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TMI Blog2002 (5) TMI 220X X X X Extracts X X X X X X X X Extracts X X X X ..... total turnover. Learned CIT found no force in these contentions because under KVSS the matter covered was dispute regarding exclusion of profit from export of trading goods while calculating deduction under sections 80HH and 80-I and the dispute whether income from sale of export entitlement and refund of excise duty was to be excluded or not was not discussed at all. Similarly, he did not find any force in the contention that definition of total turnover as given in the Companies Act should be adopted because total turnover was defined in Explanation (ba) of Section 80HHC. 3. Before us, Learned Assessing Representative submitted that originally assessment was completed under section 143(3) on 27-3-1998. Later on assessment was rectified under section 154 of the I.T. Act on 28-1-1999. According to him, it is a well settled law that once a notice is issued for the purpose of making rectification, proceedings become reopened and the initial order of assessment ceases to be operative. The effect of reopening of assessment is to vacate or set aside the initial order of assessment and to substitute in itself the order made on rectification. Thus, rectified order would come into existe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e other 9 additions would still remain the only effect of rectification is that assessment order has to be read subject to rectification made in that order. The judgment relied on by the Learned Assessee's Representative are of no help. In this regard, first of all, we would like to observe that Hon'ble Supreme Court in CIT v. Sun Engg. Works (P.) Ltd. [1992] 198 ITR 297 has observed, "it is neither desirable nor permissible to pick out a word or sentence from the judgment of the Supreme Court divorced from the context of the question under, consideration and treated to be complete law declared by the Court. The judgment must be read as a whole and the observations from the judgment had to be considered in the light of the question which were before the Court. A decision of the Supreme Court takes its colour from the questions involved in the case in which it is rendered and while applying the decision to a latter case Courts must carefully try to ascertain the true principles laid down by the decision." Recently again a Constitution Bench of the Hon'ble Supreme Court in case of Padmasundra Rao v. State of Tamil Nadu [2002] 255 ITR 147 has observed at page 153 : "Courts should no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents means correct an error and the expression "Amend the order" would mean correct the error in the order. Under section 154, power to rectify the error is to be exercised by correcting the error in the order and the correction must, therefore, extend to the elimination of the error. What the effect of the elimination of the error will be on the original order will depend upon each case. It may be that the elimination of the error may affect only a part of the order." 8. Again Hon'ble Gujarat High Court in Karsandas Bhagwandas Patel v. G. V. Shah, ITO [1975] 98 ITR 255 has observed "The "final order" for the purpose of section 35(5) of the Act means the order which makes the final assessment of the assessee. It is well established that a proceeding for rectification of an assessment is a proceeding for assessment: it is part of the procedure for ascertainment and imposition of tax liability on the assessee. When an assessment is rectified by an order of rectification, what was wrong quantification of tax liability is rectified and a correct quantification of the liability is substituted for it and the corrected assessment is final assessment the order of rectification th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt in Vippy Solvex Products (P.) Ltd.'s case was concerned with altogether different facts. In that case, original assessment was completed on 12-12-1986 and this order was rectified on 28-2-1987. In this case, Commissioner initiated revisionary proceedings under section 263. In this case also the original order itself was under appeal before Commissioner of Income-Tax (A). It was held in these circumstances that there was no order available for revision under section 263. So again ratio of this decision cannot be applied to the instant case. Recently Hon'ble Gujarat High Court in CIT v. Panna Knitting Industries [2002] 253 ITR 656 has held that even if an appeal has been preferred before CIT, order would merge only to the extent (i.e. various items which have been challenged before CIT). After analysing all these judgments, we are of the considered opinion that original order was very much available for revision in respect of the items which have not been dealt with for Learned CIT. 11. Coming to the second contention of Learned Assessing Representative that assessee has filed declaration under KVSS and as such the matter was finally closed and could not be reopened by the Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents and non-inclusion of job receipts in total turnover while calculating deduction under section 80HHC. Regarding refund of excise duty, it was submitted that ratio of decision in Sterling Food's case was not applicable because the refund of excise duty is received on the goods manufactured and exported by the company. Thus, it is derived from the manufacture of goods exported and assessee is entitled for deduction under sections 80HH and 80-I. In this regard, reliance was also placed on Cambay Electric Supply Industrial Co. Ltd. v. CIT[1978] 113 ITR 84 (SC). As no deduction under sections 80HH and 80-I can be allowed on income from sales of export entitlement in view of the decision of Hon'ble Supreme Court in Sterling Food's case, we uphold the order of Learned CIT in this respect. As far as refund of excise duty is concerned, we agree with Learned Assessee Representative that it has been received on goods manufactured by assessee, therefore, the ratio of Sterling Food's case is not applicable, therefore, we set aside the order of Learned CIT on the point of deduction under sections 80HH and 80-I in respect of refund of excise duty. As far as issue of inclusion of job work rece ..... X X X X Extracts X X X X X X X X Extracts X X X X
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