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2016 (12) TMI 446 - ITAT COCHIN

2016 (12) TMI 446 - ITAT COCHIN - TMI - Revision u/s 263 - computation of deduction u/s 10B - Held that:- Admittedly, in this case, the assessee has computed the deduction u/s 10B before reducing the brought forward loss and unabsorbed deprecation. The said computation of the assessee is against the judgment in the case of CIT vs Patspin India Ltd [2011 (9) TMI 276 - KERALA HIGH COURT]. Against the judgment of the Hon’ble jurisdictional High Court in the case of CIT vs Patspin India Ltd,, a revi .....

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u/s 10B by the assessee, is erroneous and the CIT is justified in invoking his revisionary jurisdiction u/s 263 of the Act. - Decided against assessee - ITA No 203/Coch/2016 - Dated:- 9-11-2016 - SHRI B P JAIN, AM AND GEORGE GEORGE K, JM For The Assessee : Sh K M Jose For The Revenue : Sh Shamtom Bose, CIT-DR ORDER PER GEORGE GEORGE K,JM: This appeal, at the instance of the assessee, is directed against the CIT s order passed u/s 263 of the I T Act (order dated 24.3.2016). The relevant assessmen .....

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s had been submitted at the time of assessment and therefore does not become eligible for proceedings under section 263 of the Income Tax Act, 1961. 2. Serial no. ii, of the Notice under section 263 says that "Amount of deduction to be allowed under section 10B was not verified by the Assessing Officer". It is respectfully submitted that all the related details/documents had been submitted at the time of assessment and the Officer had verified all the relevant documents for quantifying .....

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ng Officer and was verified by him and there is no income which has escaped assessment. This is also a change of opinion and therefore does not become eligible for proceedings under section 263 of the Income Tax Act, 1961. 4. Excess deduction in serial No. iii is only a mistake apparent on the record as all the documents were produced and submitted before the Assessing Officer at the time of hearing during the assessment proceedings and it is therefore only a mistake apparent on record to be rec .....

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ee, for the assessment year 2011-12 had filed return of income on 27.9.2011 declaring nil income. The assessment u/s 143(3) was completed vide order dated 23.1.2014. 3.1 Subsequently, the CIT, invoking his revisionary powers, issued notice u/s 263 of the Act, as according to him, the order of the assessment completed on 23.1.2014 is erroneous and prejudicial to the interest of the revenue for the following reason: 1. Allowing depreciation after deduction u/s 10B has resulted in excess disallowan .....

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ssee filed objections to the proposed revision. The CIT, however, rejected the objections raised by the assessee and passed order u/s 263 of the I T Act, setting aside the assessment order passed u/s 143(3) dated 23.1.2014. The CIT directed the Assessing Officer to re-examine the issues mentioned in para 3 of the impugned order. The relevant findings of the CIT, read as follows: 3. I have considered the contentions of the assessee. Section 10B says that deduction u/s 10B shall be allowed from th .....

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duction u/s 10B is at par with any expenditure is not acceptable. The assessee has computed the total income after deducting profit from 10B from gross profit rather than from total income. The total income has to be taken as a figure as mentioned in the Act. While claiming the deduction u/s 10B as an expenditure the assessee has reduced his gross profit and thereby was able to make a higher claim which is not due to it. The correct procedure will be to compute total income of the assessee as pe .....

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14 on the above said limited issues. The Assessing Officer is directed to re-examine the facts of the case on the line discussed above and pass an order as per the provisions of the Income-tax Act 1961, after giving ample opportunity of being heard to the assessee. 4 The assessee being aggrieved is in appeal before us. The ld counsel for the assessee filed written arguments, which are reproduced here for ready reference: With respect to the appeal filed by the appellant Akay Flavours and Aromati .....

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Seide (286 ITR 255) 1.1.1 The above decision is rendered in respect of the assessment year 1994-95 which is prior to the amendment of section 10B with effect from the assessment year commencing on 1st April 2001 whereby the allowance contemplated prior III the amendment has been now made a deduction from the profits or the undertaking. 1.2 Section 10B is in Chapter III of the Act which deals with Income which do not form part of the Total Income and contemplates a specific deduction for a speci .....

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so submitted that a plain reading of the return or income in Form ITR-6 applicable for Companies in respect of the assessment year 2011-12 under schedule BP(page 12), the profit of the business is quantified under serial no..34 (page 13) and the deduction under section 10B is allowed under serial no. 35 (page 13) to arrive at the net profit or loss from business or profession under serial no.A37. 1.5 This resultant profit or loss is taken under serial no. 2(i) (page 10) under Part TI for computi .....

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e above order of computation of the taxable income as detailed in ITR-6 as prescribed under the Income Tax Rules 1962 is binding on the Assessing Officers and is the correct method to be followed to computing the taxable income. 1.8 The above view has been confirmed in several decisions, a few of which are listed below: 1. Kanataka High Court in CIT & Another v. Yokogawa India Ltd & Others (341 ITR 0385) 2. The Bombay High Court in ClT v. Black & Veatch Consulting Pvt Ltd. (348 ITR 0 .....

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be adopted. Therefore any view taken by not allowing the whole of the deduction under section 10B of the eligible unit would result in a violation of the provisions of the Income Tax Rules, 1962 and would rend r such assessment or an interpretation thereof as bad in law. 1.10 The Assessing Officer has made the computation of the deduction under section 10B in accordance with law and the stand now taken for the issue of the Order under section 263 is only a change of opinion and does not fulfill .....

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High Court in Commissioner of Income Tax v. Design & Automation Engineers (Bombay) (P) Ltd: ((2010) 323 ITR 0632 (Pages 14 to 17 of the Paper Book) 2. It is not correct on the part of the Principal Commissioner of Income Tax to come to the conclusion that the deduction under section 10B was not verified by the Assessing Officer. 2.1 It is respectfully submitted that all the relevant documents relating to the claim of the Assessee under the section 10B was filed before the Assessing Officer .....

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. 2.3 Reliance is placed on the decisions of 1. ITAT Kolkata (C) Bench in Maithan International v. Assistant Commission r or Income Tax ((2012) l34 ITD 0393 (page 18 to 27 of the Paper Book 2. Delhi High Court In Commissioner of Income Tax v. Ashish Rajpal (320 ITR 0674) (Pages 28 to 39 of the Paper Book) 3. The serial no. iv of the Order under section 263 deals with non-reconciliation of TDS Certificate and Income Credits in the Books. 3.1 It is the respectfully submitted that there is no escap .....

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e warranting proceedings under section 263. 4. With regard to the excess deduction under section 35(2AB) mentioned in the serial no. iii of the Order under section 263, 4.1 It is Submitted that all the relevant documents with regard to the eligible claims and the approval (Pages 73 to 75 of the Paper Book) was filed with the assessing officer during the assessment proceeding are verified by him. 4.2 The Excess deduction under section 35(2AB) is only a mistake apparent on the record to be rectifi .....

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