Income Tax Appellate Tribunal - Ahmedabad
Dcit.,(Osd)Circle-8,, Ahmedabad vs Torrent Pharmaceuticals Limited,, ... on 10 November, 2016
ITA No.2026/Ahd/2013 &
C.O. No.15/Ahd/2014
A.Y. 1995-96
Page 1 of 12
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD "B" BENCH, AHMEDABAD
BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND
SHRI S.S. GODARA, JUDICIAL MEMBER
ITA No.2026/Ahd/2013
Assessment Year: 1995-96
D.C.I.T. (OSD) vs. M/s. Torrent Pharmaceuticals Ltd.,
Circle-8, Ahmedabad. Torrent House,
Nr. Dinesh Hall,
Ashram Road,
Ahmedabad.
[PAN - AAACT 5456 A]
C.O. No.15/Ahd/2014
(In ITA No.2026/Ahd/2013)
Assessment Year: 1995-96
M/s. Torrent Pharmaceuticals Ltd., vs. D.C.I.T. (OSD),
Torrent House, Circle-8, Ahmedabad.
Nr. Dinesh Hall,
Ashram Road,
Ahmedabad.
[PAN - AAACT 5456 A]
(Appellants) (Respondents)
Revenue by : Shri Jagdish, C.I.T. (D.R.)
Assessee by : Shri P.M. Mehta & G.M. Thakar, A.R.
Date of hearing : 11.08.2016
Date of pronouncement : 10.11.2016
ORDER
PER S.S. GODARA, J.M.
This revenue's appeal and assessee's cross objection for assessment year 1995-96 arise against CIT(A)-XIV Ahmedabad's order dated 27.05.2013 in case no. CIT(A)XIV/ACIT,Cir.8/06/2012-13 in proceedings under section 154 of the Income Tax Act, 1961; in short 'the Act'.
ITA No.2026/Ahd/2013 &C.O. No.15/Ahd/2014
A.Y. 1995-96 Page 2 of 12
2. We come to rival pleadings. The revenue's sole substantive ground challenges lower appellate order deleting disallowance of Rs.78,03,422/- of section 80HH deduction made by the Assessing Officer by invoking section 154 rectification in question. The assessee's ground on the other hand assails correctness of the CIT(A)'s order rejecting its legal plea that the above rectification is time barred.
3. We come to the relevant facts. This assessee is engaged in pharmaceutical business. It filed return on 30.11.1995 stating income of Rs.12,40,87,170/-. The same stood processed on 12.12.1995 making adjustment of Rs.15,640/-. The assessing officer took up scrutiny thereafter. The assessee filed revised return on 19.03.1997 showing income at Rs.11,51,49,350/- on the ground that there was some change in computing section 80HH and 80I deduction. The Assessing Officer completed regular assessment on 30.03.1998 computing the above two deductions as Rs. NIL as against assessee's corresponding claims of Rs.2,06,68,955/- and Rs.2,58,36,194/-; respectively.
4. The assessee filed appeal before the CIT(A) on 28.04.1998. It further chose to prefer section 154 rectification petition before the Assessing Officer on 14.08.1998 on the ground that another entity M/s Indian Infusion Limited assessed having loss of Rs.1,49,69,610/- on 26.12.1997 had amalgamated as per hon'ble jurisdictional high court's amalgamation scheme w.e.f. 01.04.1994. It claimed set off of the said loss in its hands in other words. The Assessing Officer accepted the same vide order dated 24.12.1998.
5. We now get back to assessee's above said appeal against the original assessment order. The CIT(A)'s order dated 15.03.1999 upheld Assessing Officer's ITA No.2026/Ahd/2013 & C.O. No.15/Ahd/2014 A.Y. 1995-96 Page 3 of 12 action computing NIL deduction claims hereinabove. The assessee then filed ITA No.1141/Ahd/1999 before this tribunal. A co-ordinate bench in its order dated 29.12.2006 held that the above two deductions under section 80HH and Section 80I are to be computed on the basis of gross income by reducing the necessary expenses. It further directed the Assessing Officer not to deduct section 35(1)(iv) expenses. The Assessing Officer framed consequential assessment on 06.11.2008 computing section 80HH deduction as Rs.3,52,06,579/- thereby determining assessee's total income as Rs.5,78,67,400/-.
