TaxTMI 
TaxTMI 
2016 (1) TMI 1393
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....hin the meaning of entry 111(5) of Appendix I to the Income-tax Rules,1962 and thereby restricting rate of depreciation to 25% as applicable to the general category of 'Plant & Machinery' on the written down value of GDS amounting to Rs. 51,78,15,649/- instead of allowing 60% as applicable to 'computer'. 2) On the facts and circumstances of the case and in law, the learned CIT(A) has erred in restricting depreciation to 25% (applicable to the general category of Plant & Machinery) instead of 60% claimed by the Appellant on the incidental charges of Rs. 2,00,60,320/- paid for installation and commissioning of highly integrated and sophisticated computerised billing and accounting system viz., "Interconnect System - Traffic Accounting System" comprising of hardware and software which in the impugned appellate order itself has been upheld as qualifying to be 'computer' by the learned CIT(A) and consequently depreciation has been allowed thereon @ 60% by the learned CIT(A). 3) It is prayed that the Assessing Officer may kindly be directed to grant interest under section 244A on the refund, if any arising out of above grounds, in accordance with the law. The ....
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....leaded for admission of the additional grounds. 6. Having considered the submissions of the Ld. Counsels vis-à-vis the facts and materials on record as well as judicial pronouncements cited before us we are of the view that the issue raised by the assessee in the additional grounds being purely legal issues and going to the root of the matter as if affects the very jurisdiction of the assessment proceeding, the assessee is entitled to raise such an issue even at this stage of the proceeding. Further, we are inclined to entertain the additional grounds raised by the assessee as they do not require going into fresh facts and can be decided on the basis of facts and materials already available on record. For coming to such conclusion we rely upon the decisions of the Hon'ble Supreme Court in the case of "National Thermal Power Co. Ltd." 229 ITR 383 & "Jute Corporation of India" 187 ITR 688 and the decision of the Hon'ble Jurisdictional High Court in the case of "CIT vs. Pruthvi Brokers and Shareholders Pvt. Ltd. (2012) 349 ITR 336 (Bom.). " Having held so, we will deal with the facts of the case. Briefly stated, the assessee during the relevant period was a Government of Indi....
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.... also observed that software is also an integral part of computer system. Further, he noticed that the assessee has not claimed entire software expenditure as revenue. He therefore held that the assessee would be entitled for depreciation on hardware and software systems of TAS. However, he found that there is also another component to the value of the WDV of the TAS system viz. installation and commissioning expenses of Rs. 2,00,60,320/-. As far as this component of expenditure is concerned, Ld. CIT(A) observed that assessee has not furnished details to prove that these expenses are purely in the nature of labour and consultancy charges for installation of hardware and software, hence, they cannot be considered to be part of computer expenses. He therefore upheld the allowance of depreciation at the rate of 25% by AO treating the same as plant & machinery. Being aggrieved of the aforesaid decision of the Ld. CIT(A), the assessee is before us. The Department has also preferred an appeal challenging the partial relief granted by the Ld. CIT(A) which will be dealt with at the appropriate stage while dealing with Department's appeal. 9. Ld. Sr. Counsel, Shri Dinesh Vyas appearing for....
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....ction 44AB is a statutory document, hence, cannot be considered to be an ordinary piece evidence. He submitted, tax audit report constitutes a valid piece of evidence and cannot be ignored. Ld. Sr. Counsel submitted, as assessee's claim of depreciation is fully disclosed in the tax audit report which was available before the AO at the time of completion of original assessment and the AO has accepted assessee's claim after examining such a statutory document, in absence of further tangible material or information coming to the possession of the AO after completion of the original assessment, the reopening of assessment on the very same material is nothing but a review of his own order on a mere change of opinion. In support of his contention that tax audit report submitted in compliance to section 44AB of the Act is in the nature of a statutory document and has certain sanctity and cannot be considered to be a ordinary piece of evidence which could not have been noticed by the AO with due diligence. Ld. Sr. Counsel relied upon the following decisions: 1. Ranbaxy Laboratories Ltd. vs. DCIT (351 ITR 23) 2. 31 Infotech Ltd. vs. CIT (329 ITR 257) 10. The Ld. Sr. Counsel referring t....
