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2018 (10) TMI 1267 - HC - Income TaxReopening of assessment - no information with regard to DEPB or Duty Draw Back was furnished by the appellant - deduction under Section 10BA - Held that - We find that the questionnaire issued to the assessee during the assessment proceedings and the assessment order dated 19.11.2010 passed on that basis make it clear that no information with regard to DEPB or Duty Draw Back was furnished by the appellant. There was indeed no adjudication on that aspect of the matter and therefore the concurrent view taken by the lower authorities cannot be faulted with. The appellant failed to show from the record whether the Assessing Officer has indeed considered the issue of allowability of deduction under Section 10BA of the Act in respect of Duty Draw Back. Had this issued been actually considered some query would certainly have been raised on this aspect and reply thereto if any would also have been submitted by the appellant. Obviously the Assessing Officer did not apply his mind to this aspect of the matter. Since the appellant failed to point out that the Assessing Officer formed any opinion on this issue it cannot be held that initiation of re-assessment proceedings under Section 148 of the Act was based on mere change of opinion. It is only when the Assessing Officer later realised that the deduction under Section 10BA of the Act was not allowable in respect to Duty Draw Back and that exemption of 15, 88, 601/- was allowed on account of this mistake he initiated re-assessment proceedings by recourse to Section 148 of the Act vide notice dated 29.03.2012. - decided in favour of revenue. Deduction u/s 10BA - DEPB and DDB received by appellant - CIT(A) relying upon the judgment of the Supreme Court in Liberty India 2009 (8) TMI 63 - SUPREME COURT held that Duty Draw Back and other such incentives are not profits derived from the eligible business and accordingly exemption under Section 10BA of the Act cannot be allowed - Held that - In CIT Jaipur Vs. Suresh Kumar Bajoria 2017 (5) TMI 1492 - RAJASTHAN HIGH COURT remanded the matter back to the Assessing Officer to reconsider the entire material all over again. Thus Impugned judgments are set aside to that extent and the matter is remanded back to the Assessing Officer to decide the same afresh in accordance with law however leaving it open for both the parties to raise all the contentions before the Assessing Officer. We make it clear that we have not expressed any opinion so far as the second substantial question of law is concerned.
Issues Involved:
1. Initiation of reassessment proceedings under Section 148 of the Income Tax Act, 1961. 2. Eligibility of deduction under Section 10BA of the Income Tax Act, 1961 on DEPB and Duty Draw Back (DDB) received by the appellant. Issue-wise Detailed Analysis: 1. Initiation of Reassessment Proceedings under Section 148: The appellant-assessee contended that the Assessing Officer (AO) erred in initiating reassessment proceedings under Section 148 based on a subsequent Supreme Court judgment without forming the requisite belief of "escapement of income." The CIT(A) rejected this argument, stating that the AO had not considered the allowability of deduction under Section 10BA in respect of Duty Draw Back (DDB) in the original assessment. The AO did not apply his mind to this issue, and thus, the reassessment proceedings could not be considered as based on a change of opinion. The ITAT concurred with this view, and the High Court upheld the initiation of reassessment proceedings, finding no evidence that the AO had considered the issue of DDB deduction in the original assessment. The court ruled in favor of the Revenue, confirming that the reassessment was justified. 2. Deduction under Section 10BA on DEPB and DDB: The appellant-assessee argued that DEPB and DDB are inextricably linked to the export business and should be considered part of the profits from export business, thus eligible for deduction under Section 10BA. The CIT(A) and ITAT rejected this argument, relying on the Supreme Court judgment in Liberty India, which held that such incentives are not profits derived from the eligible business and thus not eligible for deduction under Section 10BA. The appellant contended that Liberty India dealt with Section 80IA and should not apply to Section 10BA. The High Court noted that other judgments, including those in Topman Exports and Meghalaya Steels Limited, had been referenced by the appellant. The court chose not to decide on the merits of the second question but instead remanded the issue back to the AO for reconsideration, allowing both parties to present their contentions afresh. Conclusion: The High Court upheld the initiation of reassessment proceedings under Section 148, affirming the AO's action. However, it remanded the issue of the eligibility of deduction under Section 10BA on DEPB and DDB back to the AO for fresh consideration, without expressing an opinion on the merits of the second substantial question of law. The appeal was thus allowed in part, with the impugned judgments set aside to the extent of the second issue.
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