TMI Blog2007 (12) TMI 169X X X X Extracts X X X X X X X X Extracts X X X X ..... short). By the said notice assessment for the assessment year 2001-02 is sought to be reopened. The petitioner has also challenged the order dated July 21, 2006, whereby the objections raised by the petitioner for reopening of the assessment have also been rejected. The petitioner ("the assessee" for short) is a multi-unit and multi-product company engaged in the business of manufacturing, trading and exports of animal feeds and marketing of pesticides, plant growth regulator etc. The assessee has more than 10 units located at different parts of the country manufacturing various products. For the assessment year 2001-02, return of income was filed by the assessee on November 30, 2001, declaring gross total income of Rs. 2,73,15,648. In the return of income, the assessee had claimed deduction under section 80-IB in respect of two units, one situated at Vijaywada and another known as Sachin Plant-II. The eligible profit of Vijaywada Plant computed by the assessee was Rs. 3,86,52,957 and deduction under section 80-IB (30 per cent. of 3,86,52,957) claimed was at Rs. 1,15,95,887. Similarly, the eligible profit of Sachin Plant-II computed by the assessee was Rs. 1,18,29,143 and ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Supreme Court in the case of IPCA Laboratory Ltd. [2004] 266 ITR 521 and also when read with section 80-IA(9) of the Act, keeping in view that after considering the profits of units for which deduction under section 80-IB has been claimed, the assessee-company will be left with negative profit. The assessee-company had claimed deduction under section 80HHC of Rs. 14,23,970. Of this Rs. 50,124 pertains to manufacturing exports and Rs. 13,73,846 pertains to trading exports. As per annexure 1.4 to return of income of the assessee for the assessment year 2001-02, the assessee has profits from manufacturing export activity of Rs.255,98,340.80. Similarly, the assessee has profits from trading exports activity of Rs. 17,17,307. Thus, the assessee has profits from both manufacturing export activity as well as trading export activity. The principle laid down by the hon'ble Supreme Court in the case of IPCA Laboratory Ltd. [2004] 266 ITR 521 is that if the assessee has loss from one export activity and profit from another, such profits should be netted against the losses, and section 80HHC can only be claimed on the net figure. Further, the assessee has claimed excess depreciation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , in the reasons recorded for reopening the assessment, the Assessing Officer has admitted that the assessee has profits from both the manufacturing export activity as well as trading export activity. Once it is admitted that the assessee has profits from the export activities, there being no loss from export activity, the question of deducting any loss from the export activity as held by the apex court in the case of IPCA Laboratory Ltd. [2004] 266 ITR 521 does not arise. Accordingly, Mr. Pardiwala submitted that reopening of the assessment relying upon the decision of the apex court in the case of IPCA Laboratory Ltd. [2004] 266 ITR 521 is wholly misconceived. Mr. Pardiwala further submitted that reopening of the assessment based on the construction of section 80-IB(13) read with section 80-IA(9) is also without any merit because, in the present case, it is admitted by the respondents in their affidavit in reply that the assessee had not exported goods manufactured in the industrial units eligible for deduction under section 80- IB. Once it is admitted that the goods manufactured in the industrial units eligible for deduction under section 80-IB have not been exported, then sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s petition. We have carefully considered the rival submissions. In the present case the Assessing Officer has invoked the jurisdiction to reopen the assessment for the assessment year 2001-02 within four years from the end of the relevant assessment year, because, firstly, there was negative profit and, therefore, in the light of the decision of the apex court in the case of IPCA Laboratory Ltd. [2004] 266 ITR 521 no deduction was permissible under section 80HHC. Secondly, in the regular assessment the Assessing Officer failed to consider section 80-IB(13) read with section 80-IA(9) of the Act. If that provision was considered, there would be negative profit and in that event deduction under section 80HHC would not have been allowed in the regular assessment. The contention of the Revenue that in the present case, there is negative profit from the export activity is wholly misconceived, because, in the reasons recorded for reopening the assessment, the Assessing Officer has clearly recorded that the assessee has profits from the manufacturing export activity as well as profits from the trading export activity. In view of the categorical finding recorded by the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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