2012 (9) TMI 549 - AT - Income Tax

Reopening of assessment u/s.147 - the return was processed u/s.143(1) - Held that - As decided in ACIT Versus Rajesh Jhaveri Stock Brokers P. Limited 2007 (5) TMI 197 - SUPREME COURT an intimation u/s.143(1) could not be treated to be an order of assessment. It was held that there being no assessment u/s.143(3), the question of change of opinion did not arise. The AO had jurisdiction to issue notice u/s.148 for bring to tax income escaping assessment in an intimation u/s.143(1) and did not render the AO powerless to initiate re-assessment proceedings - against assessee. Disallowance of deduction on Gola i.e. wastage income u/s.10B - Held that - On questioning that what was the related expenditure which was having a direct nexus for production of this by-product, assessee has fairly expressed not to further argue this ground and let the issue to be decided after considering the facts as available on records. Thus the Revenue Authorities have rightly rejected the said claim of the assessee after considering the manufacturing process and the manner in which the said by-product was generated - against assessee. Disallowance of deduction u/s 10B on DEPB income - Held that - As decided in Maral Overseas Ltd. vs. Addl.CIT 2012 (4) TMI 345 - ITAT INDORE once an income forms part of the business of the income of the eligible undertaking of the assessee, the same cannot be excluded from the eligible profits for the purpose of computing deduction u/s 10B of the Act. As per the computation made by the Assessing Officer himself, there is no dispute that both these incomes have been treated by the Assessing Officer as business income. - the undertaking is eligible for deduction on export incentive received by it in terms of provisions of Section 10B(1) read with Section 10B(4) of the Act - Decided in favor of assessee.

Summary

Issues:
1. Jurisdiction of reopening assessment u/s.147
2. Deduction u/s.10B on export income
3. Deduction under section 10B on DEPB income

Jurisdiction of Reopening Assessment u/s.147:
The appeal questioned the jurisdiction of reopening the assessment u/s.147. The appellant argued that the action was without jurisdiction and not permissible in law or fact. However, the Tribunal dismissed this ground, citing a Supreme Court decision that an intimation u/s.143(1) does not constitute an assessment u/s.143(3), allowing the AO to issue a notice u/s.148 for income escaping assessment. The Tribunal upheld the reopening, rejecting the appellant's contentions.

Deduction u/s.10B on Export Income:
Regarding the deduction u/s.10B on export income, the appellant contended that the entire profit generated from export proceedings, which is exempt u/s.10B, should be considered for deduction. However, the Revenue Authorities rejected this claim, emphasizing that the income from the sale of the by-product "Gola" was part of domestic turnover and not export turnover. The Tribunal upheld the Revenue Authorities' decision, dismissing the appellant's argument.

Deduction under Section 10B on DEPB Income:
The appellant claimed DEPB benefit as part of the net profits for deduction u/s.10B. The AO treated the DEPB Incentive as "Other Income," citing a Supreme Court decision and excluded it from the profits of the undertaking. The CIT(A) affirmed this decision. However, the Tribunal referred to a Special Bench decision in Maral Overseas Ltd. vs. Addl.CIT, emphasizing that the entire profits of the business should be considered for deduction u/s.10B, as per the formula in section 10B(4). The Tribunal directed the AO to verify the claim and apply the formula as discussed in the case-law, allowing the deduction if satisfied. The Tribunal partially allowed the appeal for statistical purposes only.

In summary, the Tribunal addressed the issues of jurisdiction in reopening the assessment u/s.147, the deduction u/s.10B on export income, and the treatment of DEPB income for deduction purposes. The Tribunal relied on legal precedents and statutory provisions to make its decisions, ensuring adherence to the law and relevant judicial interpretations.