This judgment deals with a North western India Income Tax matter. The Court dismisses the appeal filed by the Revenue against the Tribunal's order quashing reassessment proceedings initiated on a change of opinion regarding deductions under Section 80HHC and 80IA.
Reopening of assessment proceedings under Section 147/148 was struck down; appeal dismissed.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
*** IN THE HIGH COURT OF DELHI AT NEW DELHI**
% Date of Decision : January 04, 2012.
CIT
..... Appellant
Through: Mr. Sanjeev Rajpal, Adv.
versus
RAJ KUMAR MAHAJAN ..... Respondent Through: Mr. Ajay vohra, Ms. Kavita Jha and Mr. Somnath Shukla, Advs.
CORAM: HON'BLE MR. JUSTICE SANJIV KHANNA HON'BLE MR. JUSTICE R.V. EASWAR
SANJIV KHANNA,J: (ORAL)
The present appeal filed by the Revenue under Section 260A of the Income Tax Act, 1961 (Act) impugns order dated 21st June, 2010 passed by the Income Tax Appellate Tribunal (Tribunal) which relates to the assessment year 2001-02.
ITA 683/2011
Page 1 of 6
Question Nos.4 and 5 of the said questionnaire read as under:-
“4. The deduction claimed u/s 80HHC is excessive as FDR interest of Rs.10,47,538/- has been taken as business income and not as income from other sources. In effect, 10 per cent of this interest income amounting to Rs.1,04,754/-, has escaped taxation. Please show cause why this excess deduction u/s 80 HHC should not be added back to your income.
ITA 683/2011
Page 2 of 6
candles for export, which is not mentioned in eleventh schedule.
It is very clear from the plain reading of this section that even 10% of the interest, rent and other receipts would be eligible for deduction u/s 80HHC.
ITA 683/2011
Page 3 of 6
declared. The said assessment order records that a chartered accountant/authorized representative attended from time to time and had filed detailed information as called for. The case was discussed. It may be noted here that the respondent-assessee’s accounts are audited and along with the return of income, the respondent-assessee had filed computation of deduction under Section 80IA and 80HHC duly certified by the chartered accountant.
“On going through the assessment records of the assessee, for asstt. year 2001-02, it is seen that the assessee has wrongly claimed deduction u/s 80HHC at Rs. 2,35,68,838/- by restricting the deduction u/s 80 IA at Rs. 61,70,349/-. This restriction of deduction by the assessee has been done by reducing from the eligible profits for deduction u/s 80IA the deduction claimed u/s 80HHC. However, as per law the assessee has to claim deduction u/s 80IA on profits without any reduction by taking away deduction u/s 80HHC on the said profits.
Further, the assessee has while working out deduction u/s 80HHC has not reduced the amount of deduction u/s 80IA from the profits of business. This is against the provisions of section 80IA(9). Secondly the assessee has not reduced interest income earned from profits while calculating deduction u/s 80HHC. Thirdly, assessee has wrongly included FDR interest as part of his business income.
ITA 683/2011
Page 4 of 6
Due to all the reasons cited above, the assessee has wrongly claimed a higher deduction u/s 80HHC then what he is allowed as per law. The deduction u/s 80HHC actually works out to Rs. 1,76,48,818/- as against wrong claim of deduction by the assessee at Rs. 2,35,68,838/-. Thus excess deduction claimed by the assessee u/s 80HHC comes to Rs. 59,20,020/-. However, since the assessee has claimed a lesser deduction u/s 80IA of Rs. 61,70,349/- instead of Rs. 74,34,797/-, the excess deduction claimed by the assessee u/s 80HHC at Rs. 59,20,020/- will be reduced by the amount of short deduction u/s 80IA of Rs. 12,64,448/-. Thus excess deduction u/s 80HHC claimed by the assessee would be Rs. 46,55,572/- (59,20,020/- - 12,64,448 ).
Thus, the assessee has claimed excess deduction u/s 80HHC and there has been a failure on the part of the assessee for not disclosing fully and truly, all material facts necessary for his assessment for the asstt. year 2001-2002.
I have therefore reasons to believe that income of the assessee by way of excess deduction of Rs. 46,55,572/- u/s 80HHC allowed to the assessee has escaped assessment for the asstt. year 2001-2002. It is, therefore, necessary to take action u/s 147/148 in this case for the said assessment year.”
ITA 683/2011
Page 5 of 6
not of re-examination or reopening on change of opinion as the Assessing Officer during the course of the original proceedings had not applied his mind to the legal provisions/law. He submits that in the assessment order dated 31st March, 2003, the Assessing Officer has not discussed any aspect and had recorded that the return was accepted.
SANJIV KHANNA,J
R.V.EASWAR, J
JANUARY 04, 2012/mm
ITA 683/2011
Page 6 of 6
2 issues framed by the court
Whether the reopening of assessment under Section 147 for a change of opinion on deductions under Section 80HHC and 80IA is permissible.
Whether the Assessing Officer had applied his mind to the legal provisions during original assessment proceedings.
Colour shows how this judgement treated each authority
CIT v. Kelvinator of IndiaFollowed¶9
CIT v. Kelvinator of India (2010) 320 ITR 561 (SC)
Kelvinator of India v. CITFollowed¶9
Kelvinator of India v. CIT (2002) 256 ITR 1 (DEL)
4 provisions across 1 enactments
CIT
RAJ KUMAR MAHAJAN
SANJIV KHANNA
R.V. EASWAR
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
SANJIV KHANNA and R.V. EASWAR
Parties & counsel