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....cepted that the AO has applied his mind to the submissions of the assessee. The Ld. D.R. submitted, if the AO while completing the assessment has ignored to examine certain facts and materials as result of which there is underassessment or escapement of assessment then the AO is empowered under the Act to reopen such assessment under section 147. In support of such contention the Ld. D.R. relied upon the following decisions: 1. Honda Siel Power Products Ltd. vs. DCIT (340 ITR 53) 2. Indian Hume Pipe Co. Ltd. (348 ITR 439) 3. ACIT vs. Manubhai Sons & Co. (18 SOT 297) 4. Export Credit Guarantee Corporation of India Ltd. vs. Addl. CIT (350 ITR 651) 12. The Ld. D.R. submitted, the assessee having not objected to the reopening of assessment before the AO and having participated in the reassessment proceeding he cannot challenge the reopening of assessment at the subsequent stage. For such proposition he relied upon the decision of ITAT in case of Sushil Kumar Jalan vs. ITO in ITA No.34/Gau/2011- order dated 03.02.2012. 13. In rejoinder, the Ld. Sr. Counsel submitted, the doubt expressed by the Ld. D.R. with regard to assessee's reply dated 19.11.03 is unfounded as GDS is not t....
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....assessment proceeding along with the return of income the above said tax audit report was available before the AO. Further a careful reading of the assessment order demonstrates that the AO has extensively referred to assessee's claim of depreciation on different items of fixed assets. Therefore, it cannot be accepted that claim of depreciation on GDS and interconnect TAS would have escaped the attention of the AO as in the statement of depreciation the assessee has specifically mentioned the claim of depreciation under different heads. In addition to the information disclosed in the tax audit report, it is observed that in letter dated 19.11.03 assessee in response to query raised by the AO during the original assessment proceeding has specifically explained the justification of claim of depreciation at 60% on GDS by treating it as computer. The aforesaid facts would clearly suggest that in course of original assessment proceeding under section 143(3) of the Act the AO has examined not only assessee's claim of depreciation on GDS and interconnect TAS but has accepted the claim after application of mind. Whether the acceptance of assessee's claim by the AO is proper or improper is ....
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....come has escaped assessment, the assessment cannot be reopened on a mere change of opinion. In case of Asian Paints 308 ITR 195 the Hon'ble Jurisdictional High Court held that when an assessment is completed under section 143(3) of the Act it is to be presumed that the AO has completed such assessment after taking into consideration all facts and materials on record. Therefore, on the very same set of facts and circumstances assessment cannot be reopened as it will amount to change of opinion. In contrast, the decisions cited by Ld. CIT DR are found to inapplicable to the present case. On perusal of these decisions it was seen that most of them are in the context of true and full disclosure of all material facts by the assessee in terms of proviso to section 147, which is not an issue in the present appeal. Moreover, none of the decisions lay down the proposition that in absence of any tangible material assessment can be reopened on mere change of opinion. Be that as it may, on examination of facts and materials on record in the light of the principles laid down in the judicial precedents referred to above it is found that there is no fresh/tangible material in the possession of th....
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.... appellant craves leave to add to, amend or withdraw the aforesaid ground of appeal". 18. Before deciding the grounds of the Department it is necessary to briefly deal with the facts. As already stated herein before, assessment in case of the assessee was reopened under section 147 of the Act and ultimately completed under section 147 read with 143(3) vide order dated 10.11.06. After completion of the assessment as aforesaid the AO again reopened the assessment under section 147 of the Act for the second time by issuing a notice under section 148 of the Act beyond the period of four years from the end of relevant assessment year for the reason that depreciation on GDS and interconnect TAS has been wrongly allowed to the assessee for the entire year, whereas, the assessee is eligible at the rate of 50% of the amount claimed as asset was used for less than six months. The AO ultimately completed the assessment by restricting the claim of depreciation to the 50% of the amount claimed by holding that the asset was used for less than six months. Assessee challenged both the reassessment orders before the CIT(A) by preferring separate appeals. 19. The Ld. CIT(A) however disposed off bo....