ACIT - 2(1), MUMBAI V. M/s. AMAL PRODUCTS LTD., MUMBAI

ITA 1967/MUM/2007

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9470 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 12-11-2012
• Assessment Year: 1997-1998
• Appeal Filed On: 07-03-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K K VED
• Assessee Lawyers: MANISH KANOJIA
• Keywords: Business income; Depreciation; Difference of opinion; Assessment record; Unabsorbed depreciation; Change of opinion; Reassessment proceedings
• Section: 143(3); 80HHC; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A , MUMBAI BEFORE SHRI B. R. MITTAL, J.M. AND SHRI SANJAY AROR A, A.M. ITA NO.: 1729/MUM/2007 ASSESSMENT YEAR: 1997-98 AMAL PRODUCTS LIMITED 310 B, VEER SAVARKAR MARG, (CADDEL RD), OPP. INDIA UNITED MILLS, NEAR PRABHADEVI TEL. EXCHANGE, DADAR (W), MUMBAI-400 028. [PAN NO: AAACA 1041J] VS. DY. CIT CIRCLE 2(1), ROOM NO.575, 5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400 020 (APPELLANT) (RESPONDENT) & ITA NO. : 1967/MUM/2007 ASSESSMENT YEAR: 1997-98 ASST. CIT CIRCLE 2(1), ROOM NO.575, 5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400 020 VS. AMAL PRODUCTS LIMITED 310 B, VEER SAVARKAR MARG, (CADDEL RD), OPP. INDIA UNITED MILLS, NEAR PRABHADEVI TEL. EXCHANGE, DADAR (W), MUMBAI-400 028. [PAN NO: AAACA 1041J] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K. K. VED RESPONDENT BY : SHRI MANISH KANOJIA DATE OF HEARING : 12.11.2012 DATE OF PRONOUNCEMENT : 05.12.2012 ORDER PER SANJAY ARORA, AM : THESE ARE CROSS APPEALS, I.E., BY THE ASSESSEE AND THE REVENUE, DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-2 , MUMBAI (CIT(A) FOR SHORT) DATED 21.11.2006, PARTLY ALLOWING THE ASSESSEES AP PEAL CONTESTING ITS ASSESSMENT U/S. ITA NOS. 1729 & 1967/MUM/2007 AMAL PRODUCTS LIMITED (A.Y. 1997-98) 2 143(3) R.W.S. 147 OF THE INCOME-TAX ACT 1961 (THE ACT HEREINAFTER) DATED 15.02.2005 FOR THE ASSESSMENT YEAR (AY) 1997-98. ASSESSEES APPEAL (ITA NO. 1729/MUM/2007) 2. THE ASSESSEE CHALLENGES ITS ASSESSMENT BOTH ON T HE REOPENING THEREOF (VIDE GROUND NOS. 1 TO 4) AS WELL AS ON ITS MERITS (VIDE GROUND NOS. 5 TO 8). GROUND NO. 9 RAISES THE ISSUANCE OF NON ADJUDICATION BY THE FIRST APPELLANT AUTHORITY OF THE ASSESSEES GROUND NOS. 2 TO 4, AND 7 BEFORE HIM. WHILE THE FORMER GRO UNDS ARE SIMILAR TO THE GROUND NOS. 1 TO 4 BEFORE US, ASSAILING THE VALIDITY OF THE REASS ESSMENT PROCEEDINGS, GROUND NO. 7 BEFORE THE LD. CIT(A) IS ON THE MERITS OF THE DEDUC TION ALLOWED U/S. 80HHC, WHICH IS CLAIMED TO HAVE BEEN ALLOWED AT A REDUCED AMOUNT. 