TaxTMI 
TaxTMI 
2010 (11) TMI 570
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.....46,78,313/- made by the A.O. by restricting the depreciation on ITG Networking Equipment @ 25% as against 60% claimed by the assessee without discussing the merits of the addition made by the A.O. 4. The appellant craves leave to add, to alter, or amend any grounds of appeal raised above at the time of hearing." CO. No.345/Del/2010 1. Based on the facts and circumstances of the case, the notice issued under section 148 by the learned Deputy Commissioner of Income-tax 6(1) (hereinafter referred to as the learned Assessing Officer) is illegal, bad in law, without jurisdiction and barred by time limitation, hence, the reassessment order dated 31st July 2008 passed by the learned Assessing Officer is also illegal, bad in law and without jurisdiction. 2. Based on the facts and circumstances of the case, there is no failure on part of the Respondent to disclose truly and fully all material facts necessary for assessment, hence, the notice issued under section 148 of the Act and the reassessment order are illegal, bad in law and without jurisdiction The respondent craves, to consider each of the above grounds of cross objections without prejudice to each other and craves, ....
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.... 148 of the IT Act, 1961. In the case of M/s Microsoft Corporation India Pvt Ltd., it has been found that depreciation on "networking equipments" has been allowed inadvertently @ 60% under the category of 'computer' whereas it should have been allowed @ 25% as in the case of 'Plant and Machinery', as "Networking equipments" forms a part of plant and machinery. The incorrect allowance of incorrect depreciation has resulted into under-assessment of income by Rs. 46,78,313/-. In addition, interest u/s 234B has also been undercharged. Therefore, I have reasons to believe that income of the assessee for the A.Y. 2002-03 chargeable to tax amounting to Rs.46,78,313/- has escaped assessment, I am also satisfied that the case of the assessee for the A.Y. 2002-03 is a fit case for taking action u/s 147/148 of the IT Act, 1961. Notice u/s 148 of the IT Act issued to the assessee. Sd/- DCIT, Circle 6 (1)" 5. The objections against initiation of re-assessment proceedings were filed vide letter dated 8th January, 2008 which was disposed of by the Assessing Officer vide order dated 7th July, 2008. The copy of objections dated 8th January, 2008 is filed by the assessee in the pap....
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....and truly all material facts necessary for assessment, pre-condition for invoking proviso to section 147 is not satisfied and notice as well as proceedings pursuant thereto are liable to be quashed and also the contention that where reasons recorded did not indicate the failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment, then also, the initiation of re-assessment proceedings would be without jurisdiction as per proviso to section 147. He also relied upon the decision of ITAT in the case of Bank of Tokyo-Mitsubishi UFJ Ltd. v. ADIT, International Taxation, Kolkata dated 12th December, 2008 wherein both the aforementioned decisions of jurisdictional High Court were considered and it was held that where there is no specific averment made in the reasons recorded regarding the failure on the part of the assessee to disclose fully and truly all material facts relating to assessment, the proviso to section 147 will be applicable and he drew our attention towards the observations of the Tribunal contained in para 6. The copy of the order has been placed at pages 57-79 of the paper book in which one of us (Accountant Member) is a ....
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....o be fulfilled for non-applicability of first proviso to section 147 is that there should not be a failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. From the above discussion, it has already been made clear that neither it is the allegation of the Assessing Officer that there was any such failure of the assessee nor the record has shown such failure. Rather, the issue on merit was required to be explained by the Assessing Officer and the same was explained during the course of original assessment proceedings. Having fulfilled the aforementioned twin conditions, the first proviso to section 147 debarred the initiation of reassessment proceedings as the notice u/s 148 is issued on 18/23.07.2007 which is beyond the four years from the end of relevant assessment year which period ends on 31.03.2003. 13. The ratio of two decisions of jurisdictional High Court relied upon by Ld. AR, as mentioned in para 8 of this order, are fully applicable to the present case, relying upon which, the co-ordinate Bench in the case of Bank of Tokyo-Mitsubishi UFJ Ltd. v. ADIT, International Taxation, Kolkata (supra) has held that re-assessment ....
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....decision of jurisdictional High Court, mentioned above, is squarely applicable to the facts of the case. Accordingly, it is held that the AO did not have jurisdiction to issue notice u/s 147. Consequently, assessment made thereon was bad in law. 14. So far as it relates to merits of the issue i.e., regarding grant of depreciation @ 60% on ITG networking equipments, it was the contention of Ld. AR that this issue is covered in favour of the assessee by the Special Bench decision in the case of DCIT v. Data Craft India Ltd., a decision recently rendered by Special Bench on 9th July, 2010 and reported as 40 SOT 295, a copy of which is filed at pages 225 to 234 of the paper book. He specifically relied upon the following, observations from the said decision:- "In short, "Router" is a hardware device that routes data (hence the name) from a local area network (LAN).to another network connection. A router acts like a coin sorting machine, allowing only authorized machines to connect to other computer systems Most routers also keep log files about the local network activity. Now the question is whether this "machine" can be used independent of computer. If yes, then it cannot be cal....