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TMI Blog2016 (11) TMI 1020X X X X Extracts X X X X X X X X Extracts X X X X ..... the outset, it is required to be noted that initially the assessee proposed the following substantial questions of law: "(i) Whether, in the facts and circumstances of the case, the ITAT was right in law in holding that the action of the respondent in reopening the assessment of the appellant was neither barred by limitation nor without jurisdiction? (ii) Whether, in the facts and circumstances of the case, the ITAT was right in law in holding that the proviso to S.147 of the Act puts an embargo qua initiation of the reassessment proceedings only and does not put any restriction qua completion of the reassessment proceedings? (iii) Whether, in the facts and circumstances of the case, the ITAT was right in law in holding that there was no change of opinion on the part of the respondent in spite of the fact that the original assessment was framed u/s 143(3) of the Act and after applying his mind, the respondent consciously and deliberately granted deduction u/s 32AB of the Act which was sought to be withdrawn in the reassessment proceedings? (iv) Whether, in the facts and circumstances of the case, the ITAT was right in law in holding that the deduction u/s 32AB of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return had been filed by the assessee on 15.11.1988 declaring income of Rs. 6,09,62,050/. The assessee claimed deduction under Section 32AB of the Act for Rs. 2.5 crores on the basis of the deposit made with IDBI as provided under Section 32AB of the Act. The audit certificate under Section 32AB had been attached to the return of income. Certain queries were also raised by the Assessing Officer including the query with respect to the deduction claimed under Section 32AB of the Act, which came to be ensured by the assessee. That original assessment under Section 143(3) read with Section 164 of the Act was passed by the Assessing Officer on 27.3.1991 at an income of Rs. 15,34,36,930/. This included income of Patel Detergents (Manufacturing Division) of Rs. 15,19,84,289/and other income of the assessee (trust) of Rs. 14,52,638/. At this stage it is required to be noted that the assessee claimed deduction of Rs. 2,03,05,962/which were disallowed by the Assessing Officer. However, so far as the deduction claimed under Section 32AB of the Act is concerned, the Assessing Officer allowed the said deduction as claimed. At this stage it is required to be noted that the appellant - trust bein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction under Section 147 of the Act was barred by limitation as four years had expired from the end of the assessment year and that the assessee had disclosed fully and truly all material facts necessary for the assessment. The assessee also claimed that the deduction under Section 32AB of the Act was claimed on the basis of audit report and that the Assessing Officer while making the assessment under Section 143(3) of the Act had allowed the deduction accordingly. 5.4 However the Assessing Officer passed the reassessment order by observing that the reassessment is not barred by limitation. On merits, the Assessing Officer held that the deduction under Section 32AB of the Act was to be restricted to 20% of the profits of business or profession and not in respect of profits of any one undertaking. The Assessing Officer also observed and held that, for computation of deduction, the income from profits and gains are taken into account as a whole. The Assessing Officer accordingly calculated the deduction under Section 32AB of the Act at Rs. 2,14,24,749/as against Rs. 2,50,00,000/allowed in the original assessment and the excess deduction of Rs. 35,75,251/came to be withdrawn. 5.5 Fee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... materially erred in holding that the deduction under Section 32AB of the Act is allowable with reference to the profits of the business (of the assessee trust) as a whole and not in respect of the profit of any particular unit i.e. in the present case Patel Detergents (Manufacturing Division). 6.1 It is further submitted by Mr.Soparkar, learned counsel for the assessee that, while holding the aforesaid, the learned Tribunal has materially erred in considering the decision of the Gauhati High Court in the case of Commissioner of Income Tax vs. Dinjoye Tea Estate (P) Ltd., [1997 (Vol.224) 263], which has no application at all to the facts of the case on hand. It is submitted that in the case before the Gauhati High Court the facts were altogether different. It is submitted that in the case before the Gauhati High Court the question was whether the interest and dividend is to be included in income for the purpose of calculating the deduction under Section 32AB of the Act or not. It is submitted that therefore the learned Tribunal has wrongly considered and relied upon the decision of the Gauhati High Court in the case of Dinjoye Tea Estate (P.) Ltd. (supra). 6.2 Mr.Soparkar, learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led to deduction under Section 32AB of the Act equal to 20% of the profits of eligible business i.e. in the present case, the profit of Patel Detergents (Manufacturing Division). 6.5 Making the above submissions, it is requested to allow the present appeal and answer the question framed in favour of the assessee and against the revenue. 7. Mr. M.R.Bhatt, learned counsel appearing on behalf of the department has tried to oppose the present appeal by submitting that, on one hand, the assessee got the benefit of the order passed by the CIT(A) (against the original assessment order) and the income of the assessee was reduced to Rs. 11,99,00,05,570/which include, for the purpose of getting deduction under Section 32AB of the Act, the assessee would claim the deduction under Section 32AB of the Act at Rs. 2.50 crores and not on the reduced amount i.e. Rs. 2,03,05,962/. It is submitted that therefore the assessee cannot be permitted to take contradictory stand. It is submitted that therefore if the loss of other units are considered, in that case the assessee shall be entitled to deduction under Section 32AB of the Act at Rs. 2,14,24,749/only. Thus the assessee was allowed Rs. 35,75,251 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount, or the aggregate of the amounts, so deposited and any amount so utilised; or (ii) a sum equal to twenty per cent, of the profits of eligible business or profession as computed in the accounts of the assessee audited in accordance with subsection (5), whichever is less: Provided that where such assessee is a firm, or any association of persons or any body of individuals, the deduction under this section shall not be allowed in the computation of the income of any partner, or, as the case may be, any member, of such firm, association of persons or body of individuals. (2) For the purposes of this section, (i) `eligible business or profession' shall mean business or profession, other than (a) the business of construction, manufacture or production of any article or thing specified in the list in the Eleventh Schedule carried on by an industrial undertaking, which is not a smallscale industrial undertaking as defined in section 80HHA; (b) the business of leasing or hiring of machinery or plant to an industrial undertaking, other than a smallscale industrial undertaking as defined in section 80HHA, engaged in the business of construction, manufacture or prod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y amount or amounts withdrawn from reserves or provisions, if such amounts are credited to the profit and loss account; and (b) in a case where such separate accounts are not maintained or are not available, be such amount which bears to the total profits of the business or profession of the assessee after following depreciation in accordance with the provisions of subsection (1) of section 32, the same proportion as the total sales, turnover or gross receipts of the eligible business or profession bear to the total sales, turnover or gross receipts of the business or profession carried on by the assessee. (5) The deduction under subsection (1) shall not be admissible unless the accounts of the business or profession of the assessee for the previous year relevant to the assessment year for which the deduction is claimed have been audited by an accountant as defined in the Explanation below subsection (2) of section 288 and the assessee furnishes, along with his return of income, the report of such audit in the prescribed form duly signed and verified by such accountant: Provided that in a case where the assessee is required by or under any other law to get his accounts aud ..... X X X X Extracts X X X X X X X X Extracts X X X X
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