9911796707
TMI Blog2006 (4) TMI 229X X X X Extracts X X X X X X X X Extracts X X X X ..... ffect from 1st April, 1962 by the Finance Act, 2001 for the purposes of computing the total income under Chapter IV and no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to such exempted income. But the provisions of section 14A of the Act do not speak about the deductions to be made in computing the total income as per the provisions of Chapter VI-A (sections 80A to 80U), even though as a result of such deductions, the taxable income is reduced wholly or partially. In the present case in hand, the reopening was done as the income escaped due to excess claim of deduction under section 80P(2)(e) of the Act by allowing full by the Assessing Officer in the original assessment order passed under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,15,566. While completing the original assessments under section 143(3) of the Act for all the assessment years under consideration, the Assessing Officer allowed the entire deduction. Subsequently, the Assessing Officer issued notice under section 148 of the Act and in reassessment, he restricted the deduction under section 80P(2)(e) to the net receipts of Rs. 38,20,117 by reducing the expenditure of Rs. 14,95,449 from the gross receipts for the assessment year 1996-97. Before the Assessing Officer, the assessee pleaded that in view of proviso to section 14A of the Act, no reassessment under section 147 of the Act or enhancement under section 154 of the Act can be done for any assessment year beginning on or before 1st April, 2001. The as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income which does not form part of the total income under this Act: Provided that nothing contained in this section shall empower the Assessing Officer either to reassess under section 147 or pass an order enhancing the assessment or reducing a refund already made or otherwise increasing the liability of the assessee under section 154, for any assessment year beginning on or before the 1st day of April, 2001." 5. We have also gone through the Circular No. 11 of 2001, dated 23rd July, 2001 which reads as under: "Restriction on reopening of completed assessments on account of provisions of section 14A- Clarification regarding.- The Finance Act, 2001, has inserted section 14A in the Income-tax Act, 1961, wherein it was specifically provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7th August, 2002 was issued elaborating the scope and effect of insertion of proviso to section 14A of the Act by the Finance Act, 2002 with effect from 11th May, 2001 and the relevant circular reads as under: "23. Amendment of section 14A.- 23.1 Through the Finance Act, 2001, a new section namely 14A was inserted in the Income-tax Act retrospectively with effect from 1st April, 1962 to clarify the intention of the Legislature that no deduction shall be allowed in respect of any expenditure incurred by an assessee in relation to income which does not form part of the total income under the Income-tax Act. The intention of inserting the new section retrospectively was to set the existing controversy on this issue at rest and not to unsettle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or this section. The provisions of section 14A of the Act talks about the income which does not form part of the total income under this Act and not the deductions. The deductions are provided under Chapter VI-A from sections 80A to 80U of the Act, etc. etc. Here, Chapter VI-A of the Act talks about the deduction in computing the total income of the assessee and not the exempted income. In the present case in hand, the assessee claimed deduction under section 80P(2)(e) of the Act on the whole of the gross receipts without deducting the expenditure. It is to be noted that as to whether the phraseology used in section 14A of the Act can be compared with the deductions to be made in computing the total income as per the provisions of section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct by allowing full by the Assessing Officer in the original assessment order passed under section 143(3) of the Act. In the given facts and circumstances of the case, we fairly feel that the reopening by the Assessing Officer is perfectly within the provisions of the law. Accordingly, we feel that the proviso to section 14A of the Act and circulars cited above will not apply to the claim of deductions as provided in Chapter VI-A from sections 80A to 80U of the Act. Hence, we find that the CIT(A) has erred in quashing the reassessment proceedings under section 147/148 of the Act by holding that the proviso to section 14A of the Act and circulars issued by the Board will apply. Accordingly, the CIT(A)'s order on jurisdiction is set aside but ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