6. This case file indicates that the Assessing Officer thereafter issued section 154 rectification notice on the ground that he had accepted excess amount of section 80HHS deduction claim to the tune of Rs.78,03,422/-. He then passed impugned rectification on 21.03.2012 after inter alia holding that the assessee had succeeded in availing above two deductions before set off of losses of the amalgamated entity whereas the same had to be allowed after the necessary set off. This resulted in the impugned addition to the tune of Rs.78,03,422/-.
7. Assessee preferred appeal. It raises two substantive grounds. First one challenged validity of the impugned rectification on the ground that the same is time barred. It's latter plea assailed correctness of the impugned rectification on merits. The CIT(A) rejects the form er plea and accepts latter one as under :-
"2.2. Decision:
I have carefully perused the findings of the assessing officer and submissions made by the AR of the appellant. The undisputed facts of the present case are that appellant has claimed its return of income after claiming deduction u/s 80HH at Rs 3.45 crores and in the said Return of Income, appellant in notes has stated that amalgamation scheme between it and Indian Infusion Limited is pending for ITA No.2026/Ahd/2013 & C.O. No.15/Ahd/2014 A.Y. 1995-96 Page 4 of 12 approval before Hon'ble Gujarat High court and said company has current year loss of Rs 1,89,84,253 and brought forward loss of Rs 4,70,59,248. Thereafter appellant has filed revised Return of Income wherein deduction u/s 80HH was enhanced at Rs 3.85 crore. In the original assessment proceedings, Assessing Officer has made certain disallowances which include disallowances of 80HH. My predecessor CIT(A) has allowed deduction u/s 80HH partially. Meanwhile, Assessing Officer has passed order u/s 154 of the Act on 24th December 1998 wherein he has set off current year loss of Indian Infusion for Rs 1.49 crore as scheme of amalgamation between appellant and that company was approved. Subsequent to passing of original assessment order. Assessing Officer has passed reassessment order u/s 147 of the Act which was quashed by Learned CIT(A) vide his order dated 21st May 2003. Effect of said order was passed by Assessing Officer on 30th June 2003 wherein Assessing Officer has also allowed set off brought forward loss of Indian Infusion for Rs 4.53 crore against taxable income of appellant and net income was computed at Rs 6.63 crore. While computing deduction u/s 80HH at the time of passing the order giving effect to CIT(A)'s order on 30/06/2003, Assessing Officer has not reduced brought forward loss of Indian Infusion. It is pertinent to note that against the order of CIT(A), both assessee and department has filed an appeal and Hon'ble Ahmedabad I.T.A.T. has passed its order on 29th December 2006 and effect of such order was passed by Assessing Officer on 06/11/2008 wherein assessed income was recomputed at Rs.578 crore and deduction u/s 80HH was computed at Rs 3.52 crore. Thereafter, Assessing Officer has passed present order u/s 154 of the Act on 21/03/2012 on the ground that while computing deduction u/s 80HH in order given effect to I.T.A.T.'s order, the Assessing Officer has not reduced brought forward loss of India Infusion and hence he has recomputed deduction u/s 80HH in present order after reducing brought forward loss of amalgamated company being India Infusion and denied deduction u/s 80HH at Rs.78,03,422/-.
