AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2012 (2) TMI 284
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....n the return of income, the petitioner claimed depreciation of Rs.74,85,196/- on fixed assets. The Assessing Officer issued a questionnaire on 05.10.2004 under Section 143(2) of the Act and called upon the petitioner to furnish the details of the new assets acquired during the relevant accounting year amounting to Rs.5,98,81,568/- along with copy of the bills and also to furnish the details of working of depreciation of Rs.74,85,196/- as claimed in the return. He also required the petitioner to furnish the details about the items with bill number, bill date, cost, date on which the asset was put to use and the depreciation claimed thereon. In the questionnaire the petitioner was also required by the respondent to explain why depreciation claim should not be disallowed since no business activity was carried on by the petitioner during the year. 3. In response to the questionnaire referred to above, the petitioner submitted a reply dated 23.11.2004. It was stated therein that the company entered into the business of maintenance of a Commercial Complex in Gurgaon and acquired plant and machinery at a cost of Rs.6.5 crores with a view to start the business. It was also submitted as un....
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....uilding and had started the business of managing the said building immediately on acquisition of plant & machinery. Although the assessee company has not received any income during the year, it cannot be assumed that the assessee had not started its business; the business of the company was set up as soon as the company was ready to start its business. It had acquired plant & machinery and had also entered into an agreement with M/s. Vatika Greenfield Pvt. Ltd. as one of its clients. It had made sufficient arrangements for inflow of income from 1.4.2002 and the company had started giving services to the holders of the space in the building known as First India Place at Gurgaon. In these circumstances, it is wrong to allege that the company had not started its business activities during the year under consideration and therefore, the company is entitled to its claim of depreciation in accordance with law. The assets purchased were immediately put to use by the company. It is therefore, prayed that the claim of depreciation as claimed by the assessee company in its return of income may please be allowed in accordance with law." 4. Another notice under Section 143(2) of the Act was ....
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....f Rs.74,90,450/-. Assessment was made at the returned loss of Rs.74,90,450/- by the then AO under section 143(3) of the Act vide order dated 24.02.2005. It has been noticed that the assessee had claimed deduction of Rs.74,85,196/- on account of depreciation. It is further observed that there was no business activity during the relevant year. As per 'notes of accounts' the company planned to undertake the business and for the purpose had acquired all the assets during the year from its group company which were not put to use by the assessee. Thus, as the business was yet to commence and there was no business activity during the relevant year, the depreciation amounting to Rs.74,85,196/- was wrongly claimed by the assessee. Since the assessee had claimed excess depreciation amounting to Rs.74,85,196/- which was not allowable, income to the extent of Rs.74,85,196/- has escaped assessment. In view of above, I have reason to believe that, on account of failure on the part of the assessee to disclose the particulars of his income truly and correctly, an amount of Rs.74,85,196/- chargeable to tax has escaped assessment for the A.Y. 2002-03. To bring to tax this escaped income of Rs.74,85,....
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....rse of the original assessment proceedings regarding claim of depreciation of Rs.74,85,196/- and that the assessment was completed on that basis under Section 143(3) and that therefore the notice is without jurisdiction. We see merit in the contention. As the reasons recorded for re-opening the assessment show, the ground on which the assessment was re-opened was that the business was yet to commence and, therefore, the depreciation was wrongly claimed by the assessee and allowed in the original assessment. In our opinion, there was no failure on the part of the petitioner to furnish full and true particulars relating to the claim of the depreciation. In its letter dated 23.11.2004 filed in response to the query raised under Section 143 (2), in the course of the original assessment proceedings, the petitioner had furnished the relevant and primary facts and submitted that it had acquired plant and machinery at a cost of Rs.6.5 crores with a view to start its business and that though no income from the said business had been declared in the return for the year under consideration, still the claim of depreciation on fixed assets was allowable as the business had already been set up. ....