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TMI Blog2018 (2) TMI 1756X X X X Extracts X X X X X X X X Extracts X X X X ..... ar ground which can be raised along with Form No.36. Therefore, the rectified revised grounds filed on 21.12.2015 are only considered as regular grounds for adjudication of the assessee's appeal. The grounds raised therein are reproduced hereunder for the purpose of ready reference: "1. The Assessing officer and CTT(A) has contrary to the provisions of section 80AB of the Income Tax Act, 1961 on a fictional basis adjusted the past losses and unabsorbed depreciation of the Midnapore unit from the current years eligible income of the Midnapore unit included all the Gross Total Income of the appellant computed according to the provision of the Income Tax Act, 1961 2. Your Appellant submits that Rule 18BBB had been complied with and the separate profit and loss Accounts and Balance Sheet of the undertaking has accompanied with the form 10CCB and the same should have been accepted by the Assessing Officer as well as the CTT(A) and allowed the deduction under Section 80IB of the Income Tax Act, 1961 3. Your Appellant Submits that the assessing officer has erred in making the assessment u/s. 148 of the Income Tax Act, 19610n a basis different from the reasons given while issuance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment year commencing with 1.4.2003, but the assessee has claimed deduction for the first time in the A.Y 2005-06. The AO therefore, asked the assessee to file proof of starting production of the Midnapore Unit. The assessee submitted that the production has already commenced during the financial year 2002-03 as mentioned in the annual report of the company for A.Y 2002-03 but that the claim is being made for the first time during the A.Y 2005-06. 4. While considering the assessee's claim of deduction, the AO observed that the assessee has not filed the details as per Rule 18BBB of the I.T. Rules r.w.s. 80IB and 80IA of the I.T. Act, which mandates that the assessee should furnish the audit report in support of its claim of deduction u/s 80I or section 80IA/80IB/80IC for the eligible unit separately and accordingly issued a notice to the assessee to furnish the same. In response to the notice, the assessee filed a separate P&L A/c and balance sheet of Midnapore Unit from inception. The AO noticed that such separate P&L A/c and Balance Sheet were not signed by the Chartered Accountant who has certified the Form 10CCB dated 27.10.2005 but that they were signed by the Authorized ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Hon'ble Madras High Court in the case of CIT vs. M/s.TTK Pharma Ltd (Tax Case Appeal) No.298 of 2004 dated 23.12.2009 ii) Hon'ble Madras High Court in the case of Carborundum Universal Ltd vs. JCIT (59 Taxmann.com 435)(Mad.) iii) Hon'ble Supreme Court in the case of CIT vs. GK Knitting Industries (P) Ltd (2016) 71 Taxmann.com 35 (SC). 8. Further, the learned Counsel for the assessee also drew our attention to the information called for by the AO vide letter dated 13.06.2008 after passing of the order u/s 143(1) of the Act and assessee's reply dated 7.7.2008 giving the information called for. He submitted that after receipt of the above information only, the notice u/s 148 has been issued to the assessee, which is not sustainable as it is clearly on a change of opinion. Further, he also argued that proceedings u/s 148 cannot be issued without concluding the proceedings pursuant to notice dated 13.06.2008. 9. The learned DR, on the other hand, supported the orders of the authorities below and submitted that the assessee's objections have been rejected by the AO as it had been found that the income of the assessee has escaped assessment warranting the initiation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed. (3) The assessee company claimed deduction u/s.80G to the tune of Rs. 25,92,785 (50% of Rs. 42,68,285) towards donation. However, as per the assessment record donations to the tune of Rs. 37,91,OOO were allowed, which should actually be restricted to Rs. 25,92,785. Thus an amount of Rs. 5,50,000 short worked which needs to be brought to tax. In this connection you are requested to offer your explanation on the above observation immediately. Yours faithfully, Sd/- (M.Narmada) Asst. Commissioner of lncome tax Circle-3(3), Hyderabad(I/c)". 