the unaccounted investments in land made by the assessee is quantified during the year 2005-06 relevant to the A.Y 2006-07, since the assessee company has paid the cash and got the lan .....

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e returned income of the assessee and further the addition of ₹ 2,07,32,443 is also made in the A.Y 2006-07. Therefore, if the same is brought to tax in the A.Y 2007-08 also because the assessee has offered it, it is clearly a double taxation of the same amount. We have gone through the annual report of the assessee and find that this sum of ₹ 2.07 crores is included in the returned income of the assessee for the A.Y 2007-08. The AO has considered the issue at length and thereafter a .....

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560 as revenue receipt without considering the fact that the said receipt is a capital receipt . As far as this ground is concerned, we have already held that though the assessment order is erroneous, it is not prejudicial to the interests of the Revenue as the receipt from the sale of carbon credits of ₹ 13,39,54,560 being a capital receipt is not taxable. Therefore, the direction of the CIT to tax the receipt as revenue receipt is not sustainable in view of the decision of the Coordinate .....

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