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2011 (11) TMI 350 - HC - Income TaxValidity of re-opening of assessment erroneous deduction u/s 80IA on miscellaneous income assessee engaged in business of and in Exports of Rice pulses - original assessment order passed u/s 143(1)(a) without examining the claim of deduction u/s 80IA on merits assessee contended that A.O. or CIT(A) had considered the issue in the original assessment proceedings Held that - A.O. rejected the claim of deduction u/s 80IA at the threshold simply on the ground that there was no separate working of the industrial profit and admissibility of claim was not even touched by him. CIT (A) also dealt with this aspect alone. In such case judgment of the Supreme Court in Rajesh Jhaveri Stock Brokers Pvt Ltd (2007 - TMI - 6563 - SUPREME Court) is clearly applicable. Therefore it cannot be said that it is a case of mere change of opinion when no opinion was formed in the first instance. New material need not be extraneous to the record and the touchstone is not where the material is to be found i.e. within the existing record or outside. Insofar as denial of claim u/s 80 IA on merits is concerned no grievance was raised by the appellant nor any question of law framed thereupon. We may only reiterate that the Tribunal has rightly held that such a claim was not admissible on miscellaneous income like sale of import licence interest weighbridge income insurance claim etc. It is rightly disallowed having regard to the judgment of this Court in Cement Distributor Ltd (1994 - TMI - 20126 - DELHI High Court) Decided against the assessee.
Issues Involved:
1. Validity of the assumption of jurisdiction by the Assessing Officer under Section 147 of the Income Tax Act, 1961. 2. Admissibility of the claim under Section 80-IA of the Income Tax Act on miscellaneous income. Issue-Wise Detailed Analysis: 1. Validity of the Assumption of Jurisdiction by the Assessing Officer under Section 147 of the Income Tax Act, 1961: The appellant contested the reopening of the assessment under Section 147, arguing that the original assessment had already considered the issue of deduction under Section 80-IA. The Tribunal, however, upheld the initiation of reassessment proceedings, noting that the original assessment under Section 143(1)(a) did not involve any detailed scrutiny or formation of opinion by the Assessing Officer. The Tribunal stated, "It cannot be said that any opinion was formed by the AO as regards allowability or otherwise of the deduction U/S 80-IA." The Tribunal also emphasized that the reasons recorded for reopening had a reasonable nexus for forming an opinion that excessive deduction was claimed, thus justifying the issuance of notice under Section 148. The appellant's reliance on KLM Royal Dutch Airlines Vs. ADIT and CIT Vs. Ved & Co. was dismissed by the Tribunal, which distinguished these cases based on the facts and the presence of recorded reasons in the current case. The Tribunal also referenced the Supreme Court's decision in Rajesh Jhaveri Stock Brokers P. Ltd., which clarified that the sufficiency of reasons is not required to be looked into as long as there is material to form a belief that income has escaped assessment. 2. Admissibility of the Claim under Section 80-IA of the Income Tax Act on Miscellaneous Income: On the merits, the Tribunal sustained the orders of the Assessing Officer and the CIT (A), holding that the amount realized from the sale of import licenses, rent, and weighbridge income could not be considered as income derived from an industrial undertaking for the purpose of computing deduction under Section 80-IA. The Tribunal cited authoritative pronouncements, including the Supreme Court's decision in Sterling Foods and the Karnataka High Court's decision in Siddaganga Oil Extraction P. Ltd., to support its conclusion. The Tribunal also noted that no details of miscellaneous income were furnished before the Assessing Officer or CIT (A), and thus, it declined to interfere with the order of CIT (A). The issue of the insurance claim was remitted back for re-examination. The appellant's argument that the Assessing Officer had erred in allowing the claim under Section 80-IA in the original assessment was rejected. The Tribunal found that the original assessment did not involve a detailed examination of the claim, and thus, the reopening of the assessment was justified. The Tribunal also noted that the presence of the Delhi High Court's decision in CIT Vs. Cement Distributor, which was available at the time of the original assessment, did not preclude the reopening as the issue was not examined on merits initially. Conclusion: The High Court upheld the Tribunal's decision, concluding that the reopening of the assessment under Section 147 was valid and justified. The Court emphasized that the original assessment under Section 143(1)(a) did not involve a detailed examination or formation of opinion on the claim under Section 80-IA. The Court also affirmed that the miscellaneous income in question did not qualify for deduction under Section 80-IA, as it was not derived from an industrial undertaking. The appeals were dismissed, and the questions of law were decided against the assessee.
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