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TMI Blog2016 (12) TMI 446X X X X Extracts X X X X X X X X Extracts X X X X ..... 263 of the Act. - Decided against assessee - ITA No 203/Coch/2016 - - - Dated:- 9-11-2016 - SHRI B P JAIN, AM AND GEORGE GEORGE K, JM For The Assessee : Sh K M Jose For The Revenue : Sh Shamtom Bose, CIT-DR ORDER PER GEORGE GEORGE K,JM: This appeal, at the instance of the assessee, is directed against the CIT s order passed u/s 263 of the I T Act (order dated 24.3.2016). The relevant assessment year is 2011-12. 2 The grounds raised read as follows: 1. Serial no.i, of the notice under section 263 says that Allowing depreciation under section 10B has resulted in excess disallowance of deduction and wrong carry forward of loss of ₹ 17,82,793/-. The deduction under section 10B has to be allowed from the total income and not from the business income as claimed by the assessee . It is respectfully submitted that this is only a change of opinion and all the details/documents had been submitted at the time of assessment and therefore does not become eligible for proceedings under section 263 of the Income Tax Act, 1961. 2. Serial no. ii, of the Notice under section 263 says that Amount of deduction to be allowed under section 10B was not v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess income as claimed by the assessee. ii). Amount of deduction to be allowed u/s 10B was not verified by the Assessing Officer. iii). Excess deduction u/s 35(2AB) of ₹ 5.69 lakhs claimed by the assessee. iv) Reconciliation of income as per TDS certificates and income credited in the books not done by the Assessing Officer. 3.2 The assessee filed objections to the proposed revision. The CIT, however, rejected the objections raised by the assessee and passed order u/s 263 of the I T Act, setting aside the assessment order passed u/s 143(3) dated 23.1.2014. The CIT directed the Assessing Officer to re-examine the issues mentioned in para 3 of the impugned order. The relevant findings of the CIT, read as follows: 3. I have considered the contentions of the assessee. Section 10B says that deduction u/s 10B shall be allowed from the total income of the assessee. This total income is defined in Section 80A of the Income-tax Act, and it speaks of how gross total income is to be determined and how total income is to be determined. Hence the assessee's contention that there is no definition for total income is incorrect. Further, what can be allowed as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng on 1st April 2001 whereby the allowance contemplated prior III the amendment has been now made a deduction from the profits or the undertaking. 1.2 Section 10B is in Chapter III of the Act which deals with Income which do not form part of the Total Income and contemplates a specific deduction for a specific eligible undertaking irrespective of any other factors which might affect the computation of the total taxable income. Please see page C for the Computation of the deduction under section 10B and page A B for the Computation of income. 1.3 In so far as it is a deduction relating to the profit of the undertaking it has to be strictly computed on the basis of the profit of the undertaking only and also in accordance with the formula prescribed in subsection (4) of section 10B. 1.4 It is also submitted that a plain reading of the return or income in Form ITR-6 applicable for Companies in respect of the assessment year 2011-12 under schedule BP(page 12), the profit of the business is quantified under serial no..34 (page 13) and the deduction under section 10B is allowed under serial no. 35 (page 13) to arrive at the net profit or loss from business or profession ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of, 1. The Supreme Court in Commissioner of Income Tax v. Max India Ltd (2c) 5 ITR 0282 (Pages 8 and 9 of the Paper Book) 2. The Gujarat High Court in Commissioner of Income Tax v. Arvind Jewellers (259 ITR 0502) (Pages 10 to 13 of the Paper Book) 3. The Bombay High Court in Commissioner of Income Tax v. Design Automation Engineers (Bombay) (P) Ltd: ((2010) 323 ITR 0632 (Pages 14 to 17 of the Paper Book) 2. It is not correct on the part of the Principal Commissioner of Income Tax to come to the conclusion that the deduction under section 10B was not verified by the Assessing Officer. 2.1 It is respectfully submitted that all the relevant documents relating to the claim of the Assessee under the section 10B was filed before the Assessing Officer and verified by him and such an allegation is contrary to the facts and therefore bad in law. 2.2 It is also submitted that it is not correct to come to a conclusion that the assessment has been completed by the assessing officer without making proper enquiry, just because the assessment Order was not an elaborate one. The reason why it was not an elaborate order is due to the fact that the tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appeal. 5 The ld DR, on the other hand supported the order of the CIT. The ld DR submitted that the computation of deduction u/s 10B made by the assessee is erroneous in light of the judgment of the Hon ble jurisdictional High Court in the case of CIT vs Patspin India Ltd reported in 245 CTR 97 and hence, the revisionary order passed by the CIT u/s 263 of the Act is justified and the same is to be upheld. 6 We have heard the rival submissions and perused the material on record. Admittedly, in this case, the assessee has computed the deduction u/s 10B of the Act before reducing the brought forward loss and unabsorbed deprecation. The said computation of the assessee is against the judgment of the Hon ble jurisdictional High Court in the case of CIT vs Patspin India Ltd reported in 245 CTR 97. Against the judgment of the Hon ble jurisdictional High Court in the case of CIT vs Patspin India Ltd,, a review petition was filed and the same was dismissed by the Hon ble High Court. In the judgment rendered on the review petition, in spite of taking note of the judgment of the Hon ble Karnataka High Court, in the case of CIT vs Yokogawa India Ltd reported in 341 ITR 385 (Hon ble ..... X X X X Extracts X X X X X X X X Extracts X X X X
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