The first plea of appellant/Proposition No.(i) of the appellant is that present order passed by Assessing Officer u/s 154 is barred by limitation on the ground that Assessing Officer has given set off brought forward loss of India Infusion for Rs 4.53 crore for first time in order given effect to CIT(A)'s order on 30/06/2003 and at such point of time, while computing deduction u/s 80HH, Assessing Officer has not set off such loss hence period of four years as prescribed u/s 154 of the Act is required to be reckoned from this date and not from the date when Assessing Officer has given effect order of I.T.A.T. as this issue was never before Hon'ble Ahmedabad I.T.A.T. The plea of appellant along with decisions relied upon is carefully considered but same is not found acceptable on the ground that return of income filed by appellant has been considered while passing the assessment order u/s 143(3) wherein certain additions were being made which was challenged before CIT(A) and I.T.A.T. In this process, in view of amalgamation order as approved by Hon'ble Gujarat High court, appellant became entitled to set off of brought forward loss of India Infusion and credit of which was granted to appellant by Assessing Officer, The Assessing Officer is of the view that while computing deduction u/s80HH, brought forward loss of said company is required to be set off hence by for giving this effect, he has passed the 154 order. The various additions made by Assessing Officer in assessment order were subject matter of dispute before Hon'ble Ahmedabad I.T.A.T. and under the Doctrine of Merger, once an appeal against the order passed by an ITA No.2026/Ahd/2013 & C.O. No.15/Ahd/2014 A.Y. 1995-96 Page 5 of 12 authority is preferred and is decided by the appellate authority, the order of the said authority merges into the order of the appellate authority. With this merger, the order of the original authority ceases to exist and the order of the appellate authority prevails, in which the order of the original authority is merged. For all intent and purposes, it is the order of the appellate authority that has to be seen. Thus, the word "order" in s. 154 (7) has not been qualified in any way and it does not mean only the original order but includes the appeal - effect order. Considering this doctrine of merger, order giving effect to CIT(A)'s order passed by Assessing Officer has merged with the order given effect to I.T.A.T's order thus present order passed by Assessing Officer rectifying its mistake in granting deduction u/s80HH as per his stand is within the time prescribed u/s 154 of the Act and is not barred by limitation. The Hon'ble Calcutta I.T.A.T. in case of ITO V/s. Iran Tea Trading Co. (P.) Ltd. 80 ITD 537 has held as under:
"Section 154, read with sections 80HHC and 263, of the Income-tax Act, 1961 - Rectification of mistake - Apparent from record - Assessment year 1985-86 - Original assessment, in which deduction u/s 80HHC to the tune of Rs.12,95,588 was allowed, was set aside by Commissioner invoking jurisdiction under section 263 - As Tribunal set aside Commissioner's order under section 263, order of fresh assessment made in compliance with section 263 order was also set aside - While giving effect to order of Tribunal, Assessing Officer reduced deduction allowed under section 80HHC during original assessment on ground that though after adjustment of unabsorbed business loss of earlier year, gross total income was only Rs. 25,829, deduction under section 80HHC had been allowed at Rs.12,95,588 which was in excess of that amount of income - Assessee made an application for rectification of this order but this application was rejected by Assessing Officer - On appeal, Commissioner (Appeals) by his order dated 13-9-1995 allowed assessee's appeal and held that since order under section 263 had been set aside by Tribunal, original order of assessment revived and therefore, deduction under section 80HHC as allowed in original order could not be reduced while giving effect to order of Tribunal cancelling order of revision - Assessing Officer gave effect on 6-11-1995 to order of Commissioner (Appeals) dated 13-9-1995 and following his directions restored deduction at Rs.12,95,588 as was originally allowed in first order of assessment - Assessing Officer also then initiated proceeding under section 154 on 1-11-1996 for rectifying this order passed giving effect to Commissioner (Appeals) 's order dated 13-9- 1995 - After hearing assessee and referring to proviso to section 80B(5), Assessing Officer rectified his order dated 6-11-1995 on 31-3-1997 by setting off carried forward losses of 1984-85 and reduced deduction under section 80HHC to extent of gross total income of Rs. 54,829 - Whether Assessing Officer was justified in rectifying his order to withdraw/reduce deduction under section 80HHC - Held, yes - Whether though mistake had been originally committed by Assessing Officer in original order of assessment, but that order had by process of various appeals and reversionary orders culminated into final and effective order on 6-11-1995 when Assessing Officer gave effect to order of Commissioner (Appeals) dated 13-9-1995 directing him to restore original order of assessment and, therefore, period of limitation of four years for passing order of rectification ITA No.2026/Ahd/2013 & C.O. No.15/Ahd/2014 A.Y. 1995-96 Page 6 of 12 was to be counted from 6-11-1995 and, hence, order of rectification was not time barred - Held, yes"
Considering the provisions of section 154 of the I. T. Act 1961 and relying on aforesaid decisions, Proposition No. (i) of appellant that present order passed by Assessing Officer is barred by limitation is hereby rejected.
