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TMI Blog2019 (5) TMI 842X X X X Extracts X X X X X X X X Extracts X X X X ..... st on income tax refund can be assessed as income only on the respective assessments reaching finality. 4) Alternatively interest granted earlier and treated as income for the corresponding assessment years, but which has been subsequently reduced/revised should be allowed as deduction in computing the income of the assessment year in which such reduction has been effected. 5) The CIT(A) should have also given a direction to the Assessing Officer to revise the assessment adopting the correct amount of interest as finally determined for the relevant assessment years. 6) For these and other grounds that may be permitted to be adduced at the time of hearing of the case, it is prayed that the order of the lower authorities may be ordered to be modified suitably. 3. The facts of the case are that the assessee is an exporter of seafoods. The income tax assessment u/s. 143(3() was completed vide order dated 26/02/1999 determining the total income at Rs. 1,04,19,530/-. In the said order, deduction u/s. 80HHC was not granted on exports made through export houses on the ground that no disclaimer certificates were filed. The assessee filed an appeal against the assessment order which w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on under section 10B, there are certain conditions that are required to be fulfilled In the year in which the undertaking begins to manufacture or produce article or thing and the 10 years period is to be taken from the first year of such operation in which the undertaking starts production and exports. These conditions are laid down in subsection (2) of section 10B, which inter alia include :- "10B. (1)...... (2) This section applies to any undertaking which fulfils all the following conditions namely:- (i) it manufactures or produces any article or thing; (ia) in relation to an undertaking which begins to manufacture or produce any article or thing on or after the 1st day of April, 1994, its export of such articles and things are not less than 75% of the total sales thereof during the previous year: (ii) it is not formed by the splitting up, or the reconstruction, of a business already in existence: Provided that this condition shall not apply in respect of any undertaking which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such industrial undertaking as is referred to in section 338, in the circumstanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... completing the assessment, it was submitted that deduction u/s.80 HHC was denied on the reason of non production of disclaimer certificates. Before the CIT(A), the assessee raised the ground that it is eligible for deduction u/s.10B as it is a 100% EOU but the claim was denied by the CIT(A) for the reason that no claim for deduction u/s.10B was made in the return of income. The Ld. AR submitted that the CIT(A) had overlooked the provisions of section 10B, prevailing at that time. Sub-section (1) reads as follows:- "Subject to the provisions of this section, any profits and gains derived by an assessee from a 100% Export Oriented undertaking (hereafter in this section referred to as the undertaking) to which this section applies shall not be included in the total income of the assessee". 4.1 It was submitted that section 10B is falling under Chapter III of the Income Tax Act "incomes which do form part of total income". The profits and gains from a 100% Export Oriented Unit therefore will not form part of the total income. It was submitted that there was a clear distinction between deduction under Chapter VIA where deductions are granted from gross total income and exemption u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DR relied on the order of the CIT(A). 6. We have heard the rival submissions and perused the record. Admittedly, the assessee claimed deduction u/s. 80HHC in the return of income which was duly granted. Subsequently, before the first appellate authority, the assessee made a claim of deduction u/s. 10B of the I.T. Act in respect of the profit of the CAPs Sea Food Unit which is said to be 100% EOU, without withdrawing the claim u/s. 80HHC of the Act. In our opinion, the assessee may exercise his option before the due date of furnishing the return of income under sub-section (1) of section 139 for the assessment year commencing form 1st April, 1989, furnishes to the Assessing Officer a declaration in writing that the provisions of sub-section (1) of section 10B may be made applicable to it for the relevant assessment year and if it does so, then the provisions of sub-section (1) of section 10B shall be made applicable to it for the relevant assessment year. Accordingly, the provisions of sub-section (4) of section 10B shall also apply while computing the total income of the assessee for the relevant assessment year immediately succeeding the last of such assessment year or in subsequ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r assessment year 1992-93 Rs. 8,436 10.1 It was submitted that the assessment for assessment year 1994-95 was taken for scrutiny and completed as per order dated 28.2.1997. Interest was reduced to Rs. 31,416/-. The assessment was reopened and completed as per order dated 19.2.2002. The interest granted as per order dated 28.2.1997 amounting to Rs. 31,416/- was withdrawn and balance tax of Rs. 20,64,714/- was demanded Therefore, it was submitted that the assessee was not eligible for any interest for assessment year 1994-95 which could be assessed for assessment year 1996-97. The Ld. AR submitted that for the assessment year 1992-93, interest granted as per intimation u/s. 143(1)(a) dated 23.8.1993 was Rs. 23,928/- and no interest was granted when the assessment was completed u/s.143(3) as per order dated 27.9.1994. According to the Ld. AR, the assessment was again revised giving effect to the order of the CIT(A) vide proceedings dated 19.1.1996 and interest granted was at Rs. 8,436/-. 10.2 The Ld. AR drew our attention to the departmental appeal (ITA No.204/Coch/1996) which was allowed vide order dated 30th Dec.1999. However, it was submitted that no proceedings were issued gi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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