TMI Blog1998 (5) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... nufacture of colour film rolls was not entitled to investment allowance because such an article was included in the prohibited list mentioned in the Eleventh Schedule to the Income-tax Act, 1961. In the said list, at serial No. 10 of the articles mentioned are : "Photographic apparatus and goods". The cinematographic films were also included in this list at serial No. 9. Vide Finance Act, 1988, the Government decided to withdraw cinematographic films from this Schedule because these films were used for manufacturing educational and tourism documentaries. However, photographic apparatus and goods which included photographic films were not excluded and remained in this list. Hence, the Assessing Officer disallowed the claim of the petitioner for investment allowance under section 32A of the Act for the assessment year 1990-91. The return of income for 1991-92 was filed on December 31, 1991. In this return, the petitioner did not claim any deduction under section 80-I of the Act. Similarly, for the assessment years 1992-93 and 1993-94, in the original return the petitioner had not claimed any deduction under section 80-1 of the Act. The Commissioner of Income-tax (Appeals) while d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 80-I in respect of its colour roll film unit and other photosensitised goods, such as medical X-ray, graphic art film, cine positive film and photographic colour paper. The contention of the assessee-company is that it fulfils the conditions laid down in sub-section (2) of section 80-I and is entitled for the deduction at 25 per cent. of the gross total income of that unit. The assessee further contends that this roll film unit was set up in the assessment year 1989-90 as a new industrial undertaking and it is not engaged in production of any article specified in the Eleventh Schedule. On my specific query why entries Nos. 9 and 10 should not be construed as bringing the activity of the assessee within the ambit of Schedule Eleven, the assessee has referred to and relied upon a clear finding given by the learned Commissioner of Income-tax (Appeals)-XVI, New Delhi, in its own Appeal No. 63 of 1993-94 relating to the assessment year 1990-91 in which my predecessor had turned down the claim of the assessee for investment allowance on the ground that the industrial unit of the assessee engaged in the manufacturing of colour roll film and other photosensitised items was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the assessee. According to the respondents, the Assessing Officer while examining the record for the assessee for all the three years found that deduction under section 80-I of the Act had been wrongly allowed in the assessments. The assessments were completed by merely following the order of the Commissioner of Income-tax (Appeals) passed on February 28, 1994, relevant to the assessment year 1990-91 which were not binding on the Assessing Officer for the subsequent years. The observations of the Commissioner of Income-tax (Appeals) were totally against the provisions of the Act. The photographic apparatus includes camera, etc., and photographic goods include colour film rolls, etc., and the intention of the Legislature is clear that the manufacture of these articles is not entitled to the deduction. Removal of cinematographic films is to confer eligibility for deduction on educational and tourism documentary films. Looking to this fact and taking the view that income had escaped assessment notices under section 148 were issued. It was submitted that it was not a case of mere change of opinion particularly in view of the amendment made in section 147 of the Act with effect fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... committed an error in computing the taxable income of the assessee and reopen the assessment by resort to section 147 of the Act. Discovery of new and important matters or knowledge of fresh facts which were not present at the time of original assessment would constitute a "reason to believe that income had escaped assessment" within the meaning of section 147. Here also such facts which could have been discovered by the assessing authority but were not so discovered at the time of original assessment may not constitute a new information. (See Phool Chand Bajrang Lal v. ITO [1993] 203 ITR 456, 477 (SC); A. L. A. Firm v. CIT [1991] 189 ITR 285, 298 (SC); Indian and Eastern Newspaper Society v. CIT [1979] 119 ITR 996, 1004 (SC); ITO v. Lakhmani Mewal Das [1976] 103 ITR 437, 445 (SC); and CIT v. Bhanji Lavji [1971] 79 ITR 582, 588 (SC)). In Kalyanji Mavji and Co. v. CIT [1976] 102 ITR 287 (SC), one of the points decided was that where in the original assessment, the income liable to tax had escaped assessment due to oversight, inadvertence or a mistake committed by the Income-tax Officer, the assessment can be reopened. It was a decision by a Bench of two honourable judges. At leas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forming the belief is not for the court to judge but it is open to an assessee to establish that there in fact existed no belief or that the belief was not at all a bona fide one or was based on vague, irrelevant and non-specific information. To that limited extent, the court may look into the conclusion arrived at by the Income-tax Officer and examine whether there was any material available on the record from which the requisite belief could be formed by the Income-tax Officer and further whether that material had any rational connection or a live link for the formation of the requisite belief." Following the settled trend of judicial opinion and the law laid down by their Lordships of the Supreme Court time and again, different High Courts of the country have taken the view that if an expenditure or a deduction was wrongly allowed while computing the taxable income of the assessee, the same could not be brought to tax by reopening the assessment merely on account of subsequently the Assessing Officer forming an opinion that earlier he had erred in allowing the expenditure or the deduction (see Siesta Steel Construction Pvt. Ltd. v. K. K. Shikare [1985] 154 ITR 547 (Bom); Satpa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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