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2017 (9) TMI 1591

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....ax Act, 1961 ('Act') seeking to reopen the assessment in the Assessment Year ('AY') 2009-10 as well as the consequential order dated 11th January 2016, passed by the AO, rejecting the objections filed by the Petitioner to the re-opening of the assessment. 2. While directing notice to be issued in this petition on 29th January 2016, this Court directed that further proceedings pursuant to the impugned notice and order shall remain stayed. That interim order has continued till date. 3. The background facts are that the Petitioner is a subsidiary of Honda Motors Company Ltd. Japan ('Honda Japan') which is stated to be a leading manufacturer and distributor of automobiles, motorcycles and power products. The Petitioner purchases raw material,....

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....10% has caused escapement of income to that extent. The TDS credit has been allowed in excess of Rs. 68,964/- than admissible as per credit reflected in ITD System. Section 43B of the Income Tax Act provides that any sum payable by the assessee as an employer by way of contribution to any provident fund or superannuation fund or gratuity fund or any other fund for the welfare of the employees, a deduction shall be allowed only in computing the income in the previous year in which such sum is actually paid by him. Subsequent to assessment on verification of records it is seen that as per computation the assessee had deducted expenses of Rs. 1,98,06,804/- on account of payment made to approved gratuity fund related to earlier years. Wherea....

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....me which did not form part of the total income. In its reply dated 24th January 2013, the Assessee explained that it had neither earned any exempt income nor incurred any expense to earn the exempt income. It was further pointed out that, in the appeal filed by the Petitioner against the original assessment order dated 22nd March, 2013 for AY 2010-11, the Commissioner of Income Tax (Appeals) ['CIT (A)'] had deleted the disallowance made by the AO on account of Section 14A of the Act. Consequently, it is pointed out by the Petitioner that there was no basis for the reason to believe that the expenditure in respect of the exempt income under Section 14A should be disallowed. 12. The Court notices that in the AO's order dated 11th January, 20....

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....on is that excess depreciation was claimed by the Petitioner @ 15% in respect of the electrical installation instead of at the eligible rate of 10% and, therefore, excess depreciation ought to be disallowed. Here again, the explanation offered by the Assessee that the electrical installation was part of the plant and machinery and could not operate independent of it was not even adverted to by the AO in the order dated 11th January, 2016 which disposed of the objections. It is argued that the Petitioner was eligible for depreciation under the block of plant and machinery. Reliance was placed on the decision of the Punjab and Haryana High Court in CIT v. Oswal Woollen Mills Ltd., (2007) 289 ITR 261. 15. Here again, the AO has failed to indi....

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....to approved gratuity fund related to earlier years whereas, in Form 3CD under Clause 21(i)(a) Annexure-8A, the amount shown on account of actual gratuity paid during the AY in question was Rs. 1,79,53,799/-. It is, accordingly, stated that the excess deduction of Rs. 18,53,005/- should be disallowed. 19. The Petitioner, in its objections, pointed out that the above reason was based on the original income tax return and not the revised return filed by the Petitioner in which the Petitioner had claimed Rs. 1,98,317/- instead of Rs. 1,98,06,804/- on account of gratuity paid during the AY in question. 20. Obviously, the AO failed to note the changed figures in the revised return. This, being an instance of non-application of mind by the AO, c....