3. WE SHALL ENGAGE OURSELVES WITH THE LEGAL ISSUE F IRST, I.E., AS PROJECTED PER ITS GROUND NUMBERS 1 THROUGH 4 BEFORE US BY THE ASSESSE E. THIS IS AS IN THE CASE OF A SUCCESSFUL CHALLENGE, IT MAY NOT BE NECESSARY FOR U S TO ADJUDICATE ITS OTHER GROUNDS AGITATING VARIOUS ISSUES ON QUANTUM. THOUGH THE REL EVANT GROUNDS WERE RAISED BEFORE THE LD. CIT(A) AS WELL, WHO HAS NOT DECIDED THE SAME, T HE ISSUE BEING LEGAL, WITH THE MATERIAL FACTS ON RECORD, SO THAT IT COULD BE EVEN BE RAISED BEFORE US FOR THE FIRST TIME AND, BESIDES, DOES NOT CAUSE ANY PREJUDICE TO EITHER PARTY, WE, I NSTEAD OF RESTORING THE MATTER BACK TO THE FILE OF THE FIRST APPELLATE AUTHORITY, AS WE WO ULD NORMALLY BE INCLINED TO, PROCEED TO DECIDED THE SAME. IT WOULD BE RELEVANT TO CLARIFY A T THIS STAGE THAT THIS PROPOSITION, ON BEING SO INDICATED BY THE BENCH, WAS NOT OBJECTED T O BY THE LD. DR, WHILE BEING ONLY TOWARD ADJUDICATING THE ASSESSEES RELEVANT GROUNDS BEFORE US, WHO DID NOT AGITATE ITS GROUND NO. 9 BEFORE US, SO THAT THE QUESTION OF ANY OBJECTION BY THE LD. AR DOES NOT ARISE. CONTINUING FURTHER, THOUGH THE ASSESSEE HA S RAISED AS MANY AS FOUR GROUNDS, EMPHASIZING DIFFERENT ASPECTS OF THE MATTER, BEFORE US THE LD. AR ARGUED ONLY QUA THE INVALIDITY OF THE NOTICE U/S. 148 INASMUCH AS THE N OTICE WAS ISSUED ON 29.03.2004 , I.E., WELL BEYOND FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, I.E., 31.03.1998. ITA NOS. 1729 & 1967/MUM/2007 AMAL PRODUCTS LIMITED (A.Y. 1997-98) 3 WITH REFERENCE TO THE REASONS RECORDED FOR THE SAME [PAPER-BOOK PAGE 192], IT WAS SUBMITTED BY HIM THAT THERE IS NO ALLEGATION THEREI N AS TO THE NON-DISCLOSURE OF THE MATERIAL FACTS NECESSARY FOR THE COMPUTATION OF INC OME FOR THE RELEVANT YEAR. THE REOPENING OF THE ASSESSMENT WAS CLAIMED TO BE INVAL ID ON THAT BASIS. HE RELIED ON THE DECISION IN THE CASE OF VOLTAS LTD. V. ASST. CIT DATED 15/2/2012, REPORTED AT (2012) 19 TAXMAN.COM 183 (BOM.) AND BY THE TRIBUNAL IN THE CA SE OF NAHEED JAVEED MERCHANT V. ASST. CIT, MUMBAI (IN ITA NO. 3529/MUM/2010 DATED 21/10/2011), PLACI NG A COPY EACH OF THE SAME ON RECORD. THE LD. DR, ON THE OTHER HAND, RELIED ON EXPLANATION 1 TO SECTION 147, WHICH READS AS UNDER:- EXPLANATION 1. PRODUCTION BEFORE THE ASSESSING OF FICER OF ACCOUNT BOOKS OR OTHER EVIDENCE FROM WHICH MATERIAL EVIDENCE COUL D WITH DUE DILIGENCE HAVE BEEN DISCOVERED BY THE ASSESSING OFFICER WILL NOT NECESSARILY AMOUNT TO DISCLOSURE WITHIN THE MEANING OF THE FOREGOING P ROVISO. 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. 