2013 (2) TMI 524 - HC - Income Tax

Re-opening of assessment u/s.147 Reassessment of assessment previously framed after scrutiny - Entire issue of deduction under Section 80I was examined threadbare by the AO while framing original assessment Issue is that such reopening is permissible or not Held that - Issues on which the reopening has been done are not touched upon in the original proceedings. In the original proceedings only the prior period expenses were considered and adjusted. Therefore there cannot be case of change of opinion as to whether head office expenses were properly and reasonably allocated to Baroda Unit or not. Explanation 2 of Section 147, as amended with effect from 01-04-1989, provides that if allowances under this act have been computed excessively, then it will be the case of deemed escapement assessment - Assessee for A.Y.1992-93 has escaped assessment, therefore notice u/s.148 is issued for re-assessment of income of the assessee From the perusal of the records, reopening was valid reopening within 4 years - Since it is not a case of change of opinion and deduction under section 80I has not been correctly computed - Reopening of the assessment is justified Appeal filed by the assessee dismissed - Against the assessee.

Issues:
1. Validity of re-opening of assessment for A.Y.1992-93 u/s.147 of the Income-tax Act, 1961
2. Excessive claim of deduction u/s.80-I
3. Basis of allocation of expenses for computing deduction u/s.80-I
4. Conclusion reached by the Income Tax Appellate Tribunal regarding the basis of allocation of expenses

Issue 1: Validity of re-opening of assessment for A.Y.1992-93 u/s.147 of the Income-tax Act, 1961
The Assessing Officer reopened the assessment due to discrepancies in the deduction claimed under Section 80I for the eligible unit. The Tribunal justified the reopening, stating that the issues were not addressed in the original assessment. The Tribunal found that the reopening was valid as it was not a case of a mere change of opinion by the Assessing Officer. It was concluded that the Tribunal correctly upheld the validity of the reassessment within the permissible period of 4 years.

Issue 2: Excessive claim of deduction u/s.80-I
The Assessing Officer reduced the deduction under Section 80I by Rs.3.65 lakhs, considering a portion of the expenditure to be excessive. Both the CIT(Appeals) and the Tribunal upheld this decision. The Tribunal found the estimate made by the Assessing Officer reasonable and did not identify any mistakes. The Tribunal confirmed the lower authorities' decision, stating that no interference was required, and dismissed the appeal filed by the assessee. No legal question was found to arise in this matter.

Issue 3: Basis of allocation of expenses for computing deduction u/s.80-I
The Tribunal examined the basis of allocation of expenses for computing the deduction under Section 80I and found it reasonable. The Assessing Officer's estimate that 10% of the expenditure pertained to non-publication work and 90% for publication work was considered reasonable by the Tribunal. The Tribunal confirmed the orders of the lower authorities, stating that the calculation of deduction under Section 80I was reasonable and no mistakes were identified.

Issue 4: Conclusion reached by the Income Tax Appellate Tribunal regarding the basis of allocation of expenses
The Tribunal's conclusion on the basis of allocation of expenses for computing the deduction u/s.80-I was upheld as reasonable. The Tribunal confirmed the orders of the lower authorities, stating that the appeal filed by the assessee was dismissed. No legal question was found to arise in this regard, as both Revenue Authorities had concurrently reached factual conclusions without any identified perversity. Therefore, the Tax Appeal was dismissed based on the findings of the Tribunal and lower authorities.

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