DCIT Vs. Century Textiles & Industries Ltd. (ITAT Mumbai)
We have observed that the AO never raised any query w.r.t. excise benefit forming part of the eligible profit derived from industrial undertaking for computing deduction u/s 80IC of the 1961 Act.
We have observed that the AO excluded other incomes such as rent, surplus on sale of assets, sale of scraps , insurance claims, provisions no longer required etc amounting to Rs. 9,56,18,376/- while computing deduction u/s 80IC in original assessment framed u/s 143(3), while export benefits to the tune of Rs. 2,36,32,653/- which albeit formed part of other income disclosed in audited financial statements were never being queried by the AO for computing deductions u/s 80IC although the assessee made disclosure that the same was also included while computing deduction u/s 80IC, which clearly mean that the AO allowed the same to be included while computing eligible profits derived from industrial undertaking for computing deduction u/s 80IC in the original assessment proceedings u/s 143(3) r.w.s. 143(2).
The export benefits were allowed by the AO to be included for computing eligible profits derived from the industrial undertaking for determining deduction u/s 80IC despite the fact that the AO could not have allowed the same due to Hon‟ble Supreme Court decision to the contrary in the case of Liberty India Limited(supra).
Thus, the issue of computing deduction u/s 80IC qua inclusion of other income such as rent, surplus on sale of assets, sale of scraps , insurance claims, provisions no longer required etc to the tune of Rs. 9,56,18,376/- was subject matter of appeal before learned CIT(A) and is hit by the second proviso to Section 147 which could not have been re-opened by the AO u/s 147 as the assessment order stood merged with the appellate order of learned CIT(A), but to say that learned CIT(A) is seized of the matter w.r.t. determining the controversy as to the inclusion of export benefits to the tune of Rs. 2,36,32,653/- for computing eligible profits derived from the industrial undertaking for computing deduction u/s 80IC is fallacious and to contend that the assessment order originally framed u/s 143(3) cannot be now subject to re-assessment proceedings u/s 147 despite the income having escaped assessment in light of Honorable Supreme Court decision in the case of Liberty India Limited(supra) is not acceptable and is hereby rejected as learned CIT(A) was never seized of this controversy.
Thus, we uphold re-assessment order passed by the AO dated 30-01-2014 u/s 143(3) and 147 of the 1961 Act both on merits as well on legal ground concerning validity of re-opening of the concluded assessment u/s 147 and we have no hesitation in setting aside the appellate order dated 09-10-2015 passed by learned CIT(A) which was an order of rectification rectifying appellate order dated 13-08-2015 passed by learned CIT(A). Hence, under this factual matrix of the case , we allow the appeal of revenue and hold that export incentive to the tune of 2,36,32,653/- shall not be included for the purposes of computing eligible profits derived from the industrial undertaking for computing deduction u/s. 80IC of the Act.
