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2007] 293 ITR 577 [2007] 165 TAXMAN 204 (BOM.) HIGH COURT OF BOMBAY Travel Corpn. (India) (P.) Ltd.* v. Assistant Commissioner of Income-tax, Central Circle 47, Mumbai F.I. REBELLO AND J.P. DEVADHAR, JJ. WRIT PETITION NOS. 3148 OF 2006 AND 43 OF 2007 JULY 17, 2007 Section 80HHD of the Income-tax Act, 1961 - Deductions - Hotels/Tour operators - Assessment years 2000-01 and 2001-02 - Whether where assessee utilises certain amount for purposes specified in section 80HHD(4) and draws that much amount from 80HHD reserve account, it would be open to assessee to utilize said amount for any purpose it deems fit and proper - Held, yes FACTS The assessee filed its return of income for the assessment years 2000-01 and 2001-02 claiming deduction under section 80HHD. The Assessing Officer disallowed the assessee's claim to some extent. On appeal, the Commissioner (Appeals) allowed entire amount claimed by the assessee. Appeal filed by revenue before the Tribunal was pending. In the meantime, based on the audit report, the Assessing Officer issued a notice under section 154 and rectify the assessment by withdrawing the deduction allowed under section 80HHD. Subsequently, the Assessing Officer issued a notice under section 148 to reopen the assessment for assessment years in question. In the notice, the Assessing Officer stated that after crediting a sum of Rs. 16.25 crores to 80HHD reserve account, the assessee utilized a sum of Rs. 10,50,71,000 for the purpose specified in section 80HHD(4), and that out of the said amount, the assessee transferred Rs. 7,89,46,000 to 80HHD utilized account but actually utilized only Rs. 4,60,96,779 for specific purpose and utilized balance for the purpose other than those referred in section 80HHD(4), and, therefore, the said amount should have been taxed as deemed profit. In writ, the assessee contended that once it was accepted by the revenue that a sum of Rs. 10,50,71,000 had been utilized for the purpose specified in section 80HHD(4), then transferring the said amount or any part thereof from 80HHD reserve account to the 80HHD utilized account would be in no way in violation of the provisions of section 80HHD and, therefore, reopening of…

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