4.1 THE QUESTION AS TO WHETHER THERE HAS BEEN I N THE FACTS AND CIRCUMSTANCES OF THE CASE, A TRUE AND FULL DISCLOSURE IS A QUESTION OF F ACT, WHICH IS TO BE DECIDED ON THE BASIS OF THE MATERIAL ON RECORD, WHERE THE SAME, AS IN THE I NSTANT CASE, IS CALLED IN ISSUE. AND TOWARD WHICH WE MAY REFER TO THE DECISION BY THE HO NBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. MAHARASHTRA SUGAR MILLS LTD . [2003] 263 ITR 180 (BOM). THIS IS AS A DISCLOSURE COULD BE PARTIAL, IMPROPER AS WELL AS FA LSE, WHILE THE LAW PRESCRIBES SAVING ONLY IN RESPECT OF A TRUE AND FULL DISCLOSURE AND, SECONDLY, OF ALL MATERIAL FACTS (REFER TO FIRST PROVISO TO SECTION 147). WE ARE THEREFORE NOT PREPARED TO FORECLOSE THE ISSUE MERELY ON THE BASIS OF THE ABSENCE OF A CHARGE OR ALLEGATI ON IN ITS RESPECT BY THE AO IN THE REASONS RECORDED, WHICH MAY, RATHER, EVEN WHERE SO, BE FACTUALLY INCORRECT, SO AS TO BE OF NO MOMENT. ALSO, THE ONUS TO EXHIBIT SO, I.E., AN A BSENCE OF TRUE AND FULL DISCLOSURE OF ALL MATERIAL FACTS BY THE ASSESSEE, ON BEING CONTESTED BY IT, AND WHERE NOT APPARENT FROM THE RECORDED REASONS THEMSELVES, WOULD BE ON THE REVENU E. ITA NOS. 1729 & 1967/MUM/2007 AMAL PRODUCTS LIMITED (A.Y. 1997-98) 4 4.2 IT WOULD RELEVANT TO REPRODUCE THE REASONS RECORDED, WHICH ARE AS UNDER: ASSESSMENT OF THE RETURNED INCOME OF THE ASSESSEE F OR A.Y. 1997-98 WAS COMPLETED U/S.143(3) FOR TAXABLE INCOME OF RS . 1,12,26,952/-. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF DYES INTERMEDIATES . UNDER THE PROVISION OF INCOME-TAX ACT 1961, WHILE W ORKING OUT THE GROSS PROFIT FOR ALLOWANCE OF DEDUCTION UNDER CHAPTER VI OF THE INCO ME-TAX ACT EFFECT OF SET OFF OF UNABSORBED CARRY FORWARD LOSSES, DEPRECIATION, INVE STMENT ALLOWANCE SHOULD BE GIVEN BEFORE WORKING OUT DEDUCTION UNDER THAT CHAPTER. SUBSEQUENTLY, IT WAS SEEN THAT THE DEPARTMENT HAS W ORKED OUT THE DEDUCTION U/S.80HHC TO THE EXTENT OF RS.21,9,285/- (*) WITHOUT SETTING OFF OF THE UNABSORBED DEPRECIATION , LOSSES, INVESTMENT ALLOWANCE, ETC. AMOUNTING TO RS. 1,19,08,109/- FROM THE TOTAL ASSESSED BUSINESS INCOME OF RS.2,49,61,266/-. THE ALLOWABLE DEDUCTION U/S. 80HHC WOULD WORKED OUT TO RS.13,57,293/- AS PER THE COMPUTATION SHEET ATTACHED AS AGAINST RS.21,09,285/- ALLOWED BY THE DEPARTMENT. THIS HAS RESULTED IN AN EXCESS ALLOWANCE OF DEDUCTION OF RS.7,51,992/- U/S. 80HHC LEADING TO UNDERASSESSMENT OF INCOME TO THAT EXTENT . [(*) RS. 21,09, 285/-] 4.3 IN THE LAST PARA OF THE REASONS RECORDED, TH E AO STATES THAT SUBSEQUENTLY, IT WAS SEEN , WHICH ONLY IMPLIES THAT THE FACT THAT THE DEDUCT ION U/S. 80HHC AS CLAIMED