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TMI Blog2005 (6) TMI 230X X X X Extracts X X X X X X X X Extracts X X X X ..... e under s. 37(1) of the Act. The brief facts of the case are that the AO disallowed Rs. 14,440 incurred by the assessee on article/gifts presented to business clients of the assessee-company. The assessee contended before the AO that the expenses should not be disallowed under r. 6(b) of the IT Rules, 1962, as the items presented do not bear the monogram/logo/name of the assessee which can be used to advertise the assessee's product. It was submitted that the expenses were allowable under s. 37(1) of the IT Act, 1961. The said arguments of the assessee did not find favour with the AO who disallowed the same. 4. In appeal before the CIT(A), reliance was placed on the decision of the Hon'ble Delhi High Court in the case of CIT vs. Associated India Export (1992) 107 CTR (Del) 170 : (1991) 188 ITR 125 (Del) to show that on the expenses incurred, r. 6(b) was not applicable. The learned CIT(A) noted that the items consisted of silver set and carpet, which were purchased for presentation purpose to the party with whom the assessee had official relation. The assessee could not furnished the name of the persons and the reason as to how the item was wholly, necessarily and exclusively requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gate such points, which have been decided in the original assessment proceedings. He placed reliance on the decision in the case of Chettinad Corporation (P) Ltd vs. CIT (1993) 200 ITR 320 (SC) to: the proposition that under s. 147, the jurisdiction of the AO is binding to such income which has escaped assessment. Accordingly, he did not allow set off of loss of Ramganga Fertilizers Ltd. with the profit of M/s Vam Organic Chemicals Ltd., i.e., the assessees-company. He was of the view that set off of loss of Ramganga Fertilizers Ltd. with the profit of the assessee-company could have been allowed under a proceeding under s. 143(3) of the IT Act, but considering the restrictive nature of s. 147, such benefit cannot be availed by the assessee in reassessment proceedings. 7. In appeal, the CIT(A) agreeing with the findings of the AO, upheld the disallowance made. 8. The learned Authorised Representative of the assessee argued and submitted that no notice under s. 143(2) was issued to the assessee within the prescribed time. Notice under s. 148 was for the first time issued on10th May, 1996, and the assessment made under s. 147 was the assessment for the first time. Previous to thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observed that the Supreme Court in the case of V. Jagan Mohan Rao Ors. vs. CIT (1970) 75 ITR 373 (SC) has observed as under: "It is, therefore, manifest that once the assessment is reopened by issuing a notice under sub-s. (2)(ii) of s. 22, the provision under assessment is set aside and the whole assessment proceedings started afresh." 11. The Hon'ble Kolkata High Court further observed that the above principle has been reiterated by the Supreme Court in ITO vs. Mevalal Dwarka Prasad (1989) 76 CTR (SC) 40 : (1989) 176 ITR 529 (SC). 12. The Hon'ble Kolkata High Court further observed in the-case of CIT vs. Assam Oil Company Ltd. (1982) 133 ITR 204 (Cal) as under; "It was relied upon the assessment being reopened the entire assessment was at large. It appears to us that it is so. Once the assessment is reopened a notice is given for a fresh return in respect of all the items. This view is corroborated by the observation of the Supreme Court though it was made in a different context, in the case of V. Jagan Mohan Rao Ors. vs. CIT (1970) 75 ITR 373 (SC)." 13. The Hon'ble Kolkata High Court further observed that the Madras High Court in the case of Co-operative Marketing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Hon'ble Kolkata High Court reported in (1993) 109 CTR (Cal) 495 : (1993) 200 ITR 749 (Cal) and (1993) 113 CTR (Cal) 429 : (1994) 207 ITR 1030 (Cal). The Hon'ble Kolkata High Court has observed that the loss can be claimed as set off in the return filed under s. 148 provided the said return is filed within the prescribed time of filing of the return of income under s. 139(4) of the IT Act. In the case before us, it is not a case wherein loss is being claimed by the assessee for the current year under appeal which has to be determined in the assessment made by the AO for the purpose of set off and carry forward. In the present case before us the assessee is claiming set off of loss of Ramganga Fertilizers Ltd. which was amalgamated with the assessee and by virtue of order passed by the BIFR on5th Dec, 1994with retrospective effect from1st April, 1992, was allowed to be set off by the assessee in determining its income. Thus, the said loss of Ramganga Fertilizers Ltd. was already a determined loss in the hands of Ramganga Fertilizers Ltd. and the assessee in the return filed under s. 148 was claiming deduction of the said income by way of set off. The AO has disallowed the set of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ering the judgement in the case of Jagan Mohan Rao vs. CIT and ITO vs. Mewalal Dwaraka Prashad and CIT vs. Sun Engineering (P) Ltd. We have also perused the order dt.19th March, 1983, as well as the specific order that was passed on16th July, 1987, after the reopening of the assessment under s. 147. On a consideration of the order dt. 16th July, 1987, we were satisfied that the said assessment order makes a fresh assessment of the entire income of the respondent assessee and the High Court was in our opinion right in proceeding on the basis that the earlier assessment order had been effaced by subsequent order. 