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TMI Blog2005 (10) TMI 218X X X X Extracts X X X X X X X X Extracts X X X X ..... uently. Since in the present case, the Assessing Officer has not taken a permissible view or possible view as the deduction u/s 80HHB was not allowable to the assessee keeping in view the fact that the overseas project was completed by the assessee in 1982 itself, whereas the deduction u/s 80HHB came with effect from 1-4-1983 and, therefore, the view taken by the assessee while granting deduction u/s 80HHB cannot be permissible and, therefore, was rightly withdrawn after invoking section 148 proceeding and, therefore, the objection raised by the assessee that the above action of Assessing Officer is a very change of opinion does not hold good and accordingly do not find favour from us. We, therefore, find that the action of Assessing Officer in re-opening the case was not a change of opinion as the same was initiated with a view to re-compute the allowance/deduction wrongly allowed by him at the lime of original assessment proceedings. Deduction u/s 80HHB - We do not see any merit in the objection raised by the ld. counsel while relying on the case laws as in the present case before us, the income has not been disputed by the Assessing Officer and the only dispute is with regard to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 43(3) determining total income of Rs. 6,89,36,496. In the said assessment, deduction under section 80HHB and under section 80G amounting to Rs. 3,57,40,835 and Rs. 76,500 respectively was allowed. The said deduction under section 80HHB was allowed on 50 per cent of arbitration award issued by the assessee on 20-1-1998, which was credited to the Profit Loss A/c. for the assessment year 1998-99. Though the Assessing Officer allowed the claim under section 80HHB at 50 per cent of the Net Profit arose to assessee on principal amount of Rs. 7,14,81,670. He disallowed the claim of the assessee under section 80HHB on the interest amount of Rs. 2.81 crores. Being aggrieved, the assessee went before the CIT(A) against disallowance of claim under section 80HHB on interest amount, but the ld. CIT(A) sustained the order of Assessing Officer observing that the assessee was not entitled for any deduction under section 80HHB on the interest amount of arbitration award received by it. 3. Later on, the Assessing Officer re-opened the assessment by issuing a notice under section 148 of the Income-tax Act, 1961 on the ground that income chargeable to tax has escaped assessment arising out of the audi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue Audit and withdrew the allowance originally allowed to the appellant. (ii) That the ld. CIT(A)-XII has arbitrarily confirmed the observations made by the ld. Assessing Officer in his order under section 147/143(3) of the Income-tax Act, 1961 that the appellant does not maintain separate accounts in respect of the profits and gains derived from the business of the execution of foreign projects as required under section 80HHB(3)(i) of the Income-tax Act, 1961. (iii) That the ld. CIT(A)-XII has erroneously opined that the appellant did not seek permission from the Reserve Bank of India or such other competent authority for extension of time beyond six months for receipt of payment and as such the claim for deduction under section 80HHB of the Income-tax Act, 1961 was not satisfied. (iv) That the ld. CIT(A)-XII has arbitrarily held that the deduction allowable to the appellant for the assessment year 1998-99 was not eligible to the provision of section 80HHB of the Income-tax Act, 1961. (v) That the ld. CIT(A)-XII has arbitrarily confirmed the action of the ld. Assessing Officer in attributing the income accounted for by the appellant for the assessment year 1998-99 to an earlie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opening of the case under section 148 which was based on the objection of audit party and such assessment was annulled by ITAT, 'A' Bench while disposing I.T.A. Nos. 1249 to 1252/Cal./1998 vide order dated 15-11-2002. 10. The ld. Senior Counsel has thereafter contended that the Assessing Officer while reopening the case has referred only those facts which were part of the proceedings at the time of framing the assessment order under section 143(3) and nothing new was brought on record by the Assessing Officer while reopening the case. The ld. Counsel further pointed out that even the ld. CIT(A) had applied his mind while sustaining the allowance of deduction under section 80HHB by the Assessing Officer while disposing the appeal filed by the assessee against the rejection of the claim of assessee under section 80HHB on account of interest portion. It has, therefore, been pleaded by the ld. Counsel that it is a pure case of change of opinion keeping in view the fact that details were filed before the Assessing Officer regarding such contract as evident from page Nos. 74 to 85 of its paper book. The ld. Counsel has thereafter referred to para 13 of page 121, wherein the assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee finally received the award only in previous year and, therefore, there was no occasion for the assessee to claim deduction under section 80HHB in earlier years. Ld. counsel further argued that even otherwise the disputed income cannot be held as income in view of the judgment of Hon'ble Supreme Court in case of CIT v. Hindusthan Housing and Land Development Trust Ltd. [1986] 161 ITR 524. He has also relied on the following judgments in support of his above contention:- (i) CIT v. Smt. Geeta