The second plea of appellant/proposition No.(ii) that the loss of India Infusion Ltd. being amalgamated company is required to be set off against income of the appellant company for the purpose of computation of deduction u/s 80HH is debatable in nature hence Assessing Officer has no jurisdiction to recomputed deduction u/s 80HH while passing the order u/s. 154 of the I.T. Act, 1961. On careful consideration of facts, it is observed that appellant has claimed deduction u/s 80HH in Return of Income and at the time of while return of income, amalgamation scheme of India Infusion Ltd. with assessee company was pending before Hon'ble Gujarat High court which got approved subsequently. Both the companies had separate undertaking/unit and appellant's unit is entitled to deduction u/s 80HH whereas India Infusion Ltd. being separate company is not entitled to deduction u/s 80HH. Whether for the purpose of computing deduction u/s 80HH, loss of another unit not eligible for deduction u/s80HH or whether brought forward loss of other unit is required to be set off is purely debatable in nature as various courts have decided the similar issue in favour of assessee whereas some other courts have decided issue against the assessee. The fact which is to be noted is that the ratio laid down-by jurisdictional High Court is against the decision arrived by the AO while issuing order u/s. 154 of the I. T. Act 1961. The Hon'ble Kolkatta I.T.A.T. in case of ITO V/s. Kanchan Oil Industries Ltd has held that where assessee has income from both business eligible under section 80-1A and non-eligible business, deduction under section 80-IA would be allowed on income from eligible business without same being adjusted/set off by existing/brought forward expenses/ losses/ allowances relating to non-eligible business. Recently Hon'ble Himachal Pradesh High court in case of Him Teknoforge Ltd. 210 Taxman 201 has held as under :
"22. On perusal of the bare provisions of the Act and the law cited hereinabove, it is clear that while calculating deductions under Chapter VI- A only the profits derived from priority units are to be taken into consideration. Section 80A(2) specifically provides that the amount of deduction shall not in any case exceed the gross total income of the assessee. There can be no manner of doubt that Section 80AB has overriding effect and will govern the other provisions of Chapter VI-A. This also clearly indicates that only the income derived from apriority undertaking is to be taken into consideration while making deduction. Section 80B(5) indicates that gross total income means the total income computed in accordance with the provisions of this Act. Therefore, we are of the considered view that the phrase "gross total income" will include profits and losses from other units whether they be priority units or non- priority units.
