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2012 (11) TMI 23 - AT - Income TaxRe-opening of assessment - Held that - The assessment has been re-opened within four years from the end of the assessment year and further the return filed by the assessee had been processed earlier only u/s. 143(1) - no simultaneous action u/s 154 and also u/s 147 of the Act, as contended by the assessee, thus as decided in ACIT Versus Rajesh Jhaveri Stock Brokers P. Limited 2007 (5) TMI 197 - SUPREME COURT so long as the ingredients of section 147 are fulfilled, AO is free to initiate proceeding u/s 147 and failure to take steps u/s 143(3) will not render the AO powerless to initiate reassessment proceedings even when intimation under section 143(1) - revenue s appeal is allowed Disallowance of deduction u/s. 80HHD - Held that - As decided in assessee s own case relying on HOTEL AND ALLIED TRADES P. LTD. Versus DCIT (ASSESSMENT) 2007 (4) TMI 120 - HIGH COURT, KERALA deduction u/s. 80HHD has to be computed with reference to the profits and gains of the business as a whole - Assessee not entitle for deduction by treating each unit separately - revenue s appeal is allowed. Deduction u/s. 80-IA - Held that - AO has computed deduction u/s 80-IA on the amount of Gross total income as reduced by the deduction given u/s 80HHD whereas a combined reading of the provisions of sub sec. 7 of sec. 80-IA and sec. 80AB would suggest that the computation of deduction u/s 80-IA made by the AO would be correct only if the Gross total income consisted of, only income of that nature which is eligible for deduction u/s 80-IA. The aggregate amount of deductions under chapter VIA shall be restricted to the amount of Gross total income - as the break up details of the Gross total income is not borne out of record. Hence, the issue of computation of deduction u/s 80-IA requires fresh examination - in favour of assessee by way of remand. Interest u/s. 234C on the tax payable u/s. 115JA - Held that - As decided in Jtc. I. T., Mumbai Versus M/s Rolta India Ltd. 2011 (1) TMI 5 - SUPREME COURT OF INDIA the assessee is liable to pay interest for short payment of advance tax even on the income computed u/s 115JB - against assessee. Deduction of carry forward depreciation while computing book profit u/s 115JB - Held that - First of all, clause (iii) of Explanation 1 to sec. 115JB, which is extracted above mandates that the deduction of amount of loss brought forward or unabsorbed depreciation whichever is less should be as per books of account. Hence the assessee was wrong in law in claiming deduction of carry forward depreciation, which was determined under the income tax Act. Secondly, the AO has given a specific finding that there is no carry forward loss as per the books of account, in which case, the assessee is not eligible to claim any deduction under clause (iii) in view of specific provisions contained in clause (b) of the Explanation given under the above said clause (iii) - against assessee.
Issues Involved:
1. Validity of reopening of assessment. 2. Deduction claimed under Section 80HHD. 3. Deduction claimed under Section 80-IA. 4. Computation of interest under Section 234C. 5. Deduction claimed under Section 80IB. 6. Deduction of carry forward depreciation while computing book profit under Section 115JB. 7. Validity of simultaneous action under Sections 154 and 147. Detailed Analysis: 1. Validity of Reopening of Assessment: The assessee challenged the reopening of the assessment for the assessment year 1999-2000. The return was initially processed under Section 143(1) and later reopened under Section 148 within four years. The tribunal referenced the Supreme Court decision in Rajesh Jhaveri Stock Brokers Pvt. Ltd. (291 ITR 500), which upheld the validity of such reopening. Consequently, the tribunal found no infirmity in the CIT(A)'s decision to uphold the reopening. 2. Deduction Claimed Under Section 80HHD: The assessee operated two hotel units and claimed deduction under Section 80HHD separately for each unit. The Assessing Officer aggregated the profits of both units and allowed deduction on the combined profit, which was upheld by the CIT(A). The tribunal referenced the Kerala High Court decision in the assessee's own case (294 ITR 67), which mandated that the deduction under Section 80HHD should be computed with reference to the "profits and gains of the business as a whole." Therefore, the tribunal upheld the CIT(A)'s decision. 3. Deduction Claimed Under Section 80-IA: For the hotel unit "Coconut Lagoon," the AO computed the profit after disallowances and allowed deduction under Section 80-IA on the gross total income, which was less than the actual profit from the unit. The tribunal noted that Sections 80A(2) and 80AB limit the aggregate deductions to the gross total income. The tribunal found that the computation of deduction under Section 80-IA should consider the profits of the eligible unit as the only source of income but restricted to the gross total income. The issue was remanded to the AO for fresh examination in light of these provisions. 4. Computation of Interest Under Section 234C: The tribunal upheld the CIT(A)'s decision that the assessee is liable to pay interest for short payment of advance tax on income computed under Section 115JB, referencing the Supreme Court decision in CIT v. Rolta India Ltd. (330 ITR 470). 5. Deduction Claimed Under Section 80IB: For the assessment years 2000-01 and 2001-02, the assessee claimed deductions under Section 80IB, but the gross total income resulted in a loss. The tribunal upheld the CIT(A)'s decision to deny the deductions, citing Section 80A(2), which mandates that the aggregate amount of deductions shall not exceed the gross total income. 6. Deduction of Carry Forward Depreciation While Computing Book Profit Under Section 115JB: For the assessment year 2003-04, the AO denied the deduction of carry forward depreciation computed under the Income Tax Act while computing book profit under Section 115JB. The CIT(A) directed the AO to allow the deduction, but the tribunal sided with the AO, noting that the deduction should be as per the books of account, not the Income Tax Act. The tribunal restored the AO's decision. 7. Validity of Simultaneous Action Under Sections 154 and 147: For the assessment year 2002-03, the AO initially issued notice under Section 154/155 and later under Section 148. The CIT(A) held the reopening void ab initio, but the tribunal found no simultaneous action, noting that the proceedings under Section 154/155 merged with the reassessment proceedings. The tribunal upheld the reopening under Section 148, referencing the Supreme Court decision in Rajesh Jhaveri Stock Brokers Pvt. Ltd., and remanded the case to the CIT(A) for adjudication on merits. Conclusion: - The appeals for the assessment years 1999-2000 and 2002-03 were partly allowed. - The appeals for the assessment years 2000-01 and 2001-02 were dismissed. - The appeals for the assessment years 2003-04 to 2005-06 were allowed.
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