TaxTMI 
TaxTMI 
2007 (4) TMI 402
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....eration is whether the CIT (Appeals) erred in directing to allow depreciation, at the rate of 40 per cent on the vehicles on lease and hire given by the assessee-company. 3. We have heard the parties. The ld. Chartered Accountant Shri A.S. Narayanamoorthy for the assessee submitted that this issue is covered in favour of the assessee in assessee's own case for the assessment years 1997-98 and 1998-99 being ITA Nos. 930 and 931/Coch./2004 vide order, dated 28-3-2006. The ld. Departmental Representative Smt. A.S. Bindhu for the revenue fairly conceded that this issue is decided by this Tribunal in favour of the assessee as submitted by the ld. AR. 4. We find that a similar issue has come for the consideration of this Tribunal in assessee's own case as stated supra wherein it is held as under:- "6. We have, heard rival submissions and considered the facts and materials on record. In the latest decision of the Madras High Court in the case of CIT v. Annamalai Finance Ltd., the Hon'ble Madras High Court has held as under:- 'On a plain reading of section 32 and Entry III (2)(ii) in Appendix I to the Rules, it is clear that it is the end-user of the specified asset which is re....
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....02, we are deciding this issue appeal-wise due to different reasons given by the CIT (Appeals). First of all, we are taking up ITA No. 1288/Coch./2004 for the assessment year 1999-2000. 6. The assessee is a non-banking finance company. The assessee filed its return of income on 30-12-1999 declaring the total income of Rs. 2,61,73,755 which was processed under section 143(1)(a). No assessment was made under section 143(3), but subsequently the Assessing Officer initiated proceedings under section 147 of the Act and issued notice under section 148 to the assessee on 25-3-2003. It was noticed by the Assessing Officer that the assessee has received an amount of Rs. 5,50,000 as interest from tax-free bonds which is shown as income in the profit and loss account and the assessee has claimed the said entire amount as exempt. The Assessing Officer relied on the decision of the Hon'ble Supreme Court in the case of CIT v. United General Trust Ltd. [1993] 200 ITR 488 and made the disallowance of Rs. 27,500 which is 5 per cent of the interest income and made the addition to the total income of the assessee. 7. The assessee challenged the impugned order of the Assessing Officer before the....
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....ome of Rs. 1,86,12,810 which was initially processed under section 143(1)(a) on 26-11-2001. Subsequently, the assessee's case was selected for scrutiny and completed under section 143(3) vide order dated 26-3-2003. It was noticed by the Assessing Officer that the assessee had received a sum of Rs. 43,61,888 as a dividend which, was reflected in the profit and loss account, but in the computation of the taxable income, the assessee has claimed the entire dividend income as exempt. The Assessing Officer therefore, proceeded to make disallowance in respect of the expenditure relatable to the earning of the exempted dividend income and made the disallowance at 5 per cent of the dividend income and made addition to the income of the assessee. 12. The assessee challenged the impugned order of the Assessing Officer on this issue before the CIT (Appeals). The CIT (Appeals) disposed of the assessee's appeal for the assessment year 2000-01 by common order dated 30-9-2004 for the assessment years 1999-2000 and 2000-01 deleting the addition of Rs. 2,18,094. While deciding this issue in favour of the assessee for the assessment year 2000-01, the CIT (Appeals) gave the following reasons :- ....
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....f the case. 3. The learned Commissioner of Income-tax (Appeals) ought to have seen that the Assessing Officer had successfully covered all the arguments of the assessee in paras 5, 6 & 7 of his order and Commissioner of Income-tax (Appeals) had analyzed it in paras 6 & 7 of his order dated 30-9-2004 and had come to a definite finding that he had no reason to disagree with the conclusion and finding given by the Assessing Officer, and the present order is without considering the fact that the decisions quoted by the assessee are not at all applicable to the facts and circumstances of this case and that the CBDT Circular No. 599 is applicable only in the case of banks, whereas the assessee is a non-banking finance company." 15. The assessment of the assessee was completed under section 143(3) vide order dated 26-3-2003. The Assessing Officer made three different additions to the total income of the assessee and one of them was in respect of the depreciation on the investment of Rs. 6,11,204. 16. The assessee challenged the said addition before the CIT (Appeals), but the CIT (Appeals) confirmed the addition by giving the following reasons:- "7. I have carefully considered ....
