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TMI Blog2012 (11) TMI 310X X X X Extracts X X X X X X X X Extracts X X X X ..... and also the eligible profits for working out deduction u/s 80HHC. The assessee adopted eligible profits without reducing 90% of other income admitted as 'conversion charges' and 'technical consultancy charges' amounting to Rs. 21,87,459/- as required under Explanation (baa) to section 80HHC. Thus resulted in excess claim of deduction u/s 80HHC. 4. The AO noted that the assessee had not reduced 90% of the 'commission' on exports received of Rs. 67,98,563/- from the profits of the business while working out the deduction. It was decided in the case of CIT Vs. Prabhakar, 276 ITR 176 that brokerage and commission being income for procuring export contract cannot be treated as part of eligible profits of the business. 5. In view of the above, the AO worked out the admissible deduction u/s 80HHC at Rs. 3,44,690/-, as under:- (Rs.) Profits of the business : 1,00,69,870 Less 90% of conversion & consultancy, commission received : 80,87,420 Less Balance 90% of interest and export incentives : 4,81,121 Balance eligible profit : 16,31,054 Eligible deduction = 30% of Rs. 16,31,054 x 14,01,42,707 + Rs.3,97,058 x 14,01,42,707 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Laws (Amendment) Act, 1987, and subsequently amended by the Director Tax Laws (Amendment) Act, 1989, with effect from April 1, 1989 as also of section 148 to 152 have been elaborated in Circular No. 549, dated October 31, 1989. A perusal of clause 7.2 of the said Circular makes it clear that the amendments had been carried out only with a view to allay fears that the omission of the expression 'reason to believe' from section 147 would give arbitrary powers to the AO to reopen past assessments on a mere change of opinion. It is, therefore, evident that even according to the Central Board of Direct Taxes a mere change of opinion cannot form the basis for reopening a completed assessment. An order of assessment can be passed either in terms of sub-section (1) of section 143 or sub-section (3) of section 143. When a regular order of assessment is passed in terms of the sub-section (3) of section 143 presumption can be raised that such an order has passed on application of mind. It is well known that a presumption can also be raised to the effect that in terms of clause (e) of section 114 of the Indian Evidence Act, 1872, judicial and official acts have been regularly performed. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his mind and completed the assessment u/s 143(3) of the Act by allowing deduction u/s 80HHC, etc. In other words, all the details were investigated into and there was a clear application of mind. 4.9 However, on exactly the same facts and same information, notice u/s 148 of the Act was issued based on an audit objection. As per reasons recorded, the AO wanted to recompute the deduction u/s 80 HHC and also treat the sum of Rs. 21,45,679/- originally allowed as current repairs, now as capital expenditure. This is evident from the following reasons recorded: "2. It is observed that the assessee adopted incorrect adjusted export turnover and adjusted total turnover and also the eligible profits. The assessee adopted eligible profits without reducing 900/0 of other income admitted as 'conversion charges' and 'technical consultancy charges' amounting to Rs. 21,87,459/- as required under Explanation (baa) to section 80HHC. This resulted in excess claim of deduction u/s 80 HHC. 3. Similarly, the assessee had not reduced 90% of the commission' on exports received of Rs. 67,98,563/- from the profits of the business while working out the deduction. It was decided in the case of CIT Vs. Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d furnished by the Assessee, he would like to come to a different conclusion. This clearly tantamounts to reopening is merely on change of opinion. 13. The Full Bench of the Delhi High Court in the case of Kelvinator of India Ltd has held at page 19 as Under: "In the event it is held that by reason of section 147 of the ITO exercises his jurisdiction for initiating a proceeding for reassessment only upon a mere change of opinion, the same may be held to be unconstitutional. We are therefore of the opinion that section 147 of the Act does not postulate conferment of power upon the Assessing Officer to initiate reassessment proceeding upon his mere change of opinion. We, however, may hasten to add that if 'reason to believe' of the Assessing Officer is founded on an information which might have been received by the Assessing Officer after the completion of assessment, it may be a sound foundation for exercising the power u/s 147 read with section 148 of the Act. We are unable to agree with the submission of Mr. Jolly to the effect that the impugned order of reassessment cannot be faulted as the same was based on information derived from the tax audit report. The tax audit report h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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