11. The assessee vide letter dated 7.07.2008 submitted the following reply: "Visaka Industries Ltd, Secunderabad Date: 07/07/2008 To Asstt. Commissioner of Income Tax Circle 3(3), Hyderabad Sir, Sub: M/s. Visakha Industries Ltd A.Y 2005-06 Ref: Your letter No.F.No.AAACV7263K/V/-02/HM No.28/2005-06 dated 13.06.2008 - Intimation u/s 143(1) Kindly refer to your notice wherein you have stated that the decision u/s 80IB(5)(ii) in respect of Midnapore Unit is to be disallowed. We submit that the basis on which such withdrawal is contemplated does not find any sanction under law. We submit that all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apure" Unit for the A.Y 2003-04 & 2004-05. The assessee company has 4(four) Units (1) Patancheru (2) Pasamathi (3) Midnapure (4) Textile Division (Nabpur) and in the previous year relevant to A.Y 2004-06 a new unit at Tumkur Karnataka came into existence. The assessee company had claimed deduction u/s 80IB(5)(ii) in respect of "Midnapure" unit at Rs. 2,96,87,778/- (100%) which was considered for deduction u/s 80HHC upto A.Y 2004-05. In view of the above stated position, the deduction u/s 80IB(5)(ii) in respect of "Midnapure" unit needs to be disallowed and brought to tax, as the said unit already claimed deduction u/s 80HHC and hence not a new industrial undertaking as per sub-section (2) of section 80IB. Thus, income chargeable to tax has escaped assessment by claiming excess deduction. 2. It was noticed from "schedule 15(12) expenditure in foreign currency" - page No.38 of Annual Report 23rd - 2004-05 that the assessee company made payments in foreign currency towards "interest" to the tune of Rs. 50.51 lakhs which attracts the provision of section 195 r.w.s. 40(a)(i) for non-deduction of tax at source. The 3CD report is silent regarding deduction of TDS on the payment made in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re-assessment proceedings after requiring the assessee to furnish the information. However, we also cannot consider the letter dated 13.06.2008 as a notice u/s 143(2) as 143(2) notice should have been issued before the expiry of 12 months from the end of the month in which the return is furnished and the AO could not have issued the notice u/s 142(1) once time period for issuance of notice u/s 143(2) has expired. Therefore, the letter dated 13.06.2008 cannot be considered as a notice either u/s 143(2) or u/s 142(1) of the Act and assessee's contention that the reassessment proceedings have been initiated when the assessment proceedings are pending is not substantiated. 14. Coming to the argument of the assessee that the reassessment is done on a ground which was not part of the reason for reopening, we find that out of the three reasons mentioned for reopening, the AO has made the disallowance of the deduction u/s 80IB(5)(ii), though on a ground different from the reasons mentioned for reopening of the assessment. When an assessment is reopened on any one ground which is sustained in the reassessment proceedings, the entire assessment is before the AO and he can consider any other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n'ble Apex Court, we hold that the assessee is eligible to claim deduction u/s 80IB of the Act for the first time during the A.Y 2005-06 without setting off the unabsorbed loss & depreciation of earlier A.Ys which has already been set off against profit of other business. 17. We find that the AO has disallowed the claim u/s 80IB also for the following other reason: i) That the assessee has not filed the copies of the P&L A/c and balance sheet for the Midnapore Unit as certified by the C.A. 18. As regards this objection of the AO, we find that the assessee has not filed a separate P&L A/c and the balance sheet of the Midnapore Unit certified by the CA for making the claim in Form No.10CCB of the Act. The learned Counsel for the assessee submitted that the profit declared by the assessee and claimed as a deduction in Form 10CCB as had been certified by the CA, is exactly the same as is claimed in the P&L A/c and balance sheet signed by the Authorized Signatory of the Company which has been filed before the AO during the re-assessment proceedings. Therefore, according to him, the insistence of the AO that such P&L A/c and balance sheet of the Midnapore Unit should be signed by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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