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....reasons :- "3.2 My present comments to decide the appeal is as under :- In appellant's case, who is a non-banking finance company and is governed by the direction of the RBI for carrying out its business activities as a finance company, investment made by the appellant in the current securities is a stock-in-trade, valuation of which have to be made as the closing date of the previous year on the basis of cost or market rate whichever is lower. Normal practices of the CAs while showing the position on the P & L Account of the finance company is that either increase or decrease as per the RBI Guidelines is included in the closing stock of plus or minus is reflected separately along with a note etc. To my mind which I still hold that the word 'depreciation' in the Income-tax Act for computing the income is viewed and taken in the context of fixed assets only, and depreciation is allowed on prescribed rates on the particular assets. The truth of matter is that the use of word 'depreciation' by the CA in appellant's case has to be viewed as a misnomer viz., the real meaning and interpretation in the given contexts on the facts of the appellant's case is that there is a decrease i....
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....in his competence to rectify the order under section 154. It was further contended that the CIT (Appeals) has not considered the decision of the Hon'ble Supreme Court in the case of United Commercial Bank (supra) and decision of Hon'ble High Court of Kerala in the case of Nedungadi Bank Ltd. (supra) and also the CBDT Circular No. 599, dated 24-4-1991 and hence the CIT (Appeals) has rightly allowed the claim of the assessee under section 154 of the Act. 20. We are not impressed with the arguments of the ld. CA for the assessee. As far as section 154 is concerned, it does not give power of review to any tax authority. Section 154 reads as under :- "154. (1) With a view to rectifying any mistake apparent from the record an income-tax authority referred to in section 116 may,- (a )amend any order passed by it under the provisions of this Act; (b )amend any intimation or deemed intimation under sub-section (1) of section 143. (1A) Where any matter has been considered and decided in any proceeding by way of appeal or revision relating to an order referred to in sub-section (1), the authority passing such order may, notwithstanding anything contained in any law for the time....
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....he Income-tax Officer to go into the true scope of the relevant provisions of the Act in a proceeding under section 154 of the Income-tax Act, 1961. 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 conceivably be two opinions. As seen earlier, the High Court of Bombay opined, that the original assessments were in accordance with law though in our opinion the High Court was not justified in going into that question. In Satyanarayan Laxminaran Hegde v. Mallikarjun Bhavanappa Tirumale, this Court while spelling out the scope of the power of a High Court under article 226 of the Constitution ruled that an error, which has to be established by a long-drawn, process of reasoning on points where there may conceivably be two opinions cannot be said to be an error apparent on the face of the record. A decision on a debatable point of law is not a mistake apparent from the record - see Sidhramappa Andannappa Manvi v. CIT. The power of the officers mentioned in section 154 of the Income-tax Act, 1961 to correct 'any mistake apparent from the record' is undoubtedl....
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.... of the Assessing Officer before the CIT (Appeals) by taking different contentions one of which was in respect of the validity of the notice issued under section 148 of the Act and the other on merits of the additions. As far as the validity of the assessment proceedings is concerned, the CIT (Appeals) was of the opinion that the Assessing Officer had issued notice under section 148 mechanically without having fulfilled the requirements of section 147. He, therefore, quashed the assessment proceedings by giving the following reasons:- "4. The reading of this para clearly shows that the Assessing Officer knew at the time of processing the return under section 143(1) that the assessee is in the business of hire purchasing and leasing and not in the business of running vehicles on hire, normal rate of depreciation has been allowed at 20 per cent in earlier years, details of which were available with the Assessing Officer. Nothing prevented the Assessing Officer, therefore, to invoke the provisions of section 154. Having accepted the return, he cannot subsequently change his opinion or rectify a mistake by invoking the provisions of section 147, which inflicts injury of being subjec....
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....sing Officer cannot proceed in the guise of section 147 to reopen original assessment. The Hon'ble High Court has observed as under :- "12. The next question to be considered is whether Assessing Officer by issuing Ext. P7 notice under section 143(2) of the Income-tax Act as well as Ext. P8 notice under section 142 of the Income-tax Act has embarked upon a roving enquiry on issues which are unconnected with the issue which forms the basis of proceedings initiated under secion 147 of the Act vide Exts. P5 and P6. It is trite law that general enquiry can be made only by issuing notice under sub-section (2) of section 143 within the stipulated period, which in the present case has already expired on 31-3-2003. We have already indicated that it is not the case of the revenue that during the course of proceedings under section 147 of the Act it has come across any material relating to the items mentioned in Ext. P8 suggesting escapement of income under any of those heads mentioned therein. Assistant Commissioner of Income-tax cannot make any fishing enquiry in concluded matters unconnected with the issue on the basis of which proceedings under seciton 147 was initiated as per Exts. P....