23. In Canara Workshop (P.) Ltd.'s case (supra) the Apex Court clearly held that even if two units were priority units, the losses of one unit could ITA No.2026/Ahd/2013 & C.O. No.15/Ahd/2014 A.Y. 1995-96 Page 7 of 12 not be set off against the profits of other units. The reasoning given by the Apex Court was that each industry must be considered on its own and the benefits which were available to one industry should not be denied to it because of the losses suffered by the other industry. With due respect we are of the opinion that this proposition of law stands diluted by the later judgments of the Apex Court in IPCA Laboratory Ltd's case (supra) Induflex Products (P.) Ltd.'s case (supra) and Synco Industries Ltd.'s case (supra)
24. The question, however, which remains to be answered is whether the losses incurred in a non-priority unit should be taken into account while calculating the income of the priority undertaking or not. We are of the considered view that none of the authorities relied upon by Mr.Vinay Kuthila, Sr. Advocate, especially, the judgment rendered by the Apex Court in IPCA Laboratory Ltd. 's case (supra) lays down the law that the profits of the non-priority units should be first set off while calculating the income of the priority unit. In Synco Industries Ltd.'s case (supra) the question before the Apex Court was whether an assessee could get benefit of deduction when the gross total income was nil. In view of the provisions of Section 80A(2) which provides that the deduction under Chapter VI-A shall not in any way exceed the gross total income of the assessee, it is more than obvious that if the income is nil then the assessee is not entitled to any benefit of the deductions.
25. However, this does not mean that while calculating the total income of the assessee derived from the priority unit the losses of the non-priority unit have to be first adjusted. This does not appear to be the intention of the Legislature. In fact in Synco Industries Ltd.'s case (supra) itself the Supreme Court held that for the purposes of calculating deduction under Section 801(6) the loss sustained in one of the units is not be taken into account because sub section (6) contemplates that only profits shall be taken into account as if they were the only source of income. Therefore, we are of the considered view that while calculating the deductions under Section 80HH of 80IA of the Act, the profits of each unit will have to be calculated separately. However, in case if both of the units are priority units then in view of law laid down in IPCA Laboratory Ltd. and Induflex Products (P.) Ltd. (supra) the loss of the non-priority unit will have to be taken into account while calculating the deductions. However, this principle will not apply to losses, if any of a non-priority unit.
26. It is obvious that the Legislature by using the phrases "total income"
and "gross total income" has tried to differentiate between the two. Gross total income has been defined to mean the total income computed in accordance with the provisions of this Act. Therefore, it will include the profits and losses of all units of the assessee whether they be priority units or non-priority units. However, while computing the deductions specified under Section 80C to 80U only the income derived from the priority units has to be taken into consideration. The deductions shall be calculated only in respect of the income whether profit or loss of the priority unit(s). ITA No.2026/Ahd/2013 & C.O. No.15/Ahd/2014
A.Y. 1995-96 Page 8 of 12
27. Having calculated the deductions, the next question that would arise is what benefit has to be given to the assessee on account of such deductions. If the gross total income is nil, then as laid down in Synco Industry case the assessee cannot get any benefit of such deductions. Section 80A(2) leaves no manner of doubt that the amount of deductions cannot exceed the gross total income of the assessee. To give an example if the gross total income of the assessee after taking into account profits and losses of all its units whether priority or non priority is Rs. 10 lacs and the deductions calculated are 15 lacs, the assessee can only get benefit of Rs. 10 lacs. To give another example, supposing the income of the assessee from the priority unit is Rs. 20 lacs and he is entitled to deduction of Rs.10 lacs but his gross total income after taking into consideration the losses of non priority unit is only Rs. 5 lacs he would only be entitled to the benefit of deductions of Rs. 5 lacs. This, however, does not mean that while calculating the deductions the profits of non- priority units have to be taken into consideration."
28. In view of the above discussion, we answer the question of law raised in these appeals in the following terms:-
1. That while calculating the deduction under Chapter VI-A only the losses and profits derived from the priority units can be taken into consideration.
2. While calculating the gross total income of the assessee even the income whether profit or loss of the non-priority units has to be taken into consideration.
3. That the deductions cannot exceed the gross total income and obviously if the gross total income is nil then the assessee would not be entitled to the benefit of deductions."
