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Issues involved:
Interpretation of provisions of Section 80IA of Income Tax Act, 1961 for the assessment year 2000-01. Summary: Issue 1: Amendment in Section 80-IA - The Finance Act, 1995, and Finance (No.2) Act, 1996, introduced amendments to Section 80-IA, extending tax benefits to scientific and industrial research and development. - The amendments aimed to broaden the scope of eligible businesses for tax deductions under Section 80-IA. Issue 2: Conditions for applicability of Section 80IA - Section 80IA applies to industrial undertakings meeting specific conditions, including not being formed by splitting up existing businesses and engaging in manufacturing or operating specified facilities. - The Finance Act, 1994, extended concessions to large-scale industries in backward areas, allowing for deductions from taxable profits. Issue 3: Assessment of Deductions - The case involved an assessee manufacturing water filters using imported and indigenous parts, claiming deductions for income from spare parts sales. - Disputes arose regarding the allocation of expenses and the bifurcation of income from trading and manufacturing activities for assessing deductions under Section 80IA. Issue 4: Disallowance of Deductions - The Assessing Officer disallowed deductions for the assessment year 1999-2000 and sought to reassess previous years due to discrepancies in accounting practices. - The Commissioner of Income Tax (Appeals) and the Appellate Tribunal reviewed the case, focusing on the accurate allocation of expenses and income for determining allowable deductions. Issue 5: Reopening of Assessment - The contention was raised regarding the permissibility of reopening assessments based on a change of opinion. - The Income Tax Department argued that the assessee's failure to maintain separate accounts for trading and manufacturing activities justified the reassessment. Conclusion: - The Tribunal upheld the order for detailed assessment to allocate expenses accurately between trading and manufacturing activities. - The Assessing Officer was directed to consider observations made and ensure proper assessment and grant of deductions in accordance with Section 80IA of the Act.
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