INCOME TAX ACT, 1961

--Reassessment--Change of opinion Whether issue was considered in original assessment proceedings or not--Original assessment of assessee for assessment year 2000-01 was completed under section 143(3). Subsequently, assessing officer noted that assessee had not reduced the profits by other income pertaining to a specific contract, which he was required to do in computing deduction under section 80HHC as per clause (baa) of section 80HHC and, therefore, excess deduction was allowed to assessee. On this basis, assessing officer reopened the assessment by issuing notice under section 148. Similar issue was raised in assessment year 2003-04 wherein assessing officer had reopened assessment on the ground that assessee had not reduced deduction under section 80-IA(a) from profits of business for purpose of computing deduction under section 80HHC. Assessee contended that these issues were considered by assessing officer at time of original assessment under section 143(3) in both years, therefore, reassessment was no valid as it was based merely on change of opinion. Held: As regards assessment year 2000-01, since the assessing officer himself had considered specific contract as business income at the time of original assessment reopening of assesssment based on same facts amounts to change of opinion, therefore, reopening of assessment was not justified and as regards assessment year 2003-04, assessing officer had not discussed the allowability of deduction under section 80HHC after reducing the amount of deduction allowed under section 80-IA t the time of original assessment nor was there any discussion by the assessee in his written submissions filed before the assessing officer. Therefore, non-consideration of provisions of section 80-IA(9) cannot be said that the assessing officer had formed an opinion at time of allowance of deduction under section 80HHC. Therefore, there was no change of opinion and therefore, reopening of assessment was justified.

Income Tax Act, 1961 Section 147

INCOME TAX ACT, 1961

--Deduction under section 80HHC--Computation Exclusion of deduction under section 80-IB while computing deduction under section 80HHC--Assessee claimed deduction under 80HHC without reducing the amount of deduction available to it under section 80-IB. assessing officer, during course of reassessment proceedings computed deduction under section 80HHC after excluding deduction available to it under section 80-IB. Held: Was justfied. Under section 80-IA(9) where any amount of profits and gains of an undertaking or of an enterprise in the case of an assessee is claimed and allowed under section 80-IA for any assessment year , deduction to the extent of such profits and gains shall not be allowed under any other provisions of Chapter VI-A under the heading 'C.-Deductions in respect of certain incomes', and shall in no case exceed the profits and gains of such eligible business of undertaking or enterprise, as the case may be section, 80HHC falls under the heading 'C.-Deductions in respect of certain incomes', of Chapter VI-A. The language employed in section 80-IA(9) is plain, clear and unambiguous. Therefore, deduction allowed under section 80-IB has to be reduced from such profits and gains for the purpose of computing deduction under section 80HHC.