TaxTMI 
TaxTMI 
2018 (2) TMI 1910
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....d. CIT(A) is right in ignoring the AO's mentioning within meaning of section 147 and concluding that the same does not tantamount to his taking care of the requirement of the provision to section 147. 3. Whether on facts and circumstance of the case & in law, the Id. CIT (A) is right in holding that the fact that the AO had given the exact computation of this amount at the time of recording of reasons was tantamount to the fact that "there was no material fact in possession of the AO to suggest that income had escaped assessment" and thereby deleting the addition of Rs. 1,46,23,965/- made on account of depreciation of de-leased assets. 4. The appellant craves leave, to add, alter or amend any ground of appeal raised above at the time of the hearing." 2. The brief facts qua the issue relating to validity of reassessment are that, assessee company is engaged in the business of trading and export of vide range of products for personal care. The return of income was filed u/s 139(1) on 27.10.2005 and said return of income was subjected to scrutiny by issuance of notice u/s 143(2). After detailed scrutiny of books of accounts and material on record, assessment u....
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....to Rs. 81,37,941 during F.Y.2004-0S. In response, vide letter dated 01.12.2008, the appellant had given detailed reasons for explaining decline in the rental income during the year which shows that certain assets relating to Braun category were deleased while the appellant had leased out certain other assets. Similarly, detailed explanation vide Point No.l0 of the said letter was given on claim of depreciation of plant and machinery given on lease. Copies of such letters were filed before me. Keeping in view the above facts, it is evident that having raised a specific query in the original assessment proceeding, the AO had "formed an opinion" in the matter in the original assessments on consideration of the reply given by the appellant that the claim of depreciation allowance of the appellant in respect of the assets leased out was as per law, even though the lease rental income may have been reduced, since the new additions were leased out from 01.03.2005 only. Keeping in view the above, it is evident that when this issue was already considered by the AD at length and decided in favour of appellant, reopening of the assessment on the same ground by disregarding the original opinio....
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....e reproduced herein below:- "Q.8 You have shown addition of Rs. 29698756/- in plant and machinery in the Schedule of fixed assets as per Companies Act, 1956 and Rs~30946867/- in the same as per Income-tax Act, 1961. Please explain the difference. Q.9 Your rental income has reduced from Rs. 15092383/- during Financial Year 2003-04 to Rs. 8137941/- during Financial Year 2004-05. Please explain the same along with details and necessary supports. Q.13 At S.No. 7 of schedule 18 to the accounts, you have stated that a part of plant and machinery and future & fixture has been given on operating lease. Please submit the documentary evidence for the same. Also explain where that lease income has credited. Give a detailed note on your submissions." The assessee's reply vide letter dated December 1, 2008 on lease rental income (point No.9 and 13), depreciation on plant and machinery given on lease (point no.10) is also reproduced here below together with lease details and lease agreement with details of leased assets and effective date of lease rent: - "1. Lease rental Incomes received by the company during the year (point no. 9 and 13) ....
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.... 2. Depreciation on Plant and Machinery given on Lease( point no. 10) It is confirmed that the assessee company has not done any manufacturing as is also evident from the audited statement of accounts. The assessee company has leased out all its plant and machinery and moulds and has earned lease rental income on such assets. The activity of lease rental is effective from 03.06.1997 i.e. more than 10 years and every year there are some additional assets which are added and certain assets which are deleted from the lease agreements. As all the assets of plant and machinery and moulds have been leased out, the depreciation on the same are being claimed and allowed as deduction as per the provisions of the Income tax Act, 1961. Further your good self has asked as to why the depreciation claim be allowed as deduction. In this regard, as explained above, the depreciation is claimed on the assets given on lease and it does not pertain to own manufacturing activity of the company. Also it is important to mention that there is no change in the facts of business activity of the assessee company during the year. The lease business activity of the assessee com....
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....given on lease. In view of above submissions, the deprecation claim of the assessee is fully allowable as the same is in accordance with previous years and worked out exactly as per the provisions of the Income tax Act, I 961." 6. Thus, this issue has been examined by the AO and therefore, firstly, there is no failure on the part of the assessee to disclose fully and truly all material facts relevant for the assessment; and secondly, the reopening would be based on "change of opinion" which is impermissible. In support, he relied upon various judgments of the Hon'ble High Court including that of Hon'ble Supreme Court in the case of: i) CIT vs. Kelvinator of India (2010) 320 ITR 561 (SC); ii) Rural Electrification Corporation Ltd. vs. CIT (2013)355 ITR 356 (Del.); iii) E.I. Dupont India Pvt. Ltd. and another vs. DCIT, (2013) 351 ITR 299 (Del); iv) BLB Limited vs. ACIT, (2012) 343 ITR 129 (Del) 7. We have considered the rival submissions and also the relevant material placed on record qua the legal issue raised before. Here in his case the reopening has been sought to be done u/s 147 beyond the period of four years from the end of the relevant assessment year and....
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....he expenses being a capital nature, whereas the assessee had claimed it as revenue expenditure. The limitation of reopening of the assessment pertaining to the assessment year 2004-05 did not have the backing of law. Consequently, the notice under section 148 after four years and all proceedings pursuant thereto, including the assessment order passed pursuant thereto were liable to be set aside." (2) E.I. DUPONT INDIA PVT. LTD. AND ANOTHER VS. DCIT, (2013) 351 ITR 299 (DEL.) "Held, allowing the petition, since the case of the assessee was a case of proposed reopening of assessment after four years from the end of the relevant assessment year 2005-06, it was incumbent upon the Assessing Officer to demonstrate that there was failure on the part of the assessee to fully and truly disclose all material facts necessary for its assessment. The reasons did not even allege that there had been a failure on the part of the assessee to disclose any material facts. In fact, even in the order rejecting the objections of the assessee there was no mention of what facts the assessee had failed to disclose which were necessary for the assessment. Failure to disclose all mate....