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TMI Blog1986 (1) TMI 147X X X X Extracts X X X X X X X X Extracts X X X X ..... there was no dispute about this amount. Regarding the expenses incurred after 1st June, 1976 on which date s. 44C of the IT Act, 1961 came into force, the assessee claimed that 5 per cent of the adjusted total income amounting to Rs. 15,080 should be allowed. The ITO allowed the same in the original assessment dt. 17th Sept., 1979. 3. Subsequently, the ITO came to hold the view that the deduction towards head office expenses allowed at Rs. 15,080 in the original assessment was excessive. According to him, the amount to be allowed was to be calculated at 5 per cent on a portion of the adjusted total income and not on the whole of it because the period from 1st June, 1976 to the end of the previous year under consideration was only four m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the source from which and the time at which the ITO got that information which formed the basis of the reopening of the assessment. The other ground urged before the CIT(A) by the assessee was that it was entitled to 5 per cent of the adjusted total income as defined the Explanation to s. 44C. This Explanation does not say that the adjusted income should be proportionately reduced if the previous year is less than twelve months. Reliance was placed on the decision in the case CIT vs. Simpson Co. (1980) 122 ITR 283 (Mad). The CIT(A) did not accept the above contention. He distinguished the aforesaid case on the ground that it related to s. 84 of the IT Act and not to s. 44C of the Act. Further, he agreed with the ITO that only 4/12th of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the ITO could reopen the assessment even on the basis of investigation of the facts already on record. In this connection, he also referred to the decision in the case of Indian Eastern Newspaper Society vs. CIT (1979) 12 CTR (SC) 190 : (1979) 119 ITR 996 (SC) in support of his contention. Regarding the merits of the case, he stated that the adjusted total income has also to be reduced proportionately on the same reasoning on which the expenditure was bifurcated between the period prior to 1st June, 1976 and the period after 1st June, 1976. Hence, he urged that the order of the CIT(A) deserved to be upheld. 7. We have considered the contentions of both the parties as well as the facts on record. Sec. 147(b) empowers the ITO to reopen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 15,080. The ITO accepted the same. Subsequently, the assessment has been reopened on the ground that the amount of Rs. 15,080 allowed in the original assessment was an excess allowance. To a query put by us as to what was the fresh information regarding a question of fact or a question of law which came into the possession of the ITO subsequent to the original assessment, the learned representative for the Department could not reply on that point. The reasons recorded by the ITO to reopen the assessment in his record were not made available to us. It may be stated that s. 148(2) makes it obligatory on the part of the ITO to record the reasons for reopening the assessment before assuming jurisdiction under s. 147 of the Act. Shri S. K. La ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es from a person who is competent to pronounce on the interpretation of the said question of law. Here also, we find that the real test is that the information should come from a source other than the record of the ITO as it existed at the time of the original assessment. Thus, the ratio laid down in the case of Bankirpur Club remains intact. Hence, the conclusion we have already reached on this point stands affirmed. 8. Similarly, we are inclined to agree with the contention of the assessee on the merits of the case also. The Explanation to s. 44C defines adjusted total income, but does not say anything about limiting its quantum proportionately to the length of the previous year falling after 1st June, 1976. Further, the total income i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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