AI Drafter 
TaxTMI 
TaxTMI 
2013 (3) TMI 486
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....nt under section 147. (b) The Appellant prays that the re-opening be held as bad in law. 2. Without prejudice to the foregoing: (a)The CIT(A) erred in upholding the action of the AO in deducting depreciation in respect of profits of the Goa unit and for the purpose of calculating deduction under section 80 IB. (b) The appellant prays that depreciation not be deducted for computing gross total income and for computing deduction under section 80 IB." 2. The assessee is a company engaged in the manufacturing of Copper T , OCP and trades in plastic granules and diamonds. For A.Y 2001-02 the assessee filed return of income on 29/10/2001. An order of assessment was passed under section 143(3) of the Income Tax Act (the Act) ....
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....the original assessment the assessee's claim for deduction u/s.801A has been allowed at Rs.3,59,17,105/- as claimed by the assessee. It has been held by the Bombay High Court in the case of M/s. Indian Bank Corporation Ltd. Vs. CIT that the assessee can not exclude depreciation allowance while computing profits derived from newly established units for the purpose of claiming deduction u/s. Chapter VI-A of the IT Act. Accordingly, the assessee has, been granted depreciation at Rs.18,13,758/- on the profits of its Goa units and consequently the deduction allowable u/s.801A is re-calculated." 4. On appeal by the assessee the CIT(A) confirmed the order of the AO. Before CIT(A) the assessee challenged the validity of initiation of reassess....
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....fore the Tribunal. 6. As far as challenge to the validity of initiation of reassessment proceedings is concerned, which is raised by the Assessee in Ground No.1 before the Tribunal, we find that the assessee in the original return of income filed for A.Y 2001-02 given in the computation of total income in Note No.1 which says that the assessee reserved its right to claim depreciation of Goa Unit in case taxable profits arrives in assessment. It is thus clear from this Note that the deduction claimed by the assessee under section 80IB for Goa Unit was on profits arrived at without claiming depreciation. This fact is further clear from the statement of deduction under section 80 IB of Goa Unit filed alongwith return of income, wherein depr....
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.... from total income for the purpose of allowable deduction u/s. 80IB. After excluding income from other sources profit of business works out to Rs. 3,59,11,334/- and deduction admissible works to Rs. 3,59,11,334/-." 7. Based on the above facts available on record when the original assessment proceedings were concluded, the ld. Counsel for the assessee contended that no new material had come into possession of the AO based on which it could be said that there was excess deduction claimed under section 80 IA of the Act because of depreciation not having been claimed by the assessee. It was the argument of the ld. Counsel for the assessee that the initiation of reassessment proceedings was purely on the basis of change of opinion on the set ....
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....basis of such information which he has received after the completion of the original assessment. The aforesaid decision of the Hon'ble Delhi High Court has since been affirmed by the decision of the Hon'ble Supreme Court in the case of CIT vs. Kalvinator of India Ltd., 320 ITR 561(SC) wherein it was held by the Hon'ble Supreme Court as follows: "Prior to Direct Tax Laws (Amendment) Act, 1987, reopening could be done under two conditions and fulfillment of the said conditions alone conferred jurisdiction on the AO to make a back assessment, but in s. 147 (w.e.f. 1st April, 1989), they are given a go by and only one condition has remained, viz., that where the AO has reason to believe that income has escaped assessment, confers jurisdic....
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....als are therefore dismissed-CIT vs. Kalvinator of Inida of India Ltd. (2002) 174 CTR (Del)(FB) 617 and CIT vs. Eicher Ltd. (2007) 213 CTR (Del) 57 affirmed." (Underlining by us for emphasis) 9. In view of the above we are of the view that in the present case the assessee had duly disclosed all facts and the AO while passing an order under section 143(3) of the Act is presumed to have applied his mind to the claim of the assessee for deduction under section 80IA of the Act on profits which was calculated without deduction on account of depreciation. In such a situation without a tangible material coming to the possession of the AO regarding escapement of income from assessment the AO cannot initiate reassessment proceedings. Giving suc....