BY THE ASSESSEE IS WITHOUT SETTING OFF THE UNABSORBED LOSS ES, UNABSORBED DEPRECIATION AND ALLOWANCES, WHICH AGGREGATE TO RS.119.08 LACS, IS A PPARENT FROM THE RECORD. THE SAME WOULD RATHER BE A PART OF THE ASSESSMENT RECORD INA SMUCH AS ONLY UNABSORBED ALLOWANCES AND LOSSES, AS DETERMINED AND ALLOWED TO BE CARRY F ORWARD FOR SET OFF AGAINST INCOME FOR THE SUBSEQUENT YEARS, CAN BE BROUGHT FORWARD AND SO SET OFF. THE VERY FACT THAT THE AO WAS BEEN ABLE TO ASCERTAIN THE CORRECT AMOUNT OF DE DUCTION EXIGIBLE U/S. 80HHC ESTABLISHES THE ASSESSEES WORKING OF THE SAME AS S ELF-CONTAINED AND COMPLETE, CONTAINING FULL DETAILS, THE TRUTH AND VERACITY OF WHICH IS NO T IN DOUBT. FURTHER, AS THE ASSESSEE HAS POSITIVE INCOME FOR THE YEAR, THE AO WOULD HAVE HIM SELF ALLOWED SET OFF OF THE BROUGHT FORWARD UNABSORBED LOSSES/ALLOWANCES AGAINST THE AS SESSED INCOME FOR THE CURRENT YEAR, WHICH THOUGH BORE, ON ACCOUNT OF A WRONG WORKING BY THE ASSESSEE, AN EXCESS DEDUCTION U/S. 80HHC BY RS.7.52 LACS, I.E., THE INCOME STATED TO HAVE ESCAPED ASSESSMENT. THERE WAS THUS A DIFFERENCE BETWEEN THE ACTUAL GROSS TOTA L INCOME (GTI) AND THAT WITH REFERENCE ITA NOS. 1729 & 1967/MUM/2007 AMAL PRODUCTS LIMITED (A.Y. 1997-98) 5 TO WHICH DEDUCTION U/S. 80HHC STOOD CLAIMED AND ALL OWED. UNDER THE CIRCUMSTANCES, WE ARE UNABLE TO SEE AS TO HOW THE ASSESSEE COULD POSS IBLY BE CHARGED WITH NON-DISCLOSURE OF ALL FACTS MATERIAL TO THE COMPUTATION OF INCOME FOR THE YEAR, WHICH REPRESENTS AN ESSENTIAL CONDITION FOR THE ISSUE OF NOTICE OF REASSESSMENT U /S. 148 BEYOND A PERIOD OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, AS IN THE INSTANT CASE, EVEN AS CLARIFIED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF VOLTAS LTD. VS. ACIT (SUPRA). THE REVENUES RELIANCE ON EXPLANATION 1 TO SECTION 147, IS, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, MISPLACED. NO INFORMATION HAD TO BE ASCER TAINED OR CULLED OUT FROM THE ACCOUNT BOOKS NOR ANY MATERIAL EVIDENCE WAS EITHER CALLED F OR OR REQUIRED TO FOR THE PURPOSE BY THE AO, EVEN AS APPARENT FROM THE REASONS RECORDED; THE ASSESSEES COMPUTATION OF THE DEDUCTION U/S. 80HHC, AS AFORE-NOTED, ITSELF BEARIN G THE FULL DETAILS. THE AO HAD, WHILE FRAMING THE ORIGINAL ASSESSMENT, CLEARLY OMITTED TO TAKE NOTE THAT THE SAID WORKING (OF DEDUCTION U/S. 80HHC BY THE ASSESSEE) WAS INCONSIST ENT WITH THE GTI (FROM WHICH DEDUCTION U/S. 80 HHC IS TO BE ALLOWED) INASMUCH AS THE SAME IS ONLY AFTER SETTING OF UNABSORBED LOSSES, ALLOWANCES, DEPRECIATION AGGREGA TING TO RS.119.08 LACS, BEING DULY ALLOWED IN