The above judicial decision prove beyond doubt that issue of set off brought forward loss of India Infusion Ltd., amalgamated company which is not eligible for deduction u/s 80HH in present case against income of appellant which is eligible for deduction u/s 80HH is definitely debatable issue. This issue is very well settled by the decision of Hon'ble Supreme court in case of Volkart Brothers 82 ITR 50 wherein Hon'ble Court has held as under:
"Section 154, read with section 113 [Corresponding to section 17(1) of the Indian Income-tax Act, 1922] of the Income-tax Act, 1961 - Rectification of mistake - Apparent from record -Assessment years 1958-59, 1960-61 to 1962-63 - Assessments of assessee-firm were made on slab rates prescribed under respective Finance Acts, applicable to registered firms - Its partners were assessed in status of non-resident at maximum rates in respect of their respective share income - Subsequently, despite assessee-firm's objections, ITO purporting to correct mistakes under section 154 of 1961 Act, assessed assessee-firm at maximum rates of income-tax by applying provisions of section 17(1) of 1922 Act - Whether unless a firm can be considered as a 'person' section 17(1) of 1922 Act ITA No.2026/Ahd/2013 & C.O. No.15/Ahd/2014 A.Y. 1995-96 Page 9 of 12 could not govern assessment of assessee-firm - Held, yes - Whether question of applicability of section 17(1) of 1922 Act to case of assessee- firm was not free from doubt and, therefore, ITO was not justified in thinking that on that question there could be no two opinions - Held, yes - Whether, therefore, ITO was wholly wrong in holding that there was a mistake apparent from record of assessments of assessee-firm - Held, yes"
The Hon'ble Gujarat High court in case of C1T V/s. Dlgvijay Cement Co Limited 305 ITR 267 has held as under:
"...the light of the aforesaid decision the day when rectification proceedings were undertaken by the Assessing Officer the Tribunal's decision rendered by the Madras Bench was available and was expressing a contrary view in relation to the same provisions and hence the view expressed by the Commissioner (Appeals) and the Tribunal concurrently, that the issue, being debatable, cannot form the subject- matter of rectification proceeding merits acceptance in the light of settled legal position. The apex court has consistently held that where in relation to interpretation of a provision there are conceivably two opinions rectification cannot be resorted to. In the circumstances, the Tribunal was justified in confirming the order made by the Commissioner [Appeals) rejecting the application made by the Assessing Officer under section 154 of the Act for excluding the interest on deferred payment on purchase of machineries for the purposes of calculating the actual cost for computing allowable depreciation and investment allowance. The question referred for the opinion of this court is, therefore, answered in the affirmative, i.e., in favour of the assessee and against the Revenue."
Further, Hon'ble Gujarat High court in case of CIT V/s. Atul Products Limited 109 Taxman 183 has held as under :
"Section 154 of the Income-tax Act, 1961 - Rectification of mistake - Apparent from records - Assessment year 1971-72 - Extra-shift depreciation allowance and deduction under section 80J - allowed in original assessment were withdrawn subsequently on-ground that for working depreciation, assessee-company as a whole should be considered and not separate units constituting it, and plant for which benefit of 80J was allowed was not new but expansion of existing one - Whether, where assessee had more than one factory, each factory's working days were to be separately computed to work out extra-shift allowance - Held, yes - Whether, where assessee started manufacturing new product under fresh licence and set up new building and machinery, it could be treated as new industrial undertaking within meaning of section 80J - Held, yes - Whether, however, since both issues were highly debatable, there was no justification for exercising powers under section 154 - Held, yes"
The Hon'ble Gujarat High court in case of CIT V/s. Hussainbhai M. Badri 208 1TR 719 has held as under:
ITA No.2026/Ahd/2013 &C.O. No.15/Ahd/2014
A.Y. 1995-96 Page 10 of 12 "Section 154, read with sections 80L and 86(v), of the Income-tax Act, 1961 - Rectification of mistakes - Apparent from record - Assessment year 1971-72 - Whether, where question involved was whether assessee was entitled to deduction both under sections 80L and 86(v), it could be said that it was a debatable question -Held, yes - Whether such an issue could be decided in a proceeding under section 154 - Held, no"
The High court at para 5 has held as under :
"5. The learned counsel appearing for the revenue tried to support the second rectification order passed by the ITO on the ground that granting of deduction being a mistake apparent on the record, it was open to the ITO to initiate proceedings under section 154. In our opinion, this contention raised on behalf of the revenue cannot be accepted. As regards what can be regarded as a mistake apparent on the record, the Supreme Court in T.S. Balaram, ITO v. Volkart Bros. [1971] 82 ITR 50, has held that a mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long- drawn process of reasoning on points on which there may be conceivably two opinions. It has held that a decision on a debatable point of law is not a mistake apparent on the record. Now, the question as to whether the assessee was entitled to a deduction both under sections 801 and 86(v) was a debatable question. The ITO, at one point of time, held that it was a "grantable deduction and, therefore, he had granted that relief - while granting the application made by the assessee. As that question is a highly debatable question, obviously, it could not have been regarded as a mistake apparent on the record. The ITO was, therefore, not justified in again initiating proceedings under section 154 and rectifying the first rectification order passed by him. The AAC and the Tribunal were right in taking the view that the ITO was not justified in doing so...."
