Innovsource Services Pvt. Ltd. Vs DCIT (ITAT Mumbai)
Summary: ITAT Mumbai considered whether an intimation under Section 143(1), which restricted the assessee’s deduction under Section 80JJAA to business income, continued to survive after a scrutiny assessment under Section 143(3) dealt with the same deduction and disallowed it entirely. Innovsource Services Pvt. Ltd., engaged in providing manpower services, declared business income of Rs.6,22,44,207 and income from other sources of Rs.4,90,24,172, resulting in gross total income of Rs.11,12,68,378. Against an eligible Section 80JJAA deduction computed at Rs.30,10,31,823, the assessee restricted its claim to gross total income. CPC, while processing the return under Section 143(1), restricted the deduction to business income of Rs.6,22,44,207.
Subsequently, scrutiny assessment was completed under Section 143(3), wherein the Assessing Officer examined the Section 80JJAA claim and rejected the entire deduction of Rs.30,10,31,823. The Tribunal admitted additional legal grounds relying upon NTPC Ltd. and Jute Corporation of India Ltd. It did not accept the assessee’s additional contention regarding absence of prior intimation of the proposed Section 143(1)(a) adjustment because the material placed before it did not establish that such intimation had never been issued. On the principal issue, the Tribunal examined the doctrine of merger and noted that the adjustment in the Section 143(1) intimation and the subsequent scrutiny assessment concerned the same Section 80JJAA deduction. It distinguished situations where issues dealt with in the intimation and scrutiny assessment are different.