ASSESSMENT (REFER SS. 80 AB, 80B(5)). TH E AO, WHILE RECORDING THE REASONS, MAKES NO BONES ABOUT IT; THE SAME, RATHER THAN CHAR GING THE ASSESSEE FOR NON OR IMPROPER DISCLOSURE, ON THE CONTRARY CHARGE THE REVENUE FOR NON APPLICATION OF MIND TO THE FACTS AND PARTICULARS ON RECORD INASMUCH HE STATES IN THE OPERATIVE PART OF THE REASONS RECORDED (LAST PARA) AS: SUBSEQUENTLY, IT WAS SEEN THAT THE DEPARTMENT HAS WORKED OUT THE DEDUCTION U/S.80HHC TO THE EXTENT OF RS.21,9,285/- WITHOUT SETTING OFF .. THERE IS AS SUCH NO SCOPE FOR APPLICATION OF THE SAID EXPLANATION . RATHER, AS FAR AS WE SEE IT, IT IS A CASE OF CHANGE OF OPINION BY THE REVENUE, WITH THE AO BEING SATISFIED WITH THE ASSESSEES WORKING IN THE FIRST INSTANCE. THE IMPUG NED NOTICE U/S. 148 AND, CONSEQUENTLY, THE RESULTANT REASSESSMENT PROCEEDINGS, ARE THUS BA D IN LAW. WE DECIDE ACCORDINGLY. 5. THE AFORESAID VIEW WAS IN FACT EXPRESSED BY THE BENCH DURING THE HEARING ITSELF, INDICATING THAT IN THIS VIEW OF THE MATTER, NO OTHE R GROUND BY THE ASSESSEE WOULD SURVIVE; ITA NOS. 1729 & 1967/MUM/2007 AMAL PRODUCTS LIMITED (A.Y. 1997-98) 6 THE REASSESSMENT PROCEEDINGS BEING BAD IN LAW. THE LD. AR OBJECTED TO THIS, STATING THAT GROUND NOS. 5 TO 8 OF THE ASSESSEES APPEAL SHALL S TILL SURVIVE, AS THE SAME FLOW FROM THE EARLIER ASSESSMENT U/S.143(3) DATED 24/3/2000, WHIC H WAS THE SUBJECT MATTER OF APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. AS THE SAID A UTHORITY HAD ISSUED CERTAIN DIRECTIONS (VIDE ITS ORDER DATED 28.12.2000), WHICH WERE PENDI NG IMPLEMENTATION/EXECUTION BY THE A.O., HE DID SO WHILE FRAMING THE IMPUGNED ASSESSME NT. ON BEING QUESTIONED AS TO WHETHER THE PARTIES HAD ACCEPTED THE SAID ORDER (I. E., DATED 28.12.2000), HE WOULD SUBMIT THAT THE ASSESSEE HAD CHALLENGED THE SAME BEFORE TH E TRIBUNAL, WHICH HAS SINCE ADJUDICATED THE SAME VIDE ITS ORDER DATED 26/5/2005 (IN ITA NOS . 1570 & 1613/MUM/2001). 6. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. 6.1 IN OUR CLEAR VIEW, IRRESPECTIVE OF THE ACC EPTANCE OR OTHERWISE OF THE ORDER BY THE FIRST APPELLATE AUTHORITY BY THE ASSESSEE, THE A.O. IS BOUND TO FOLLOW THE SAME, PASSING AN APPEAL GIVING EFFECT ORDER, WHEREBY ONLY THE ASSESS MENT WOULD GET MODIFIED/IMPACTED, EVEN AS THE ASSESSING AUTHORITY WOULD DO QUA AN APPELLATE ORDER BY EVERY OTHER APPELLATE AUTHORITY, INCLUDING THE APPELLATE TRIBUNAL. THE A. O. DOES NOT REQUIRE ANY SEPARATE JURISDICTION FOR PASSING THE SAID ORDER/S OR PROCEE DING TO FOLLOW THE DIRECTIONS AS CONTAINED IN THOSE ORDERS, IN WHICH HIS ORDER, AS W ELL AS THAT BY