Sanghi [1983] 142 ITR 834 (MP); (ii) Rockwell Engg. Co. Ltd. v. CIT [1989] 180 ITR 277 (Ken); (iii) Trikamlal v. CIT [1982] 134 ITR 450 (MP); (iv) CIT v. Roberts McLen Co. Ltd. [1978] 111 ITR 489 (Cal.); (v) CIT v. Soorajmall Nagarmall [1981] 129 ITR 169 (Cal.). It has, therefore, been pleaded by the ld. Senior counsel that the ld. CIT(A) was not justified in sustaining the order of Assessing Officer in withdrawing the deduction earlier granted under section 80HHB as the assessee could only claim the above deduction at the time of determination of income which only arose to the assessee during previous year and hence the same was rightly depicted by the assessee in its books of account a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .R. has further submitted that dispute regarding the arbitration award does not make any difference as to the allowability of deduction claimed by the assessee under section 80HHB as the same was not available to the assessee since such overseas project was executed by the assessee in March, 1982 i.e. well before the insertion of this section in the book of Statute. It has, therefore, been pleaded that the order of ld. CIT(A) be upheld. 19. We have given our careful consideration to the rival submissions made before us and have perused the orders of tax authorities. We have also considered the paper book filed by the assessee and the case laws relied upon before us. The assessee in this case has disputed the order of ld. CIT(A) both on legal grounds and on the merit of the case. 20. The ld. Senior counsel has assailed the order of ld. CIT(A) in upholding the action of Assessing Officer in re-opening the case under section 148 and has raised the following objections:- (i) That the re-opening of the case under section 148 on the basis of objection of revenue audit was not justified; (ii) The re-opening was based upon the change of opinion which is not permissible in the law; (iii) Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommitted by the Assessing Officer while framing the assessment under section 143(3):- (i) Though the foreign project was completed by the assessee in March, 1982, the Assessing Officer allowed the claim of the assessee under section 80HHB ignoring the fact that section 80HHB came into existence with effect from 1-4-1983 only. (ii) Even otherwise deduction allowable under section 80HHB for the project completed during assessment year 1983-84 was available to the extent of 25 per cent whereas the Assessing Officer admitted the claim of the assessee at 50 per cent on the profit earned by it on the project completed in assessment year 1982-83 while computing deduction under section 143(3). (iii) The assessee was not maintaining separate accounts in respect of profits derived from business of execution of foreign project as required under section 80HHB. (iv) It did not seek permission of the RBI or such other competent authority which is entitled to allow extension of time beyond six months. 23. Even otherwise we find that such re-opening by the Assessing Officer was justified in reopening the case as evident from the definition of section 147 which reads as under:- "If the [Assessing] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 263 proceedings held that when an Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, then it cannot be treated as an erroneous order by the Assessing Officer. 26. From the above decision of Hon'ble Supreme Court it is apparent that the change of opinion only comes to the rescue of the assessee where the Assessing Officer has taken one of the permissible view at the lime of original proceedings, and a wrong appreciation of law cannot be held as permissible view and that can always be changed for appreciating the law. Since in the present case, the Assessing Officer has not taken a permissible view or possible view as the deduction under section 80HHB was not allowable to the assessee keeping in view the fact that the overseas project was completed by the assessee in 1982 itself, whereas the deduct ion under section 80HHB came with effect from 1-4-1983 and, therefore, the view taken by the assessee while granting deduction under section 80HHB cannot be permissible and, therefore, was rightly withdrawn after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich entitle the assessee to claim deduction under section 80HHB and, therefore, in our considered opinion, the ld. CIT(A) was justified in rejecting the claim of the assessee under section 80HHB. 30. Coming to the merit of the case, since we have already held while adjudicating the above legal issue above that the assessee was not entitled for any claim under section 80HHB as it executed the foreign project in March, 1982, whereas the deduction under section 80HHB came into existence w.e.f. 1-4-1983, the assessee was not entitled for any deduction under section 80HHB for the project completed in March, 1982, even otherwise the payment against such contract attained finality in the previous year i.e. financial year 1997-98 only. 31. We, therefore, keeping in view the facts and circumstances of the case and in the light of above discussion are of the opinion that the ld. CIT(A) was justified in upholding the action of Assessing Officer in withdrawing the deduction under section 80HHB since the assessee was not eligible for the same, we therefore, do not see any reason to interfere with the order of ld. CIT(A) and, accordingly, uphold the same and reject the ground Nos. 1 to 5 taken ..... X X X X Extracts X X X X X X X X Extracts X X X X
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