The appellant-assessee was formed as a joint
venture between Kirloskar Group and the Government of
the State of Punjab. It claimed deduction under
Section 80-I of the Income Tax Act, 1961 for the
Assessment Year 1990-91, which, according to the
assessee, is the initial assessment year. The
deduction was initially allowed by successive Assessing
Officers for the initial Assessment Year 1990-91 and
for six successive Assessment Years 1991-92 to 1996-97.
For the Assessment Year 1997-98, the Assessing Officer
allowed the deduction under Section 80-I in the
assessment framed under Section 143(1)(a) of the 1961
Act. This deduction under Section 80-I was confirmed
in the assessment made under Section 143(3) of the
Income Tax Act, 1961 for the Assessment Year 1997-98 in
which deduction under Section 80-I was taken into
account by the Assessing Officer. However, a notice
under Section 154 was issued by the Department
purporting to withdraw Section 80-I deduction in
respect of the Assessment Year 1997-98. This order
under Section 154 was challenged in Appeal by the
assessee. The said Appeal was allowed in favour of the
assessee by CIT(A) vide order dated 18th January, 2002.
Soon thereafter, on 20th March, 2002, the Department
issued notice under Section 148 for the Assessment Year
1997-98 for the reason that in the Annual Report of the
assessee for Financial year 1988-89, relevant to the
Assessment Year 1989-90, assessee had indicated sales
of 346 engines manufactured before 31st March, 1989.
Taking into account the said particulars of sales, the
notice stated that the manufacturing/production of
engines had allegedly started in the period, relevant
to the Assessment Year 1989-90, and, consequently,
assessee was not entitled to the benefit under section
80-I during the Assessment Year 1997-98 (with which we
are concerned). Needless to state that 80-I deduction
is for a period of eight years, which, according to the
Department, ended during the period, relevant to the
Assessment Year 1996-97.
This initiation of the re-assessment proceedings
was challenged by way of a Writ Petition before the
Punjab and Haryana High Court, which stood dismissed
giving liberty to the assessee herein to raise all
objections, including the one relating to jurisdiction
of the Assessing Officer to issue notice, before the
proper forum. The impugned judgment has been
challenged in this Civil Appeal, which now has come for
hearing before this Court.
During the pendency of this Civil Appeal, we are
informed that against the order of the Assessing
Officer reopening the assessment, the assessee herein
had preferred an Appeal to CIT(A). By his order dated
8th January, 2007 in Appeal No.65/P/03-04, the CIT(A)
allowed deduction under Section 80-I for the Assessment
Year 1997-98 on the ground that assembling of engine
did not amount to manufacture for the purposes of
claiming deduction under Section 80-I of the Income Tax
Act, 1961. Against this decision of CIT(A), we are
informed that the Department has preferred Income Tax
Appeal No.304/CHD/2007 before the Income Tax Appellate
Tribunal, Chandigarh. That Appeal is pending as of
date. We are informed that arguments stand concluded.
However, it appears that the CIT(A) did not give the
finding on the validity of the reopening of the
assessment.
In the above circumstances, we are of the view
that ends of justice would be sub-served if we direct
the Income Tax Appellate Tribunal, Chandigarh, to also
examine this narrow issue regarding the validity of the
notice dated 20th March, 2002 in the pending Appeal,
bearing No.ITA 304/CHD/2007. [emphasis supplied]
The interim orders passed by this Court during
the pendency of this Civil Appeal will continue till
the disposal of the pending Appeal by the Tribunal.
Civil Appeal stands disposed of accordingly. No
order as to costs.
(SWATANTER KUMAR) New Delhi, April 06, 2010.