EVERY OTHER SUBORDINATE APPELLATE AUTHORITY, MERGES. THE MISTAKE COMMITTED BY THE A.O., IF WE MAY SAY SO, IS NOT THAT HE PASSES A CONSOLIDATED ORDER, I.E., AS AGAIN ST TWO SEPARATE ORDERS, WHICH IS LARGELY INCONSEQUENTIAL, BUT THAT HIS ORDER IS, TO THAT EXT ENT, NOT AN ORDER U/S. 143(3) R.W.S. 147, BUT AN ORDER U/S. 143(3) R.W.S. 250 OF THE ACT, INA SMUCH AS THE SAME IS INDEPENDENT OF THE REASSESSMENT PROCEEDINGS, SINCE CHALLENGED BY THE A SSESSEE BEFORE US. 6.2 THE ASSESSEE COULD NO DOUBT CHALLENGE THE SAME, I.E., THE ORDER U/S.143(3) R.W.S 250, BUT ONLY SEPARATELY, I.E., AGAINST THE ORDER B Y THE FIRST APPELLATE AUTHORITY DATED 28.12.2000 IN THE INSTANT CASE. FURTHER, AS BROUGHT TO OUR NOTICE, THE MATTER HAVING ALREADY BEEN CONTESTED BEFORE THE TRIBUNAL, IN WHOS E ORDER THAT BY THE FIRST APPELLATE ITA NOS. 1729 & 1967/MUM/2007 AMAL PRODUCTS LIMITED (A.Y. 1997-98) 7 AUTHORITY MERGES, NO APPEAL DE HORS THE ORDER BY THE TRIBUNAL DATED 26.05.2005, DISPOS ING THE ASSESSEES EARLIER APPEAL (AS ALSO BY THE REVEN UE), WHICH THE A.O. IS BOUND TO GIVE EFFECT TO, OR FOLLOW, WOULD OBTAIN AS THE ASSESSMEN T STANDS MODIFIED TO THAT EXTENT. 6.3 THE PRESENT APPEAL IS ONLY IN RESPECT OF TH E ASSESSMENT U/S. 143(3) R.W.S. 147 (AS MODIFIED BY THE IMPUGNED ORDER DATED 24.03.2005), W HICH STANDS FRAMED ON 15/2/2005, I.E., PRIOR TO THE DISPOSAL OF THE ASSESSEES APPEA L BY THE TRIBUNAL, I.E., IN THE FIRST INSTANCE, SO THAT NO EFFECT COULD POSSIBLY BE GIVEN TO ITS OR DER (IN ITA NOS. 1613/M/2001 AND 1570/M/2001, DATED 26.05.2005), IS NOT MAINTAINABLE BEFORE US. WE DECIDE ACCORDINGLY. 7. THE ASSESSEES GROUND NO. 9 WAS NOT PRESSED BEFO RE US, AND IS ACCORDINGLY DISMISSED AS NOT PRESSED. REVENUES APPEAL (IN ITA NO. 1967/MUM/2007) 8. THE REVENUES FIRST GROUND ASSAILS THE IMPUGN ED ORDER FOR ANNULLING THE RE- ASSESSMENT PROCEEDINGS, WITHOUT APPRECIATING THE DE CISION BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF DR. AMINS PATHOLOGICAL LABORATORY . WE ARE AT LOSS TO UNDERSTAND THE BASIS OF THE REVENUES APPEAL; THE A SSESSEE IMPUGNING THE APPELLATE ORDER ON THE GROUND OF NON-ADJUDICATION OF ITS RELEVANT G ROUNDS, I.E., CHALLENGING, INTER ALIA , THE VALIDITY OF THE REASSESSMENT PROCEEDINGS, WHICH THO UGH STAND ALSO INDEPENDENTLY AGITATED BEFORE US BY THE ASSESSEE, PER GROUND NOS. 1 TO 4 O F ITS APPEAL, AND STAND IN FACT ADJUDICATED BY US PER THIS ORDER UPON FINDING AS A MATTER OF FACT THAT THE ASSESSEES RELEVANT GROUNDS STOOD NOT DISPOSED OF BY THE LD. C IT(A) VIDE THE IMPUGNED ORDER. THE LD. CIT(A) HAS, IN FACT, DECIDED THE