TaxTMI 
TaxTMI 
2013 (6) TMI 425
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....see as deduction and not the entire amount of Rs.2,06,47,310/-. Consequently excess carried forward of unabsorbed deprecation of Rs.99,35,146/- was allowed in the assessment order. Further in the computation of book profit u/s 115JB of the Act an amount of Rs.2,62,76,653/- was reduced form the net profit as per profit and loss account of adjustment of hypothetical income credited to the profit and loss account of the year as per Note 2 of Part B of Schedule V to the audited accounts. Since the said item was not allowable as deduction as per Explanation below Section 115JB (2) of the Act the deduction of the said amount was not admissible in computing the book profit u/s 115JB of the Act. Further, an amount of Rs.10,32,595/- debited to the profit and loss account on account of "Provision for gratuity" was an unascertained liability as per clause 17(i) of the Tax Audit Report and hence the same was required to be added back to arrive at the book profit. This resulted in under-assessment of the book profit by Rs.2,73,09,248/-. In view of the above stated under assessment of income notice u/s 148 of the Act was issued on 31.03.2010. The AO in the re-assessment order passed on 24.12.201....
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....as under :- "Apparently, the assessee had furnished the return of income for the relevant assessment year u/s.139 of the Act. Hence there is no failure on this count. Now it is to be examined whether the assessee had failed to disclose fully and truly all material facts necessary for the assessment. The reasons for reopening of the assessment, as recorded in the impugned assessment order, are reproduced hereunder: "On examination of the assessment records, it was seen that: (A) The assessee had claimed and was allowed a deduction of Rs.2,06,47,310/- towards Written-off amount of intangible assets" as had been appropriated from Net profit in the Profit & Loss Account as 'Extraordinary items '. In respect of intangible assets, being depreciable assets, depreciation u/s.32 of the Act is allowable @ 25% on WDV as shown below:- Asst.Year Opening WDV (Rs.) Rate of Depreciation Depreciation allowable (Rs.) Closing WDV (Rs.) 2002-03 4,12,94,621 25% 1,03,23,655 3,09,70,965 2003-04 3,09,70,965 25% 77,42,742 2,32,28,224 It is thereby, seen that depreciation u/s.32 amounting to Rs. 77,42,742/- is allowable and no deduction under any other provision of the Act was allowable.....
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....7,310/- towards "Written- off amount of intangible assets" as had been appropriated from Net profit in the profit & loss account as 'Extraordinary items'. The A.O. himself has noted in the reasons for reopening that he noticed the above facts "on examination of the assessment records", which means that those facts were all available on record of the AO. before the reopening. The reopening was not done on the basis of any new material. This shows that there was no failure on part of the assessee to disclose fully and truly all material facts relevant to the assessment. When the A.O. himself had computed assessee's Book Profit U/S 115JB and allowed deduction of Rs.2,06,47,310/- towards "Written-off amount of intangible assets" under scrutiny assessment, it entails that he had applied his mind to the matter and had formed a view that 'hypothetical income credited to income' was deductible from Net Profit as per profit & loss account for computing Book Profit u/s 115JB and deduction of Rs.2,06,47,310/- towards "Written off amount of intangible assets" was allowable. Form the discussion made above it is apparent the reopening had not been made on the basis of any new material or facts ....
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....satisfied. The first is that the Income-tax Officer must have reason to believe that income, profits and gains chargeable to Income-tax have been under assessed. The second is that he must have also reason to believe that such "under assessment has occurred by reason of either (i) omission or failure on the part of an assessee to make a return of his income under section 22, or (ii) omission or failure on the part of an assessee to disclose fully and truly all material facts necessary for his assessment for that year. Both these conditions are conditions precedent to be satisfied before the Income-tax Officer could have jurisdiction to issue a notice for the assessment or reassessment beyond the period of four years, but within the period of eight years, from the end of the year in question.. The only difference between the old Act and the present Act is that in the old Act the maximum period of limitation was eight years, whereas the same is six years in the present Act. Except the above, both the provisions viz. section 34 of the Indian Income tax Act, 1922 and section 149 of the Income-tax Act, 1961 are verbatim the same. Thus, the aforesaid judgment of the Hon'ble Supreme Court....
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....ade out. But, when all the facts were placed before the Assessing Officer and the Assessing Officer consciously considered the facts and arrived at a decision then can it be reopened merely because subsequently he changes his opinion or some other officer takes a different view? We think not." In M.M.T.C. Limited vs Dy. Commissioner Of 1. Tax on 28 September, 2007 the Hon'ble Delhi High Court made following observations:- "We have carefully considered the rival submissions in the light of material placed before us. The reassessment has been challenged by the assessee mainly on three grounds. Firstly, that the impugned reassessment proceedings are based on mere change of opinion and, therefore, not permissible in law. Secondly, no reasonable belief was formed for initiating reassessment proceedings to hold that income of the assessee had escaped assessment which is a prerequisite condition for valid initiation of reassessment proceedings. Thirdly and lastly, reassessment proceedings are invalidly initiated as according to proviso to Section 147 reassessment proceedings cannot be validly initiated beyond the period of 4 years from the end of assessment year only in the circumstance....
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....n-off amount of intangible assets" as had been appropriated from Net profit in the Profit & Loss Account as 'Extraordinary items '. In respect of intangible assets, being depreciable assets, depreciation u/s.32 of the Act is allowable @ 25% on WDV as shown below:- Asst.Year Opening WDV (Rs. ) Rate of Depreciation Depreciation allowable (Rs.) Closing WDV (Rs.) 2002-03 4,12,94,621 25% 1,03,23,655 3,09,70,965 2003-04 3,09,70,965 25% 77,42,742 2,32,28,224 It is thereby, seen that depreciation u/s.32 amounting to Rs. 77,42,742/- is allowable and no deduction under any other provision of the Act was allowable. Consequently, excess carry forward of unabsorbed depreciation to the tune of Rs.99,35,146/- (Rs.18,90, 773/- for A..Y2002-03 and Rs.80,44,373/- for A.Y.2003-04) was allowed in the assessment order. (B) Again, in the computation of book profit u/s.115JB of the Act, it is seen that an amount of Rs.2, 62,76,653/- had been reduced from the net profit as per Profit and Loss Alc on account of adjustment for hypothetical income credited to the Profit and Loss Ale of the year as per Note 2 of Part B of Schedule V to the audited accounts. Since the said item. does not fall ....