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TMI Blog2015 (9) TMI 604X X X X Extracts X X X X X X X X Extracts X X X X ..... as claimed exemption u/s 10B(4) of Income-tax Act, 1961. For the purpose of exemption the profit derived from export of articles or things shall be the amount which bears to the profits of the business of the undertaking in the same proportion as the export turnover in respect of such articles or things bears to the total turnover of the business carried on by the undertaking. A scrutiny of the assessment records of above company has revealed that an exemption of Rs. 3,24,81,050/- u/s 10B was claimed by the assessee and also allowed by the AO. The allowable amount of exemption works out to Rs. 29714664/- as per details given below. Export turnover of EOU unit Rs. 15,39,35,866/- Total turnover (153935866+14331171 other income) Rs. 16,82,67,037/- Business Income Rs. 3,24,81,050/- Export turnover Total turnover x Export business profit i.e. 153935866/168267037 x 32481050 = Rs. 2,97,14,664/- This has resulted in excess allowances of exemption Rs. 27,66,386/- (32481050 - 29714664) u/s 10B. In view of the above facts, I have reason to believe that substantial income has escaped to assessment in the return filed for A.Y. 2002- 03 and provisions of section 147 are invoked. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng under section 148 and also on merit before ld. CIT (A). The ld. CIT (A) vide order dated 18.01.2010 had quashed the assessment order by considering the assessee's reply. The ld. A/R submitted before ld. CIT (A) that AO started the reassessment proceedings based on audit objections of AG Department. There was no independent satisfaction of the AO before reopening the assessment. The ld. A/R further submitted that on inspection of appellant's file on 29.12.2009 it was found that the audit has raised the issue of definition of total turnover which reason was recorded for issuing notice under section 148. On that basis alone notice under section 148 was issued. Although the AO was satisfied about the wrong issue being taken as the basis for reopening, he dropped the issue of total turnover but proceeded to hold certain incomes to be not eligible for 10B exemption. It was submitted that AO hade not passed a speaking order while disposing off the objection against reassessment proceedings. It was further submitted that reassessment was done on issue other than the issue on which the reopening was done. In this regard the AO placed reliance on several judicial decisions includi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Further even if it is treated that the reasons recorded by the AO as on the basis of reasons to believe then the basis of reasons to believe had not been made part of addition in the final order. It means the AO has recorded the reasons on which no addition has been made by him. As evident from the deduction claimed by the assessee, it has not been disturbed i.e. Rs. 3,24,81,050/-. The ld. AO had simply reduced the other income which has not been treated by him as derived income from the 100 export oriented unit as per section 10B of the IT Act for which he has relied upon the case of Hon'ble Delhi High Court in the case of M/s. Ranbaxy Laboratories Ltd. Vs. CIT, (2011) 336 ITR 136 and Hon'ble Bombay High Court in the case of CIT vs. Jet Airways (I) Ltd. (2011) 331 ITR 236 . The Hon'ble Delhi High Court in the case of Ranbaxy Laboratories Ltd. Vs. CIT (supra) held that the AO has not allowed under Explanation 3 of section 147 to include the different items of income which was not connected or related with the reasons to believe, on the basis of which he assumed jurisdiction. For inclusion of such items the AO would be required to issue a fresh notice under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment of those items. For every new issue coming before the Assessing Officer during the course of proceedings of assessment or reassessment of escaped income, and which he intends to take into account, he would be required to issue a fresh notice under section 148. The Assessing Officer was satisfied with the justifications given by the assessee regarding the items of club fees, gifts and presents and provision for leave encashment, but during the assessment proceedings, he found the deduction under sections 80HH and 80-I as claimed by the assessee to be not admissible. He consequently proceeded to make deductions under sections 80HH and 80-I and accordingly reduced the claim on these accounts. The very basis of initiation of proceedings for which reasons to believe were recorded was income escaping assessment in respect of items of club fees, gifts and presents, etc., but while these items were not disturbed, the Assessing Officer proceeded to reduce the claim of deduction under sections 80HH and 80-I which was not permissible. The Tribunal was right in holding that the Assessing Officer had the jurisdiction to reassess issues other than the issues in respect of which proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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