ISSUE ON MERIT S IN FAVOUR OF THE ASSESSEE, FINDING ITS WORKING OF THE DEDUCTION U/S. 80HHC, I.E., WITHOUT FIRST SETTING OFF THE UNABSORBED BROUGHT FORWARD LOSSES AND ALLOWANCES, AS SUSTAINAB LE IN LAW, PER PARA NOS. 13 AND 14 OF THE IMPUGNED ORDER. THE SAME, IF ANYTHING, ITSELF S UGGESTS PROPER DISCLOSURE BY THE ASSESSEE, BESIDES GOES TO PROVE AS A FACT THAT HE D ID NOT ANNUL THE REASSESSMENT ITA NOS. 1729 & 1967/MUM/2007 AMAL PRODUCTS LIMITED (A.Y. 1997-98) 8 PROCEEDINGS, AS THE QUESTION OF EXAMINING THE ISSUE ON MERITS WOULD NOT IN THAT CASE SURVIVE FOR CONSIDERATION. THE REVENUES GROUND #1 IS MISCONCEIVED AND IS, ACCORDINGLY, DISMISSED. WE DECIDE ACCORDINGLY. 9. THE REVENUES SECOND CHALLENGE IS TO THE DED UCTION U/S. 80HHC AS ALLOWED BY THE LD. CIT(A), CLAIMING IT TO BE INCONSISTENT WITH THE LAW IN THE MATTER AS EXPLAINED BY THE APEX COURT PER ITS DECISION IN THE CASE OF IPCA LABORATORY LTD . V. DY. CIT , 266 ITR 521 (SC). THE APEX COURT IN THE SAID CASE CLARIFIED THA T THE DEDUCTION U/S. 80HHC, THOUGH A SEPARATE CODE IN ITSELF, YET FORMS A PART OF CHAPTE R VI-A, SO THAT IT WOULD BE SUBJECT TO SS.80AB AND 80B(5). AS SUCH, THE PROFITS OF THE BUSINESS THEREIN WOULD HAVE TO BE COMPUTED AFTER SETTING OFF THE BROUGHT FORWARD LOSS ES AND ALLOWANCES. THIS IN FACT REPRESENTS THE SETTLED POSITION IN THE MATTER, WHIC H STANDS EXPLAINED BY THE APEX COURT AS WELL AS HONBLE HIGH COURTS IN OTHER DECISIONS AS W ELL, SO THAT THE SAME COULD WELL HAVE BEEN EFFECTED PER RECOURSE TO SEC. 154. WITHOUT IN ANY MANNER DISPUTING THE VALIDITY OF THE REVENUES CLAIM AS MADE PER ITS GROUND, HOWEVER , THE QUESTION OF ITS CONSIDERATION, AS DONE BY THE LD. CIT(A), WOULD ARISE ONLY IF THE REASSESSMENT PROCEEDINGS SURVIVE, WHICH HAVE BEEN FOUND BY US AS WITHOUT JURISDICTION . THE REVENUES SECOND GROUND, THUS, BESIDES BEING INCONSISTENT WITH ITS GROUND #1, NO L ONGER OBTAINS IN VIEW OF OUR HAVING HELD THE REASSESSMENT PROCEEDINGS AS BAD IN LAW (RE FER PARA 4 OF THIS ORDER). THE SAME IS ACCORDINGLY DISMISSED. 10. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY ALLOWED AND THE REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 05 TH DAY OF DECEMBER, 2012 SD/- - SD/- ( B. R. MITTAL ) ( SANJAY ARORA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 05/12/2012 ITA NOS. 1729 & 1967/MUM/2007 AMAL PRODUCTS LIMITED (A.Y. 1997-98) 9 COPY FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE C.I.T. CONCERNED 4. CIT (A) 5. THE DR, A BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR *RASIKA, ROSHANI ITAT, MUMBAI BENCHES, MUMBAI