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TMI Blog2018 (12) TMI 763X X X X Extracts X X X X X X X X Extracts X X X X ..... urt, is produced as Annexure-D. While HCL was following the calendar year for the purpose of income tax assessment, MPL was following the financial year. Hence, when the two Companies got amalgamated, MPL applied for change of previous year relevant to the assessment year by Annexure-E and the change was permitted by Annexure-F. The application is seen filed by HCL itself. The 18 months comprised between 01.01.1983 and 30.06.1984 was, by Annexure-F, permitted to be the previous year of the assessment year 1985-86, since, 30.06.1984 was the date on which MPL closed its accounts. When the assessment 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in (1990) 186 ITR 278 [Saraswati Industrial Syndicate Ltd. v. Commissioner of Income-Tax, Haryana, Himachal Pradesh and Delhi III]. On facts, it is pointed out that the two Companies, HCL and MPL amalgamated and a new Company was formed by Name M/s.Harrisons Malayalam Limited. M/s.Harrisons Malayalam Limited being a new Company could not have claimed any benefit under sub-Clause (b) of Section 80HHC(1) of the Act, since the new Company did not have a previous year. Assessment year 1985-86 was the first year of inception of the new Company M/s.Harrisons Malayalam Limited. In such 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year prayed for and permitted, was anticipating the amalgamation itself and is not the reassessment attempted hence based on a mere change of opinion? In ITA No.102/2002, the question arising is re-framed as follows:- Whether the rectification under Section 154 was permissible and whether it is sustainable on the grounds stated for such rectification, which are not true and correct? 10. Section 147 as it existed in the relevant year is extracted herein below:- "147. Income escaping assessment:- If (a) The Income-tax Officer has reason to believe 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee and ITA Nos.87, 108 and 201/2002 are rejected. 13. On the second question, we have to first notice the submission of the learned counsel appearing for the respondent-assessee that the entire proceedings was on a misconception of a new Company having been formed in the name of M/s.Harrisons Malayalam Limited. The learned counsel for the assessee produced across the Bar a certificate of incorporation, consequent on change of name, dated 29.10.1984 which we extract hereunder:- 14. Hence, as we noticed, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng out therein. The claim under Section 80HHC has been computed in the following manner:- "Less : Deduction under Chapter VIA Deduction u/s 80 HHC FOB value of Export turnover of Trading division Rs.35,31,66,651/- Add : 40% of FOB value of Rs. 92,91,647/- being export turnover of tea manufactures in its own estates as per discussion in the body 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 Rs. 35,68,83,310/- Rs.35,68,833/- 5% on incremental turnover of Rs. 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 Rs. 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 Rs. 37,16,659/-. The total of Rs. 35,68,83,310/- was taken for deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X
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