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you have raised a nice point. I will try to express my views in this manner (1) if we go by the special bench decision of sushila zhaveri, the letter "a" has to be given precise meaning i.e. one. similar letter "a" is used with the pharase long term asset (asset transferred) in section 54. Logically, in that case reply should be in negative. (2) however, if both units which are transferred constitute one residential unit, the exemption can be claimed as per the logic of K.G. rukminiamma. (3) there appears to be a distinction in section 54 & section 54F in respect of transferred asset. section 54 uses the letter "a" whereas section 54F uses the word "any". Hence, the logic of mutiple assets sold and one new asset purchased may not be correct as far as section 54 is concerned. (4) in the recent mumbai tribunal decision of rajiv pillai, one to one relation is mentioned. That also leads to believe that for two different residential houses, one new asset can not be purchased. There should be two against two. (5) finally, if one looks at the very objective of section 54 i.e. promotion of housing, it appears that purchase of one house against two or more houses does not adversely affect the objective. Hence, it should be allowed. I am in the process of fsearching for any direct decision in the matter, If i find, i will surely post it.

kindly see Cochin tribunal decision at 14 SOT 486 for contra view.

is TCS applicable on high sea sales between two residents?

Kindly see the Chennai ITAT decision in case of Chandrakumar (129 TTJ 489). The ITAT has denied such set off after considering the SC judgment of Virmani Industries.

Sorry,  i read the judgment but did not notice the citation. The said judgment has been reported in DTR also at  42 DTR 257.  I have just read one recent Mumbai ITAT decision in case of Chika Overseas Pvt. Ltd. - 50 DTR 426. The same is relevant in taking the plea of applicability of second proviso adressing the issue being subject matter of appeal.

Yes. that looks fine. Both section 263 and section 147 use the word "matters" and therefore logically this judgment can be extended to section 147 also. I have just come to know about one Bombay HC judgment reported at 9 taxmann.com 237 which is on the same issue. Can you or any one please provide me full text thereof?

Thank you for sharing the views. There are 2 different views from two experts. As i stated earlier, the re-opening is within 4 years.

In the reassessment proceedings, i mentioned the second proviso and mentioned that as per memorandum explaining the provisions of finance bill, the said proviso is clarificatory in nature. My confusion is that in the original assesment proceedings 80IB was denied in entirety on one ground. Whereas in reassessment proceedings, part of deduction u/s 80IB is denied on different ground. The second proviso uses the word "matters". Though issue is same i.e.deduction u/s 80IB, the matters are different. The matter on which the assessment is sought to be re-opened is different than the matter which was subject matter of appeal. Under the circumstances, will the proviso apply? In the judgment of Prashant Project, the matter appears to be same.  Under the second proviso, whether entire issue will get merged or only the matter will get merged?

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.

Yes I agree that the same is not legally valid. Ther reasons give jurisdiction and therefore they should precede the issuance of notice u/s 148. Practicallly, i have also faced this type of situation.The authorities do not give reasons immediately even after filing return. The mechanism of approval etc. is also not working. These 2 decisions have helped the assessees to some extent. Thank you for clarifying my confusion.   

Bombay HC in case of Caprihans India (266 ITR 566) held that the assessee must file return before seeking reasons from the A.O.

my confusion is that in GKN driveshaft (259 ITR 19), it has been stated that after notice u/s 148, return is to be filed and then to ask for copy of reasons. The Delhi ITAT decision and Haryana Acrylic were in the context of notice to be issued at the end of completion of 6 years which is the maximum time limit available under law. The emphasize was on that the reasonable time limit of furnishing reasons should not extend the maximum time limit available under the law. It is for putting a check that the time limit prescribed under the law does not practically become meaningless or otiose. In my thinking, these should be read in harmonious way that in normal case the reasons have to be provided after filing of return by the assessee in response to notice u/s 148. However, where notice u/s 148 is to be issued at finishing point of time limit, the reasons should be provided alongwith the notice or within reasonable time so as comply with the time limit prescribed in the law. If reasons are not furnishined within the time limit, the reassesmenent proceedigns will be bad in law. Kindly correct me if my thinking is not correct as i am also very keen on this issue.

as per my littile knowledge, section 41(1) can not apply to such a situation as no deduction of the amount of loan waived is claimed or allowed in the computation of toal income. The Delhi HC in case of Goyal  M G Gases Lrd. has also considered the same. There are other judgments also in this regard. One which is often being referred to is Gujarat HC in case of Chetan Chemicals (267 ITR 770). In fact, in that judgment Gujarat HC has held that such waiver cannot be taxed even u/s 28(iv).

Thank you for your prompt response. The main ground for holding the waiver of loan as taxable u/s 28(iv) in the solid container's case was that the loan was obtained for trading purpose. Normally, the working capital finance are obtained for trading purpose on the security of stock and book debts. The Tribunals have distinguished Solid Container case mainly on the ground that in the cases before tribunal, the loan waived was for capital purpose. However, i also feel that this controversy will remain till the judgment of other High Court comes or Apex Court decides the issue. Till that time, litigation will be there.

Learned friends

u/s 43D, interest on NPA account is not taxxable even if assessee is following mercantile system of accounting. however, the said section applies mainly to scheduled banks. in case of NBFC, there are judgments which hold that interst on NPA is not taxable in view of theory of real income. latest as per my knowledge is Delhi HC in case of Vashishth Chay Vyapar. My littile confusion is whether the position will be same in case of Co-operative bank? is there any direct judgment in relation to any co-operative bank? Kindly give your valuable views.

Learned friends

The Bombay HC in case of Mahindra & Mahindra (261 ITR ) held that principal amount waived by bank in respect of term loan for asset purpose is neither taxable u/s 28(iv) nor 41(1). However, in later judgment the Bombay HC in case of Solid Containers (308 ITR ) held that waiver of loan obtaind for trding liability is taxable u/s 28(iv). The HC distinguished earlier judgment of Mahindra & Mahindra and relied on T.V. sundaram Iyengar (222 ITR ). It means waiver in respect of working capital finance from bank which are generally obtained for trading purpose acn be taxed u/s 28(iv). The situation appears to be undesirable. Kindly give your view in the matter.