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TMI Blog2012 (11) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, the Assessing Officer reopened the assessment by issuing a notice u/s. 148 of the Act on 25-06-2002 after duly recording the reasons for the same. Thus, it is also noticed that the assessment has been re-opened within four years from the end of the assessment year and further the return filed by the assessee had been processed earlier only u/s. 143(1) of the Act. An identical question under identical set of facts was considered by the Hon'ble Supreme Court in the case of Rajesh Jhaveri Stock Brokers Pvt. Ltd. 291 ITR 500 and the Hon'ble Apex Court upheld the reopening of the assessment in that case. Hence, by following the said decision of the Hon'ble Supreme Court, we do not find any infirmity in the decision of the Ld. CIT(A) in upholding the re-opening of the assessment. 3. The next issue in this year relates to the deduction claimed u/s. 80HHD of the Act. The facts borne out of the record are that the assessee was operating two hotel units, viz., Hotel named at Bangaram Island and another hotel named Coconut lagoon. There is no dispute that both the units are eligible for deduction u/s 80HHD of the Act. It appears that the assessee claimed deduction u/s. 80 HHD of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r attention to the provisions of sub sec.7 of sec. 80-IA (sub. Sec. 5 in new section 80-IA introduced with effect from 2000-2001 and the said sec. 80-IA(5) is made applicable to sec. 80IB also as per the sub sec. 13 of sec. 80IB), the learned counsel for the assessee contended that deduction u/s. 80-IA has to be computed on the profits of the eligible unit, by treating the same as the only source of income. He further submitted that sec. 80-IA/80IB is a self contained regulation and it has overriding effect over all other provisions of the Act. Hence the amount of deduction computed there under is eligible for deduction even if the Gross total income results in a lesser figure or loss, since sub section 5 of sec. 80-IA overrides any other provisions of the Act including sec. 80A(2) and sec. 80AB of the Act. Thus, according to the assessee, the amount of deduction computed u/s 80-IA is eligible for deduction even if there is no Gross Total income or the Gross Total income results in a minus figure. On the contrary, the Ld D.R strongly supported the order of Ld CIT(A) on this issue. 7. We have heard the rival contentions on this issue. The provisions of sec. 80A(2) and sec. 80AB and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I-A. It starts with the words "where any deduction is required to be made or allowed under any section of this Chapter". This would include section 80HHC. Section 80AB further provides that "notwithstanding anything contained in that section". Thus section 80AB has been given overriding effect over all other sections in Chapter VI-A. Section 80HHC does not provide that its provisions are to prevail over section 80AB or over any other provisions of this Act. Section 80HHC would thus be governed by section 80AB." According to sec. 80AB, the amount of income of the nature specified in sec. 80-IA, which is included in the Gross Total Income, shall be deemed to be the amount of income of that nature derived or received by the assessee for the purpose of computing deduction u/s 80-IA of the Act, i.e., the amount of deduction u/s 80-IA shall be computed only with reference to the amount of income from eligible business, which is included in the "Gross Total Income". This provision shall have application if the profits and gains of eligible business computed under sec. 80-IA get reduced while including the same in the Gross total income. 9. Accordingly, in our view, a combined reading of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... details of the Gross total income is not borne out of record. Hence, the issue of computation of deduction u/s 80-IA requires fresh examination in the light of discussions made supra. Accordingly, we set aside the order of Ld CIT(A) on this issue and restore the same to the file of the AO with the direction to examine this issue afresh in the light of discussions made supra. 11. The next issue in the assessment year 1999-2000 relates to the computation of interest u/s. 234C of the Act on the tax payable u/s. 115JA of the Act. This issue is now decided by the Hon'ble Supreme Court in the case of CIT v. Rolta India Ltd., 330 ITR 470, in which it has been held that the assessee is liable to pay interest for short payment of advance tax even on the income computed u/s 115JB of the Act. Accordingly we uphold the order of the Ld. CIT(A) on this issue. 12. We shall now take up the appeal filed by the assessee for the assessment year 2000-2001. The assessee is assailing the decision of the Ld CIT(A) in confirming the computation of deduction made u/s 80HHD and sec. 80IB of the Act. We notice that the assessee has claimed deduction u/s 80IB of the Act in this year, where as in the immedia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... escapement of income and hence reopened the assessment by issuing notice u/s 148 of the Act by recording the reasons. In the assessment order, the AO has specifically stated that the proceedings initiated u/s 154/155 gets merged with that of section 147/148 of the IT Act, 1961. Before the ld CIT(A), the assessee contended that, as per the Kelvinator India decision of Hon'ble Delhi High Court (256 ITR 1), which takes into consideration a numerous other courts decision, no reopening u/s 147 can be made after the due date of completing scrutiny assessment u/s 143(3) has been allowed to be lapsed by the AO. It was also contended that there should not be simultaneous action by the AO under sec. 154 and 147 by placing reliance on the decision of Hon'ble Gujarat High Court in the case reported in 245 ITR 775. The Ld CIT(A) was convinced with the said contentions and accordingly held that the reopening of assessment is void ab initio. Hence, the Ld CIT(A) did not adjudicate the grounds raised on merits. Aggrieved, the revenue has filed appeal before us. On an abundant caution, the assessee has also filed appeal on merits of the case, which were not adjudicated by the Ld CIT(A). 16. We ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to Rs.73,54,058/-, which was computed under the Income tax Act, where as the clause (iii) of Explanation 1 to section 115JB provides for deduction as under:- "(iii) the amount of loss brought forward or unabsorbed depreciation whichever is less as per books of account. Explanation:- For the purposes of this clause,-- (a) the loss shall not include depreciation; (b) the provisions of this clause shall not apply if the amount of loss brought forward or unabsorbed depreciation is nil". Accordingly the AO held that the assessee is not entitled to deduct the carry forward depreciation computed under the income tax provisions from the book profit computed u/s 115JB of the Act. The AO further noticed that the books of account did not show any brought forward loss. Since the brought forward loss as per books of account was NIL, the AO held that the assessee is not eligible for deduction of any amount as per clause (iii) of Explanation 1 to sec. 115JB of the Act. However, the Ld CIT(A) directed the AO to allow deduction of carry forward depreciation as claimed by the assessee with the observation that the AO has disallowed the claim without assigning any reason. We notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction u/s 80HHD of the Act. (b) Validity of decision of Ld CIT(A) in allowing deduction of carry forward depreciation while computing book profit u/s 115JB of the Act. 25. We notice that the AO has computed the Gross total income for this year at Rs.2,32,46,035/-, but did not discuss/consider the eligibility of deduction u/s 80HHD of the Act. It is also not known whether the assessee has claimed the said deduction in its return of income. The Ld CIT(A) directed the AO to allow the deduction u/s 80HHD of the Act. The revenue is aggrieved by the said decision of Ld CIT(A). 26. The matter of eligibility of deduction u/s 80HHD of the Act has since been settled by the Hon'ble High Court of Kerala in the assessee's own case reported in 294 ITR 67. We have also discussed about this issue in the preceding paragraphs. Accordingly, we modify the order of Ld CIT(A) on this issue and direct the AO to consider the eligibility of deduction in accordance with law and also by following the binding decision of jurisdictional High Court in the assessee's own case referred supra. 27. The next issue relates to the validity of allowing deduction of carry forward depreciation while comput ..... X X X X Extracts X X X X X X X X Extracts X X X X
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