TMI Blog2018 (12) TMI 763X X X X Extracts X X X X X X X X Extracts X X X X ..... CL was amalgamated with the assessee Company w.e.f. 01.01.1983. In such circumstances, we do not think that there could be any re-assessment made under Section 147, since then it would merely be a change of opinion as decided in ANDHRA BANK LIMITED VERSUS COMMISSIONER OF INCOME-TAX [1996 (5) TMI 3 - SUPREME COURT] - Decided in favor of assessee. Permissibly to rectification u/s 154 - deduction under Section 80HHC(1)(b) - Held that:- The business of HCL when amalgamated with MPL, continued as the trading division of MPL. For the 27 months comprised in the previous year to the relevant assessment year, the trading division had an export turnover of ₹ 35,31,66,651/- to which was added the export turnover of the business of MPL, which was also ITAs.87,102, 108 201/2002 -19- continuing, coming to ₹ 37,16,659/-. The total of ₹ 35,68,83,310/- was taken for deduction under Section 80HHC(1)(a) at 1%. Then, the total export turnover of MPL for the previous year relevant to the assessment year 1985-86 was taken from which was deducted the export turnover of MPL for the previous year to the previous year which was only ₹ 87,34,764/-. The balance of ₹ 34,81 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment was made for the assessment year 1985-86, the previous year had a total of 27 months from 01.01.1983 to 31.03.1985. The assessment is seen at Annexure-G. 3. A claim was made under Section 80HHC of the Income Tax Act, 1961 ( Act , for brevity), which was allowed. Later, a rectification was made under Section 154 by the Assessing Officer (AO), which is the subject of challenge in ITA No.102/2002. The rectification was on the premise that M/s.Harrisons Malayalam Limited, the new company formed, cannot be said to have a previous year to the previous year relevant for the assessment year 1985-86. In such circumstances, there could be no claim made under sub-Clause (b) of Section 80HHC(1) of the Act, since there is no previous year to the relevant previous year. The rectification went on the premise that M/s.Harrisons Malayalam Limited is a new Company which does not have a previous year to claim benefit under sub-Clause (b) of Section 80HHC(1) of the Act. Section 154 order dated 12.02.1992, which went up in appeal and second appeal, eventually has reached this Court in ITA No.102/2002. 4. Subsequently, a re-assessment under Section 147 was attempted by the AO by issuance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch circumstances, there could be only claim of 1% of the deduction of the export turnover of the new Company for the relevant previous year of the assessment year 1985-86 and no claim could be made of 5% differential turnover of the previous year and the previous year to the previous year as there being no previous year to the previous year. This is in support of the rectification under Section 154 of the Act. The learned Standing Counsel would also contend that, if at all, the rectification is not upheld, then the assessments under Section 147 could be upheld, since otherwise, the benefit claimed by the new Company would be excessive in nature. 7. Sri.Raja Kannan, learned counsel for the respondent-assessee would, however, point out that the rectification and the re-assessment proceedings are both taken on a wrong premise and on the misconception that on amalgamation a new Company was formed called M/s.Harrisons Malayalam Limited. The learned Counsel alertly points out the scheme of amalgamation which indicates that HCL got amalgamated into MPL. HCL is shown as the transferor Company and MPL as the transferee Company. Even going by the decision of the Honourable Supreme Court c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lieve that, by reason of the omission or failure on the part of an assessee to make a return under Section 139 for any assessment year to the Income-Tax Officer or to disclose fully and truly all material facts necessary for his assessment for that year, income chargeable to tax has escaped assessment for that year, or ( b) Notwithstanding that there has been no omission or failure as mentioned in clause (a) on the part of the assessee, the income-tax Officer has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of section 148 to 153, assess or re-assess such income or recompute the loss or the depreciation allowance, as the case may be, for the assessment year concerned (hereafter in sections 148 to 153 referred to as the relevant assessment year). Explanation. 1-For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely:- ( a) Where income chargeable to tax has been under-assessed; or ( b) Where such income has been assessed at too low a r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iced, the two Companies, HCL and MPL, when amalgamated; the former was amalgamated into the latter. What remained and existed after the amalgamation was MPL. Subsequent to the amendment, MPL requested for and obtained change of name as M/s.Harrisons Malayalam Limited, which is evidenced by the above extract. Hence, it cannot be said that M/s.Harrisons Malayalam Limited was a new Company incorporated on amalgamation. 15. We now look at the judgment of the Honourable Supreme Court in Saraswati Industrial Syndicate Ltd., wherein on identical facts one Company called Indian Sugar and General Engineering Corporation was amalgamated with Saraswati Industrial Syndicate Ltd. Indian Sugar and General Engineering Corporation, prior to its incorporation, had claimed a trading liability of ₹ 58,735/-. After amalgamation, in the next assessment year, the Revenue required Saraswati Industrial Syndicate Ltd. to bring to income, the said trading liability of the Company amalgamated. The Honourable Supreme Court found that it could not be done, since Indian Sugar and General Engineering Corporation ceased to exist after the amalgamation. We extract hereunder the reasoning on amalgamation, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of order. Rs.37,16,659/- Rs.35,68,83,310/- Less: FOB value of Export turnover of the Company for the year ending on 31.3.1984 Rs.87,34,764/- Rs.34,81,48,546/- 1% on ₹ 35,68,83,310/- Rs.35,68,833/- 5% on incremental turnover of ₹ 34,81,48,546/- Rs.1,74,07,427/- Rs.2,09,76,260/- 17. As pointed out by the learned counsel for the respondent-assessee, the business of HCL when amalgamated with MPL, continued as the trading division of MPL. For the 27 months comprised in the previous year to the relevant assessment year, the trading division had an export turnover of ₹ 35,31,66,651/- to which was added the export turnover of the business of MPL, which was also ITAs.87,102, 108 201/2002 -19- continuing, coming to ₹ 37,16,659/-. The total of ₹ 35,68,83,310/- was taken for deduction under Section 80HHC(1)(a) at 1%. Then, the total export turnover of MPL for the previous year ..... X X X X Extracts X X X X X X X X Extracts X X X X
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