9911796707
TMI Blog1990 (12) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee is a registered firm. For the assessment year 1979-80, the original assessment was completed by the Income-tax Officer under section 143(3) of the Income-tax Act, 1961, on October 3, 1981. The Income-tax Officer treated the cash subsidy of Rs. 15,62,293 as non-taxable keeping in view the Tribunal's order dated June 12, 1980, for the assessment year 1974-75 and the order of the Commissioner of Income-tax (Appeals) dated Feburary 18, 1981, for the assessment year 1978-79. The assessee also claimed weighted deduction under section 35B in respect of certain items of expenditure. The Income-tax Officer allowed relief under section 35B keeping in view the Inspecting Assistant Commissioner's direction under section 144B dated April 3, 1980, for the assessment year 1978-79 and the order of the Commissioner of Income-tax (Appeals) dated February 18, 1981, for the same assessment year. The successor Income-tax Officer who had framed the original assessment, however, reopened the assessment under section 147(b). The Income-tax Officer framed the assessment under section 143(3) read with section 147(b) on March 23, 1985, holding that the cash subsidy received by the assessee is tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal that the conditions for reopening of the assessment under section 147(b) did not exist in this case. It was further contended that the question whether cash subsidy was taxable as a revenue receipt was a debatable issue. If two views on a particular issue were possible, section 147(b) would not be applicable. It was further contended that since the Income-tax Officer, while framing the assessment, followed the orders of the superior authorities, his order holding that cash subsidy was not taxable and giving relief under section 35B on certain items of expenditure could not be said to be erroneous. The Tribunal, after considering the rival submissions made on behalf of the parties and the facts available on the record, held that so far as the issue relating to allowance of weighted deduction under section 35B is concerned, the Income-tax Officer reopened the assessment only on the ground of change of opinion. The Tribunal expressed the view that this could not be a valid ground for reopening the assessment. The Tribunal held that, in the instant case, the cash subsidy was received by the assessee from a non-governmental Organisation. It could not be established by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s (Rs. 4,60,021), inspection charges (Rs. 1,62,245), bank charges (Rs. 20,098), bank interest (Rs. 2,61,445), clearing and forwarding charges (Rs, 1,89,403), etc. No weighted deduction is allowable on expenditure incurred during the year relating to packing charges and inspection charges. The expenses can be connected only with distribution and supply of goods ; sub-clause (iii) specifically excluded such expenses incurred in India (Tribunal's decision in the case of J. Hemchand and Co.). Similarly, weighted deduction is not available on bank charges, interest, clearing and forwarding charges and similar items. They are not covered by any of the clauses. The assessee-firm earned commission of Rs. 12,99,103.94 on account of export services rendered to third parties. No details of the expenses incurred for earning of the said commission had been furnished. Deduction has been claimed and allowed on the basis of the entire expenses debited to the profit and loss account whereas deduction should have been allowed on the expenses relatable to export sales only. Cash subsidy of Rs. 15,62,293 has been treated as exempt in view of the Income-tax Appellate Tribunal's order dated June 12, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment. Issue notice under section 147 (b). " It is now well settled that the jurisdiction of the Income-tax Officer to reassess income arises if he has, in consequence of information in his possession, reason to believe that income chargeable to tax has escaped assessment. That information must have come into the possession of the Income-tax Officer subsequent to the completion of the original assessment but even if the information be such that it could have been obtained during the original assessment itself from an investigation of the material on record, or the facts disclosed thereby, or from other enquiry or research into facts or law, but was not in fact obtained, the jurisdiction of the Income-tax Officer is not affected. Sufficiency of the material cannot be questioned. It is also well-settled that, if the Income-tax Officer, initially proceeded to reopen the assessment for several items of income believed to have escaped assessment and if it is ultimately found that one of such items only has escaped assessment, that will not vitiate the proceeding. All the reasons given by the Income-tax Officer for reopening the assessment might not be tenable, but at least if one o ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
