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TMI Blog2013 (3) TMI 486X X X X Extracts X X X X X X X X Extracts X X X X ..... s which was calculated without deduction on account of depreciation. Though on merits of the addition made in the reassessment proceedings which is challenged by the assessee in ground No.2 raised before us, we find that a Full Bench of the Bombay High Court in the case of Plastiblends India Ltd. vs. ACIT [2009 (10) TMI 39 - BOMBAY HIGH COURT] has held that depreciation has to be claimed and the resultant profits arrived at after claiming depreciation will alone qualify for deduction under section 80IA of the Act, in view of the decision on Ground No.1 regarding validity of initiation of reassessment proceedings, we do not consider is necessary to deal with the said issue raised by the assessee in ground No.1 The appeal of the assessee is allowed. - ITA 1799/MUM/2008 - - - Dated:- 27-1-2012 - SHRI N.V.VASUDEVAN SHRI R.K.PANDA, JJ. Appellant by : Shri Yogesh Thar Respondent by : Shri Pavan Ved ORDER PER N.V.VASUDEVAN, J.M: This is an appeal by the assessee against the order dated 10/1/2008 of CIT(A)-2, Mumbai relating to assessment year 2001-02. The grounds of appeal raised by the assessee read as under: 1. Re-opening bad in law: (a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent the assessee s claim for deduction u/s.801A has been allowed at Rs.3,59,17,105/- as claimed by the assessee. It has been held by the Bombay High Court in the case of M/s. Indian Bank Corporation Ltd. Vs. CIT that the assessee can not exclude depreciation allowance while computing profits derived from newly established units for the purpose of claiming deduction u/s. Chapter VI-A of the IT Act. Accordingly, the assessee has, been granted depreciation at Rs.18,13,758/- on the profits of its Goa units and consequently the deduction allowable u/s.801A is re-calculated. 4. On appeal by the assessee the CIT(A) confirmed the order of the AO. Before CIT(A) the assessee challenged the validity of initiation of reassessment proceedings under section 147 of the Act. The assessee had contended before the CIT(A) that the fact that depreciation had not been claimed by the assessee and that profits on which deduction under section 80IA of the Act was claimed on profits arrived at by the assessee without claiming depreciation was duly disclosed by the assessee in the return of income and that AO when he completed the proceedings under section 143(3) of the Act he was fully conscious of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act and in such order the AO dealt with the deduction under section 80IB in respect of Goa Unit as follows: III Assessee has claimed deduction u/s. 80 IB in respect of Goa Unit situated at L-20, Verna Industrial Estate, Suleetee Goa 403 722. Goa Unit started production from A.Y 1998-99. Goa unit manufacture Intrauterine device i.e. Copper T. Deduction u/s. 80 IB is claimed at Rs. 3,59, 17,105/- and in respect of Daman Unit is Nil as there is no profit from Daman Unit. From profit and of Goa unit it seen that deduction has been claimed on other income of Rs. 5771/- also. However, deduction u/s. 80IB is admissible only on profit and gain derived from any business carried on by assessee company and is applicable to Industrial undertaking. Since, other income is not in the nature of business profit and it is taxed from other sources, same is excluded from total income for the purpose of allowable deduction u/s. 80IB. After excluding income from other sources profit of business works out to Rs. 3,59,11,334/- and deduction admissible works to Rs. 3,59,11,334/-. 7. Based on the above facts available on record when the original assessment proceedings were concluded, the ld. Coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e conferred jurisdiction on the AO to make a back assessment, but in s. 147 (w.e.f. 1st April, 1989), they are given a go by and only one condition has remained, viz., that where the AO has reason to believe that income has escaped assessment, confers jurisdiction to reopen the assessment. Therefore, post 1st April, 1989, power to reopen is much wider. However, one needs to give a schematic interpretation to the words reason to believe failing which, s. 147 would give arbitrary powers to the AO to reopen assessments on the basis of mere change of opinion , which cannot be per se reason to reopen. The conceptual difference between power to review and power to reassess should also to be kept in mind. The AO has no power to review; he has the power to reassess. But reassessment has to be based on fulfillment of certain pre-condition and if the concept of change of opinion is removed, as contended on behalf of the Department, then, in the garb of reopening the assessment, review would take place. One must treat the concept of change of opinion as an in-built test to check abuse of power by the AC. Hence, after 1st April, 1989, AO has power to reopen, provided there is tangibl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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