Audit report on extra depreciation for leased hotel machinery u/s147(b) treated as "information"; reassessment jurisdiction upheld.

The dominant issue was whether reassessment under s. 147(b) IT Act was without jurisdiction because the "information" was derived from an audit report concerning extra depreciation on leased plant and machinery. The HC held that extra depreciation is allowable only where machinery is installed in premises used by the assessee as an approved hotel; the audit party merely drew the ITO's attention to the applicable statutory provision without interpreting law, and therefore its report constituted "information" under s. 147(b). The availability of rectification or revision did not bar reassessment if s. 147(b) conditions were met. Consequently, the Tribunal's finding of lack of jurisdiction was set aside and the matter was remitted for decision on merits.

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Issues Involved:
The judgment involves the interpretation of whether the reassessment made under section 147(b) of the Income Tax Act was valid based on the audit party's communication of law to the assessing officer.

Summary:

Issue 1: Extra Depreciation Claim
The assessee claimed extra depreciation for plant and machinery leased to a hotel. The audit party highlighted that the assets were not used in the assessee's business premises, leading to reassessment under section 147(b) by the ITO. The CIT(A) and Tribunal upheld the reassessment, emphasizing the need for the assets to be used in the hotel business premises for extra depreciation.

Issue 2: Tribunal's Decision
The Tribunal allowed the assessee's appeal, stating that the audit party's communication did not constitute "information" for reopening the assessment. The Tribunal relied on a Supreme Court decision to support its stance.

Issue 3: Interpretation of Law
The Revenue contended that the audit party did not interpret the law but merely informed the ITO of the relevant provisions. The assessee argued that the audit party did interpret the law, making the reassessment invalid.

Court's Decision
The High Court analyzed the relevant law on extra depreciation allowance for approved hotels. It concluded that the audit party's communication constituted "information" under section 147(b) and the reassessment was valid. The Court disagreed with the Tribunal's view that the ITO lacked jurisdiction to reopen the assessment. The matter was remanded to the Tribunal for further consideration.

In conclusion, the High Court held that the reassessment under section 147(b) was valid, contrary to the Tribunal's decision. The question of law was answered in favor of the Revenue, and no costs were awarded in this case.

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