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TMI Blog2011 (1) TMI 1114X X X X Extracts X X X X X X X X Extracts X X X X ..... of the income received by way of consultancy charges which is to be specifically excluded by virtue of mandatory provision contained in Explanation (d) of Section 80HHE. In fact, since there is an omission to apply the statutory provision in the working out of eligible deduction of profit on export of software, the assessment could even be rectified through rectification proceedings under Section 154. In any case when the mandatory provision is not followed leading to evasion of tax by way of excess relief granted to the assessee, the remedy open to the officer is to revise the assessment by invoking powers under Section 147 - Decided against assessee - ITA.No. 10 of 2010 - - - Dated:- 5-1-2011 - MR. Justice C.N.RAMACHANDRAN NAIR, MR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... noticing the mistake of including profit received for local business by way of consultancy charges in the export profit in violation of the above statutory provision, the Assessing Officer revised the assessment in exercise of powers conferred under Section 147 of the Income Tax Act. The revised assessment limiting the claim of deduction on export of software by excluding profit attributable to consultancy services rendered within India, was challenged by the assessee in appeal before the CIT(Appeals), who allowed the claim. On second appeal filed by the Revenue, the Tribunal noticed that the issue is settled by decision of the Supreme Court in K.RAVINDRANATHAN NAIR'S CASE reported in 295 ITR 228 and based on the said decision, the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces rendered to parties within the country. 3. After hearing both sides and after going through the statutory provisions and the decision of the Supreme Court abovereferred, we feel the above decision is squarely applicable to the facts of this case. This is because Explanation (d) to Section 80HHE is similar to Explanation (baa) to Section 80HHC of the Act, with reference to which the Supreme Court rendered the above judgment. Explanation (baa) to Section 80HHC states as under: "Profits of the business" means the profits of the business as computed under the head "Profits and gains of business or profession" as reduced by -- (1) ninety per cent of any sum referred to in clauses (iiia), (iiib), (iiic), (iiid) and iii(e) of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... export profit for deduction under Explanation (baa) to Section 80 HHC and Explanation (d) to Section 80HHE, are not specifically mentioned in the clauses even though some of the items like rent, commission and brokerage are specifically covered. The question, therefore, to be considered is what is the meaning of "any other charges or receipt of a similar nature" included in the profits. Necessarily what is to be considered is the nature of income the exclusion of which from the profit can be treated as an income similar to brokerage, commission, interest or rent. All these items of income like brokerage, commission, interest and rent are not attributable to export business. Assessee itself has no case that consultancy charges received by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel for the assessee contended that all the material facts are available on record and the reassessment under Section 147 is on account of change of opinion, we do not think the position canvassed is any longer available after the amendment to Section 147 of the Act by which any escapement of income can be assessed within four years by invoking Section 147 of the Act and for period beyond four years, reopening is possible only if the assessee suppressed material facts. What is seen in this case is that assessee while working out the eligible deduction did not exclude 90% of the income received by way of consultancy charges which is to be specifically excluded by virtue of mandatory provision contained in Explanation (d) of Section 80HHE ..... X X X X Extracts X X X X X X X X Extracts X X X X
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