The issue of set off of loss of India Infusion Ltd. being non priority industry not eligible for 80HH against income of appellant being eligible for 80HH is debatable in nature as discussed herein above and respectfully following the decisions of Hon'ble Gujarat High court and Hon'ble Supreme Court referred supra and facts of appellant's case. Assessing Officer's action to pass an order u/s. 154 of the I.T. Act 1961 for rectifying deduction u/s 80HH granted to the appellant is not as per law. Consequently, the order u/s. 154 of the I. T. Act, 1961 dated 21/03/2012 on this issue will not remain in force and disallowance of deduction u/s 80HH made by Assessing Officer for Rs.78,03,422/- stands deleted. The grounds of appeal are accordingly partly allowed."
8. This leaves both the parties aggrieved as indicated in their respective pleadings.
9. We have heard both the parties reiterating their respective stands in Revenue's appeal qua merits of the case. There is hardly any dispute that the Assessing Officer's ITA No.2026/Ahd/2013 & C.O. No.15/Ahd/2014 A.Y. 1995-96 Page 11 of 12 sole reason for invoking section 154 rectification in question is that he had allowed excess claim of section 80HH deduction before set off of brought forward losses of the amalgamation entity in the course of framing consequential assessment (supra). The CIT(A)'s findings extracted hereabove discuss at length that this issue is very much a debatable one in view of various judicial precedents. Learned departmental representative fails to rebut the same. We find that hon'ble apex court in the case of Volkart Bros (supra) followed by catena of subsequent judicial precedents conclude that section 154 rectification is not exigible on such debatable issues. We thus see no reason to interfere in the CIT(A)'s findings holding that the assessing officer ought not to have exercised his rectification jurisdiction for adding the impugned brought forward losses of the amalgamation entity whilst allowing the impugned section 80HH deduction. The Revenue's sole substantive ground as well as its main appal ITA no.2026/Ahd/2013 is accordingly rejected.
10. We now advert to assessee's cross objection. Shri Mehta states very fairly that the assessee/cross objector does not wish to press its legal ground pleaded therein any more. We accordingly reject this cross objection as not pressed.
11. Revenue's appeal ITA no.2026/Ahd/2013 is dismissed and assessee's cross objection no.15/Ahd/2014 is dismissed as not pressed.
Pronounced in the open court today on 10th day of November, 2016.
Sd/- Sd/- Pramod Kumar S.S. Godara (Accountant Member) (Judicial Member) Ahmedabad, the 10 th day of November, 2016 PBN/* ITA No.2026/Ahd/2013 & C.O. No.15/Ahd/2014 A.Y. 1995-96 Page 12 of 12 Copies to: (1) The appellant (2) The respondent (3) Commissioner (4) CIT(A) (5) Departmental Representative (6) Guard File By order Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad