TMI Blog1986 (8) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... e appeal for the assessment year 1971-72 along with the appeals for other two year and granted certain reliefs to the petitioner. The petitioner thereafter went to the Income-tax Appellate Tribunal and the Income-tax Appellate Tribunal disposed of the appeal and a question of law was referred at the instance of the petitioner by the Tribunal under section 256(1) of the Act relating to the assessability of import entitlement. Thereafter, the Income-tax Officer issued notice under section 148 on March 8, 1976, for the assessment year 1971-72. He also issued another notice for the said assessment year on March 29, 1976, which was handed over to the petitioner's representative presumably by way of abundant caution to avoid limitation. The Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is assessment year, being the third year of allowance, unabsorbed deficiency under section 80J to the tune of Rs. 26,60,874 as per computation filed by the assessee was accepted and carried forward in the original assessment. In the computation of capital employed worked out under rule 19A, Income-tax Rules, 1962, no deduction as provided in rule 19A(3)(b) for medium term loan obtained from the State Bank of India, H.O., Calcutta, for rupees two crores was made. It transpires that as per terms of repayment, the loan was repayable during a period of less than seven years and it was utilised in setting up of the cement factory and as such the loan should have been deducted in the computation of capital. The assessee neither deducted the amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee did not disclose the relevant particulars in the return and in the statement of accounts filed in connection with the original assessment. In view of the facts stated above, I have reasons to believe that on account of failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment and also in consequence of information in my possession, the assessee's income has escaped assessment and this is a fit case for reopening both under sections 147(a) and 147(b) of the Income-tax Act, 1961. " It may be mentioned that the said notice was issued before the expiry of 4 years from the end of the assessment year 1971-72 and, accordingly, the initiation of proceedings is sought to be justified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he light of the above principles. The first ground for reopening is that the deductions under sections 80K, 80L and 80M of the Act have been wrongly allowed in the original assessment. There is no gross total income within the meaning of section 80B(5) and the net result after allowing depreciation giving negative figure on (no?) deduction could be allowed in view of the provisions of section 80A(2) as the deduction under Chapter VI-A, i.e., deduction, inter alia, under sections 80K, 80L and 80M cannot exceed the gross total income of the assessee. From the assessment order, it would be evident that the Income-tax Officer allowed the deduction under sections 80K, 80L and 80M and before considering depreciation. This was not correctly done ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and observed (p. 140): " It will thus be seen that, according to this decision, the words 'such profits and gains' in the latter part of sub-section (1) of section 80E were referable to the quantum of the profits and gains attributable to the specified business included in the total income as referred to in the earlier part of the provision. If this decision lays down the correct interpretation of subsection (1) of section 80E, the same interpretation must also govern the language of sub-section (1) of section 80M. Structurally, there is hardly any difference between section 80E, sub-section (1), and section 80M, sub-section (1), and the reasoning which appealed to the court in the interpretation of sub-section (1) of section 80E must appl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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