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« on: February 11, 2011, 06:13:10 PM »
in the original assessment u/s 143(3), deduction u/s 80IB was denied in entirety on the ground of violation of one of the mandatory conditions. CIT(A) allowed the benefit of deduction u/s 80IB finding that there was no breach. The department filed appeal before ITAT. During the pendency of ITAT appeal, department reopened the assessment, on audit objection, on the ground that benefit of deduction u/s 80IB should not be allowed on DEPB. On merit, it seems to be in order due to Supreme Court judgment in case of Liberty India. However, we objected to the reassesment proceedings on the ground that there was no escapement of income as in the original assessment deduction u/s 80IB was denied in entirety. Proviso to section 147 is not applicable as reopening is within 4 years.
(1) Is our stand that there was no escapement of income when no deduction u/s 80IB was allowed in original assesment correct?
(2) Whether doctrine of merger will come into play? can it be said that the assessment order merged into CIT(A)'s order and since CIT(A)'s has allowed the benefit of section 80IB, there is escapement of income to the extent of deduction on DEPB?
(3) Can we say that department could not reopen such a case during pendencey of its appeal before ITAT and can take alternative plea before ITAT for DEPB?
The reassessment was completed disposing objections without discussing them with reasoning. At present, the ITAT has also dismissed department's appeal. Kindly share your views in the matter.