Reassessment Orders Quashed: Tribunal Rules Change of Opinion Invalid, Central Capital Subsidy Depreciation Addition Unjustified.

The Tribunal allowed the assessee's appeals, quashing the reassessment orders and related additions. It determined that the reassessment proceedings under Section 147/148 were invalid, as they were based on a mere change of opinion, which is impermissible. The Tribunal also found that the addition concerning depreciation related to the Central Capital Subsidy was unjustified, as it was a review of the original assessment. Furthermore, the Tribunal ruled that the amended provision of Section 2(24)(xviii) has only prospective application, supporting the assessee's position.

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Issues Involved:

1. Initiation of reassessment proceedings under Section 147/148 of the Income Tax Act.
2. Validity of addition made on account of depreciation calculation related to Central Capital Subsidy.
3. Applicability of amended provision of Section 2(24)(xviii) of the Income Tax Act.

Summary:

Issue 1: Initiation of Reassessment Proceedings
The assessee challenged the initiation of reassessment proceedings under Section 147/148 of the Income Tax Act, arguing that it was based on a mere change of opinion. The assessee had fully disclosed all relevant facts in the audited financial statements and tax audit report during the original assessment proceedings. The Tribunal found that the reassessment proceedings were initiated on the same material facts that were already considered during the original assessment under Section 143(3). The Tribunal held that the reassessment proceedings were invalid as they were based on a mere change of opinion, which is impermissible in law. The Tribunal quashed the reassessment order and the order of the CIT(A).

Issue 2: Validity of Addition on Depreciation Calculation
The assessee contended that the CIT(A) erred in upholding the addition of Rs. 72.90 lakhs on account of depreciation related to the Central Capital Subsidy. The Tribunal noted that the assessee had disclosed the receipt of the subsidy and its accounting treatment in the financial statements and tax audit report. The original assessment order did not make any addition on this count after detailed examination. The Tribunal concluded that the reassessment proceedings were merely a review of the original assessment, which is not allowed. Consequently, the Tribunal quashed the addition made by the Assessing Officer.

Issue 3: Applicability of Amended Provision of Section 2(24)(xviii)
The assessee argued that the CIT(A) wrongly applied the provisions of Section 2(24)(xviii), which were amended to have prospective application from 01.04.2016. The Tribunal referred to the judgment of the Hon'ble Calcutta High Court in the case of Pr. Commissioner of Income Tax Vs. Ankit Metal & Power Ltd., which held that the amendment to Section 2(24) has prospective effect and does not apply to the assessment years in question. The Tribunal allowed the assessee's ground on this issue.

Conclusion:
The Tribunal allowed the appeals of the assessee for both assessment years, quashing the reassessment orders and the additions made therein. The Tribunal held that the reassessment proceedings were invalid as they were based on a mere change of opinion and that the amended provision of Section 2(24)(xviii) has prospective application only.

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