TMI Blog2011 (4) TMI 1441X X X X Extracts X X X X X X X X Extracts X X X X ..... 3(1), Mumbai. Subsequently, the assessment was reopened under s. 147 by issue of notice under s. 148, dt. 28th March, 2008 after recording the following reasons (p. 41 of paper book) : Reasons recorded for reopening of assessment under s. 148 : Return of income in this case was filed on 22nd Aug., 2000 declaring total income at Rs. nil. The assessment under s. 143(3) was completed on 15th March, 2002 at ₹ 18,16,24,390 under s. 115JB. In the normal computation of income, the assessee has been allowed deduction under s. 80-IA at ₹ 75,48,02,264 and under s. 80HHC at ₹ 3,33,55,624. As per s. 80-IA(9), which is reproduced here below states that : 'Where any amount of profit and gains of an undertaking or of an enterprise in the case of an assessee is claimed and allowed under this section for any assessment year, deduction to the extent of such profits and gains shall not be allowed under any other provisions of this chapter under the heading 'C' Deductions in respect of certain income and shall in no case exceed the profits and gains of such eligible business'' as the case may be.' In the case of the assessee after redu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has escaped assessment and accordingly we request your goodself to drop the assessment proceedings relating to reopening of assessment under s. 148 of the Act . However, the AO was of the view that for calculating deduction under s. 80HHC, the profits of the business is taken without deducting the amount of ₹ 75,48,02,264 (under s. 80-IA). If this amount is considered the profits of business will be a negative figure [(Rs. 52,26,61,946 ₹ 75,48,02,264) ₹ 23,21,40,323]. Accordingly, the deduction under s. 80HHC is not allowable to the assessee , and accordingly completed the assessment at an income of ₹ 1,82,83,180 vide order dt. 18th Sept., 2006 passed under s. 143(3) r/w s. 147 of the Act. 3. On appeal, the learned CIT(A) while quashing the notice issued under s. 148 and passing of under s. 143(3) r/w s. 147 has held vide para No. 3.6 of his order as under : 3.6 In view of the above submissions backed by incontrovertible facts and provisions of law, it is abundantly clear that no new information came into the possession of the ITO which leads him to believe that the income has escaped assessment. No such contention has also been raised or finding ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of hearing, the learned Departmental Representative while relying on the order of the AO and the learned CIT(A) very fairly submits that on merit, the issue is covered against the Revenue and in favour of the assessee by the decision of the Hon'ble jurisdictional High Court in the case of Associated Capsules (P) Ltd. vs. Dy. CIT (2011) 50 DTR (Bom) 65 : (2011) 237 CTR (Bom) 408: (2011) 332 ITR 42(Bom). He further submits that on the issue of proceeding under s. 148 of the Act, the AO while completing the original assessment has not considered the issue of allowability of deduction under s. 80HHC after reducing the profits allowed as deduction under s. 80-IA, therefore, it is not a case of mere change of opinion and therefore the AO was justified in reopening the assessment under s. 148 even after 4 years after taking administrative approval on 28th March, 2006. The learned Departmental Representative while referring to the decision of Hon'ble Supreme Court in the case of Addl. CIT vs. Gurjargravures (P) Ltd. 1978 CTR (SC) 1: (1978) 111 ITR 1(SC), the attention was drawn at page No. 4 of 111 ITR wherein their Lordships have extracted the meaning of consideration from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fit from power generating unit. He further submits that the above claim of the assessee was accepted by the AO in the assessment order passed under s. 143(3) dt. 15th March, 2002 vide para No. 27 of the assessment order wherein the AO after discussing the issue at page Nos. 30 and 31 of the assessment order has held that the admissible under s. 80HHC works out to ₹ 3,33,55,264 and therefore, the assessee is entitled for deduction under s. 80HHC as per cl. (viii) of Explanation below s. 115JA of the Act . He further submits that since the assessee has filed complete details which has been duly examined by the AO, there was no failure on the part of the assessee and, therefore, notice issued by the AO under s. 148 dt. 28th March, 2006 is beyond the period of 4 years and hence not valid in law. The learned counsel for the assessee further submits that the issue is squarely covered in favour of the assessee by the decision of the Hon'ble jurisdictional High Court in Godrej Agrovet Ltd. vs. Asstt. CIT (2007) 207 CTR (Bom) 593: (2007) 290 ITR 252(Bom) wherein it has been held that reassessment initiated due to failure on the part of the AO to consider the effect of s. 80-IB(13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le