2012 (5) TMI 720 - AT - Income Tax

2012 (8) TMI 1047 - AT

Issues Involved:
1. Validity of Re-opening of assessment after four years.
2. Assessment of DEPB benefits.
3. Addition on account of under pricing in the sale of kernels made to sister concerns.
4. Validity of charging of interest u/s 234D of the Act.
5. Exclusion of 90% of items credited to the Profit and Loss account as "Expenses allocated" and "Cess refund" under explanation (baa) of sec. 80HHC of the Act.
6. Aggregation of export turnover of two independent units for the purpose of computation of deduction u/s 80HHC of the Act.
7. Disallowance of claim of deduction u/s 80IB in respect of new unit for want of separate books of account.
8. Exclusion of 90% of "Allocated expenses" and "Prior year adjustments" under explanation (baa) to sec. 80HHC.

Summary:

1. Validity of Re-opening of assessment after four years:
The assessee contested the validity of re-opening the assessment for the year 1999-2000 after four years. The return was initially processed u/s 143(1) and not u/s 143(3). The Tribunal upheld the validity of re-opening, stating that the restriction imposed under the proviso to sec. 147 does not apply as there was no regular assessment. The AO had recorded proper reasons for re-opening, and the provisions of sec. 147 authorize the AO to assess escaped income that comes to his notice during the reassessment proceedings.

2. Assessment of DEPB benefits:
The issue of taxability of DEPB receipts was set aside to the file of AO for fresh consideration in accordance with the decision of the Hon'ble Supreme Court in the case of Topman Exports Vs. CIT.

3. Addition on account of under pricing in the sale of kernels made to sister concerns:
The AO added Rs. 23,41,202/- to the total income of the assessee due to under pricing of sales to sister concerns. The Tribunal upheld this addition, noting that the assessee failed to provide convincing explanations for the under pricing, leading to the presumption of a colorable device to shift profits to sister concerns.

4. Validity of charging of interest u/s 234D of the Act:
The issue was restored to the file of AO with the direction to follow the principles laid down by the Jurisdictional High Court in the case of CIT Vs. Kerala Chemicals and Proteins Ltd.

5. Exclusion of 90% of items credited to the Profit and Loss account as "Expenses allocated" and "Cess refund" under explanation (baa) of sec. 80HHC of the Act:
The Tribunal set aside the order of Ld CIT(A) and restored the issue to the file of AO for fresh examination. If the assessee had booked the expenses and cess payment in the profit and loss account and recovered a part of such expenses/cess, they cannot be treated as independent sources of income.

6. Aggregation of export turnover of two independent units for the purpose of computation of deduction u/s 80HHC of the Act:
The Tribunal upheld the view of Ld CIT(A) that both turnovers of cashew kernels and CNSL have to be aggregated for the purposes of sec. 80HHC, as the definitions of "Export Turnover" and "Total Turnover" refer to the "assessee" and not "undertaking."

7. Disallowance of claim of deduction u/s 80IB in respect of new unit for want of separate books of account:
The issue was restored to the file of AO with the direction to examine it in light of the principles given in the case of T.C. Usha Vs. ACIT.

8. Exclusion of 90% of "Allocated expenses" and "Prior year adjustments" under explanation (baa) to sec. 80HHC:
The Tribunal set aside the order of Ld CIT(A) regarding "Allocated expenses" and restored it to the file of AO for fresh examination. However, it upheld the exclusion of "Prior year adjustments" under explanation (baa) to sec. 80HHC, as they relate to income from an earlier year.

Conclusion:
All the appeals of the assessee were treated as partly allowed for statistical purposes.

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