16. In the present case, since the reassessment is made considering the deduction allowable to the assessee under s. 80-I of the Act for which loss of Ramganga Fertilizers Ltd. is also to be taken into consideration for computing the deduction allowable, in our considered opinion, the AO should have considered the said loss of Ramganga Fertilizers Ltd. while determining the income under s. 147 of the Act. Further, we are of the considered view that the Hon'ble Supreme Court in Sun Engineering has held that concluded issues cannot be reviewed in a proceeding under s. 147 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of assessment in question, it must be taken that it had resiled from the position which it had wrongly taken while filing the return. Quit apart from it, it is incumbent on the IT Department to find out whether a particular income was assessable in the particular year or not. Merely because the assessee wrongly included the income in its return for a particular year, it cannot confer jurisdiction on the Department to tax that income in that year even though legally such income did not pertain to that year." Still further, the Hon'ble Supreme Court in the case of CIT vs. Mahalakshmi Textile Mill Ltd. (1967) 66 ITR 710 (SC) held that "all questions, whether of law or facts, which relate to the assessment of the assessee may be raised before the Tribunal. If for reasons recorded by the Departmental authorities in respect of a contention raised by the assessee, grant of relief to him on another ground is justified, it would be open to the Departmental authorities and the Tribunal, and indeed they would be under a duty to grant that relief. The right of the assessee to relief is not restricted to the plea raised by him. For the reasons given above we are of the opinion that both the low ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the matter to the file of the AO and the AO allowed the claim of the assessee. He further submitted that in the asst. yrs. 1990-91 to 1993-94, no disallowance of interest has been made by the AO. He further submitted that no fresh advance has been received during the year. Hence, the disallowance of payment of interest in the years under appeal should be deleted. 20. We have heard the rival submissions and perused the orders of both the lower authorities and considered the submissions made by both the parties. The learned Departmental Representative has submitted that the allowance of the interest was consequential. Since the deposits have been held to be genuine by the CIT(A) in the asst. yr. 1994-95, the interest on deposits was allowable to the assessee. That being so we reject the ground of appeal of the Revenue. 21. The ground No. 2 of the appeal of the Revenue in the asst. yr. 1995-96 relates to allowing 10 per cent of the expenditure made on entertainment, relying on the Hon'ble Delhi High Court decision in the cases of CIT vs. Expo Machinery Ltd (1992) 107 CTR (Del) 4 : (1991) 190 ITR 576 (Del). The facts of the case are that the AO made disallowance of Rs. 21,25,710 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k because it is their work and duty to entertain the customers of the company. Therefore, whenever expenditure is incurred on the food and beverages of the employees at the time when they are working, will obviously be excluded from the purview of s. 37(2A). Facts being similar, respectfully following the decision of the Hon'ble Delhi High Court, we uphold the order of the CIT(A). This ground of the appeal of the Revenue is dismissed. 24. The Ground No. 3 of the appeal for the asst. yr. 1995-96 and ground No. 2 for the asst. yr. 1996-97 relate to allowing deduction under ss. 80-I and 80-IA before deducting the amount of deduction under s. 80HH of the Act. The brief facts of the case are that the assessee claimed deduction under ss. 80HH, 80-I and 80-IA of the Act. The AO considering the provision of 80HH wherein it has been clarified that where the assessee claims deduction under ss. 80HH, 80-I, effect shall be first given under s. 80HH and on that basis be allowed deduction under ss. 80-I and 80-IA only on the balance amount after allowing deduction under s. 80HH of the IT Act, 1961. 25. In appeal, the assessee contended that ss. 80HH, 80-I and 80(1A) are independent provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that purpose. While specific provision for allowing deduction under s. 80HH before deduction under s. 80-I or 80J is allowed, has been made, there is no further order or priority prescribed. Amongst claims to deduction under ss. 80-I and 80J, in the absence of enough gross total income against which the permissible deduction computed independently in accordance with s. 80-I or 80J, it remains the option of the assessee, which claim he opts to be adjusted against available gross total profit for that purpose. The object of s. 80HH(9) is not to reduce the limit of eligible deduction under s. 80-I or 80J in anyway." To the same effect is the decision of the Hon'ble Bombay High Court in the case of CIT vs. Neema Specific Family Trust (2001) 165 CTR (Bom) 518 : (2001) 248 ITR 29 (Bom). To the same effect is the decision of the Hon'ble Punjab Haryana High Court in the case of CIT vs. S.B. Oil Industries (P) Ltd (2005) 274 ITR 495 (P H). 29. Facts being similar, respectively following the decision of the Tribunal in the assessee's own case and the decisions in the cases of Choksi Contacts (P) Ltd., Specific Family Trust and S.B. Oil Industries (P) Ltd., we decide the issue in favou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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