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TMI Blog2007 (7) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... e heard together and disposed off by this common judgment. 3. Although the facts are not in dispute, to appreciate the rival contentions, we may note few facts in Writ Petition No.43 of 2007. 4. Return of income filed by the petitioner/assessee for A.Y.2000-2001 was assessed under Section 143(3) of the Act on 28-3-2003. By the said assessment order, deduction under Section 80HHD was allowed to the extent of Rs.3,28,09,526/- as against the amount claimed at Rs.5,48,71,321/-. On appeal filed by the assessee, the CIT (A) by his order dated 21-11-2003 allowed entire amount claimed by the assessee under Section 80HHD of the Act. Further appeal filed by the revenue against the order of C.I.T. (A) is pending before the Income Tax Appellate Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hose referred to in sub-section (4), the amount so utilized shall be deemed to be profit and shall be charged to tax in the year in which the amount was so utilized. It is seen from the balance sheet as on 31/03/2000 that the assessee has an opening balance of Rs.16.25 Cr. in its Reserve Account (80HHD). The assessee transferred Rs.7,89,46,000/- to 80HHD Utilized Account but actually utilized only Rs.4,60,96,779/- (wrongly recorded as Rs.4,16,96,779/-) (maximum) for specific purpose and utilized the balance of Rs.3,28,49,221/- for the purpose other than those referred in sub-section (4). Therefore, the amount so utilized of Rs.3,28,49,221/- should have been taxed as deemed profit. Therefore, I have reasons to believe that the income to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its business in the manner laid down in Section 80HHD(4) of the Act or utilises the amount for the purposes other than those specified in Section 80HHD(4) of the Act, then the amount so utilized becomes chargeable to tax. 9. Mr.Sathe, learned Senior counsel appearing on behalf of the petitioner submitted that in the present case, the total amount credited to the '80HHD reserve account' during the A.Y. from 1989-90 to 1999-2000 was Rs.16,25,00,000/-. During the specified period, the assessee had utilised a sum of Rs.10,50,71,000/- for the purposes specified in Section 80HHD(4) of the Act. The said amount of Rs.10,50,71,000/-, thus became a free reserve. Out of the said sum of Rs.10,50,71,000/- the assessee had appropriated a sum of Rs.2,61 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he reopening of the assessments on the ground that the amount transferred from the '80HHD reserve account' have not been utilised for specified purposes set out in Section 80HHD is wholly unsustainable and consequently the impugned notices are liable to be quashed and set aside. 11. Mr.Chatterjee, learned counsel appearing on behalf of the respondents, on the other hand, submitted that in the present case reopening of the assessment is based on the audit objections and it is well established in law that the assessments can be reopened based on audit objections. In this connection, he relied upon a judgment of the Apex Court in the case of CIT V/s. PVS Beedies Pvt Limited reported in 237 ITR 13. 12. Mr.Chatterjee submitted that in the Annu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00/- in the '80HHD reserve account', during the assessment years from 1989-90 to 1999-2000, a sum of Rs.10,50,71,000/- has been utilized for the purposes specified in Section 80HHD (4) of the Act. Accordingly, it was contended before the assessing officer that out of the sum of Rs.16,25,00,000/- a sum of Rs.10,50,71,000/- had become free reserve. Out of the said free reserve amount of Rs.10,50,71,000/- a sum of Rs.2,61,25,000/- had already been appropriated in the profit and loss account and, therefore, the balance free reserve amount of Rs.7,89,46,000/- (Rs.10,50,71,000/- - Rs.2,61,25,000/-) has been transferred to '80HHD utilised account' so as to utilise the same for any purpose whenever found necessary. The claim of the assessee that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... awn, the assessee has transferred the said amount to a separate account called '80HHD utilised account'. In such cases, it cannot be said that there is violation of Section 80HHD and consequently it cannot be said that the income has escaped assessment. 15. The argument of the revenue based on the audit report and the annual report of the assessee that out of the amount Rs.7,89,46,000/- drawn from the '80HHD reserve account', the assessee has utilised only Rs.4,60,96,779/- for the purposes specified in Section 80HHD(4) is wholly misconceived because, firstly, there is no actual withdrawal of the amount of Rs.7,89,46,000/- from the '80HHD reserve account' and the assessee has merely transferred the said amount to the '80HHD utilized account ..... X X X X Extracts X X X X X X X X Extracts X X X X
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