jurisdictional High Court in the case of Associated Capsules (P) Ltd. (supra) wherein it has been held (p. 43 of headnote) : Held accordingly that the Tribunal was not right in holding that s. 80-IA(1) of the Act, mandates that the amount of profits allowed as deduction under s. 80-IA(1) of the Act have to be reduced from the profits of the business of the undertaking while computing deduction under any other provisions under heading C in Chapter VI-A of the Act. 8. We further find that in Godrej Agrovet Ltd. vs. Asstt. CIT (supra) it has been held (p. 253 headnote) : Held, that the fact that some of the units of the assessee were incurring losses had no relevance for computation of deduction under s. 80HHC. Admittedly, there were profits from the export activity and, therefore, deduction granted under s. 80HHC could not be faulted. It was admitted that the assessee had not made exports of the goods manufactured in the industrial units eligible for deduction under s. 80-IB. If the goods manufactured in the units availing of deduction under s. 80-IB were not exported, then obviously the goods manufactured in those units would not be taken into account for computati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 147 of the Act (w.e.f. 1st April, 1989), they are given a go-by and only one condition has remained, viz., that where the AO has reason to believe that income has escaped assessment, confers jurisdiction to reopen the assessment. Therefore, post-1st April, 1989, power to reopen is much wider. However, one needs to give a schematic interpretation to the words 'reason to believe' failing which, we are afraid, s. 147 would give arbitrary powers to the AO to reopen assessments on the basis of 'mere change of opinion', which cannot be per se reason to reopen. We must also keep in mind the conceptual difference between power to review and power to reassess. The AO has no power to review; he has the power to reassess. But reassessment has to be based on fulfilment of certain preconditions and if the concept of 'change of opinion' is removed, as contended on behalf of the Department, then, in the garb of reopening the assessment, review would take place. One must treat the concept of 'change of opinion' as an in-built test to check abuse of power by the AO. Hence, after 1st April, 1989, the AO has power to reopen, provided there is 'tangible material&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the second part deduction to the extent of profits and gains allowed under s. 80-IA(1) shall not be allowed under any other provisions under heading C of Chapter VI-A of the Act , we find that the Hon'ble jurisdictional High Court after reproducing the relevant s. 80-IA(9) at placitum 29 of p. 51 of 332 ITR has discussed the same at length in placitum 30 onwards and decided the issue against the Revenue and in favour of the assessee, therefore, the plea taken by the learned Departmental Representative that second part of the section has not been considered by the Hon'ble jurisdictional High Court is devoid of any merit and therefore the decision in Aswini Kumar Ghose (supra) relied upon by the learned Departmental Representative is also distinguishable and not applicable to the present case. 15. Further in National Textile Corporation Ltd. (MP) vs. CIT (2008) 216 CTR (MP) 153: (2008) 5 DTR (MP)117, it has been held that the Tribunal has to follow the decision of the Hon'ble jurisdictional High Court without making any comment upon the said decision; it is not permissible for the Tribunal to sidetrack and/or ignore the decision of the Hon'ble jurisdictional Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... must carefully try to ascertain the true principle laid down by the decision. 19. In the light of the ratio of the above decisions referred in paras 16 to 18 of this order, we observe that the learned Departmental Representative while relying on the decision in Gurjargravures (P) Ltd. (supra) has not considered the principle laid down by the Hon'ble apex Court in Sun Engineering Works (P) Ltd. (supra) and the observations of the Hon'ble Supreme Court in Jute Corporation of India Ltd. (supra) and in National Thermal Power Co. Ltd. (supra), therefore, the reliance placed by the learned Departmental Representative is misplaced, devoid of any merit and hence rejected. 20. We further find that the learned CIT(A) also held that since the assessment has been quashed, the matter does not require separate consideration. We find that the above view is covered by the decision of the Special Bench of the Tribunal in Colonisers vs. Asstt. CIT (1993) 45 TTJ (Hyd)(SB) 114: (1992) 41 ITD 57(Hyd)(SB) followed in the assessee's own case for asst. yr. 1994-95 in ITA No. 233/Mum/2004 (supra) wherein it has been held that under these circumstances, the issue on merit does not requi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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