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TMI Blog2018 (9) TMI 1890X X X X Extracts X X X X X X X X Extracts X X X X ..... additions made, in that eventuality no such additions is sustainable. However if the CIT (A) comes to the conclusion that there is a live connection and the reasons to reopen is interdependent and interwoven with the addition made then said additions are sustainable in the eyes of law. X X X X Extracts X X X X X X X X Extracts X X X X ..... n to believe within the meaning of section 147, it would not be open for him to assess or reassess any other income Chargeable to tax which has escaped assessment. It is contended that the AO, having reopened the case on the ground that the expenses incurred in foreign currency (being deputation expenses) were not reduced from the export turnover, concluded the assessment on the basis of his other findings...This question would have arisen in a case where the AO, having reopened the assessment to examine the claim of exemption u/s 10A, did not examine the claim and assessed some other income not connected with the claim of exemption u/s 10A. On the contrary, what the AO disallowed is the claim of exemption u/s 10A and nothing else. It is only in connection with the examination of claim u/s 10A that the AO conducted enquiries, which the assessee is calling a 'roving enquiry'. The case of Ranbaxy laboratories Ltd. Vs. CIT was a case. where there was no live nexus between reasons recorded and the assessment framed. The incomes believed to have escaped assessment in that case were the items like club fees, gifts and provision for leave encashment whereas the disallowances made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent order were different. We would be summarising the two in the following table : Reasons for reopening Grounds for additions/disallowance The assessee has not excluded the expenses incurred in foreign currency for delivery of software from the export turnover for the purposes of computing the deduction u/s.10A of the Act It was further held by the AO that export made from India was not in fact export of software or rendering the software consultancy services to earn foreign exchange, rather the assessee has transferred the money from its branch to another branch by giving its colour of export. It was submitted that the reason for reopening was not at all relatable to the addition made by the AO. It was submitted that it is not open for the AO to make addition on the grounds which are not relatable to the grounds for reopening of the assessment. Our attention was drawn by the Ld. AR to the judgment of the Hon'ble Bombay High Court in the matter of CIT v. Jet Airways India P. Ltd [331 ITR 236] and the Hon'ble Delhi High Court in Ranbaxy Laboratories Ltd v. CIT [336 ITR136], where the Hon'ble Delhi and Bombay High Courts have held that if the reassessment proceedings do not cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the enactment, it can be clarified by insertion of an Explanation to the said section of the Act. Same has been done in the present case. Section 147 of the Act was interpreted differently by different High Courts, i.e., whether the second part of the section was independent of the first part, or not. To clarify the same, Explanation 3 was inserted by which it has been clarified that the Assessing Officer can assess the income in respect of any issue which has escaped assessment and also 'any other income' (of the second part of section 147) which comes to his notice subsequently during the course of the proceedings under the section. After the insertion of Explanation 3 to section 147 it is clear that the use of the phrase "and also" between the first and the second parts of the section is not conjunctive and assessment of 'any other income' (of the second part) can be made independent of the first part (relating to 'such income' for which reasons are given in notice under section 148), notwithstanding that the reasons for such issue ('any other income') have not been given in the reasons recorded under section 148(2) of the Act. We are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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