9911796707
TMI Blog1999 (10) TMI 755X X X X Extracts X X X X X X X X Extracts X X X X ..... s per second proviso to section 80HHC which the appellant had fulfilled in subsequent year by creating the additional reserve and directing the Dy. CIT, Special Range 19, Bombay to add the shortfall to the assessment income. The appellant submits that his action of creating additional reserve in the subsequent year by debiting to P L account be held to be compliance of the condition prescribed in proviso to section 80HHC. 3. The assessee filed a return on 31-7-1987 claiming deduction under section 80HHC of ₹ 1,26,74,458. The assessee, however, filed a revised return on 17-12-1988 claiming a higher deduction under section 80HHC of ₹ 1,30,80,482. The accounting year of the assessee for the assessment year 1987-88 ended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ₹ 1,27,00,000. Therefore, deduction amounting to ₹ 3,74,189 has been allowed to assessee in excess of the reserve created which needs to be withdrawn. Consequent to the above letter received from the Assessing Officer, the CIT(A) gave an enhancement notice and the pleas taken by the assessee before him in response to the said notice are recorded by him in the following terms :- 5. A copy of the aforesaid letter was forwarded to the appellant for their comments. The appellant objected to enhancement of the assessment and also submitted their written submissions on 28-1-1992. The appellant s representative contended that they had debited to the Profit Loss Account an amount of ₹ 1,27,00,000 with an id ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... HHC in the revised return filed on 17-11-1988 was for ₹ 1,30,80,482. In terms of second proviso to section 80HHC as it was applicable to the assessment year 1987-88, the assessee was required to create a reserve for the amount equivalent to their claim. Apparently, the assessee s claim was for the amount of ₹ 1,30,80,482 and the reserve created fell short of the assessee s claim. On these facts, the deduction under section 80HHC ought to have been restricted to ₹ 1,27,00,000. Reliance placed by the appellant s representative on the Board Circular and the provisions relating to development rebate and investment allowance is misplaced inasmuch as the provisions relating to development rebate and investment allowance are mate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ortunity to create reserve should be given afresh, and this direction was given many years after the completion of the assessment. The learned counsel for the assessee has also invited our attention to the decision of the Taxman in the case of Asstt. CIT v. R.R. Hosiery (P.) Ltd. [1999] 68 ITD 25 (Mum.) to which one of us was a part wherein it was held that in a case where the assessee declared negative income but the assessment resulted in positive income, the Assessing Officer should give a fresh opportunity of filing the audit report in Form No. 10CCAC, as the assessee became eligible for deduction under section 80HHC only because of the additions made and such additions could not have been anticipated by the assessee while furnishing th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the claim for deduction under section 80HHC suo motu and not because of the additions made by the Assessing Officer. However, to our mind, it makes no difference whether the assessee becomes eligible for a higher deduction under section 80HHC consequent to certain additions proposed by the Assessing Officer or because of certain omissions detected by the assessee itself in the claim for deduction under section 80HHC subsequent to the filing of the original return. In the case of Continental Construction Ltd. (supra) the Hon ble Delhi High Court has given a direction to give the assessee an opportunity of creating the reserve in the context of the provisions of section 80HHB many years after the completion of the assessment. Functionally, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n circumstances such as those considered by the Hon ble Delhi High Court in the case of Continental Construction Ltd. (supra) or those considered by the Tribunal in the case of General Sales Ltd. (supra) or in the case of R.R. Hosiery (P.) Ltd. (supra), it appears to us that it makes no material difference whether the reserve is created in the profit and loss account of the previous year in respect of which the deduction under section 80HHC is claimed or in the profit and loss account of a subsequent year for which the books are open at the time the opportunity is given. Even if this view is not tenable for any reason, the language of the proviso to section 80HHC stipulates only that the requisite reserve should be created in the profit and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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