TaxTMI 
TaxTMI 
TaxTMI 
2023 (1) TMI 431
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....e petitioner is a company engaged inter-alia in the business of FM Radio Broadcasting. Return of income for the assessment year 2016-17 was filed under section 139(1) of the Act on 16th October 2016 declaring a total loss of Rs.7,88,83,872/-. By virtue of notice, dated 26th July 2017 issued under section 143(2) of the Act, as a part of the limited scrutiny among others identified the issue related to intangible assets for examination. (b) In response thereto, the petitioner claims that it fled the relevant details, supported by documents explaining as to how the amounts payable under the agreement executed with the Ministry of Information and Broadcasting on migration from Phase-II to Phase-III were capitalized as "intangible assets" and the basis for claiming depreciation thereunder. A copy of this response dated 10th August 2017 is also placed on record. (c) Thereafter, notices are stated to have been issued under section 142(1) seeking certain details of the assessee, pursuant to which the same were furnished including the audit report, profit and loss balance-sheet etc. Finally, an order of assessment dated 22nd October 2018 came to be passed accepting the return of income ....
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....this amount was paid on 29.04.2016. Since, by claiming depreciation @ 25% on license fee for phase II, maximum amount had been claimed as depreciation in earlier years. Thus, assessee should have been allowed capitalization on Rs.31,44,39,730. As per provisions contain in Section 35ABB, the assessee was eligible for deduction of Rs.2,09,62,648/- (1/15th of Rs.31,44,39,730/-). However, it had capitalized the said fee as intangible asset and claimed 25% depreciation of Rs.8,11,12,130/- which was not in order in view of provisions quoted above. Failure to do so has resulted in allowance of excess depreciation claim of Rs.6,10,49,482/-. 3. Considering the above, I have reason to believe that the income chargeable to tax amounting allowance of excess depreciation claim of Rs.6,01,49,481/- has escaped assessment for the year under consideration and therefore, the condition specified in the proviso to Sec.147 are fulfilled. 4. In view of the above facts, the provisions of clause (c) of explanation 2 to section 147 are applicable to facts of this case and the assessment year under consideration is deemed to be a case where income chargeable to tax has escaped assessment. Regular assess....
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....of four years from the end of relevant assessment years, the AO has to additionally be satisfied that there was failure on the part of the assessee to fully and truly disclose all material facts necessary for assessment. 7. In response, the stand taken by the respondents in the reply inter-alia is that the query raised by the AO during scrutiny assessment was only pertaining to the tax aspect of the intangible assets and that no specific query was raised regarding depreciation claim of the licence fee paid by the assessee. The stand taken indicates that there was no application of mind by the AO with regard to the claim of depreciation on payment of onetime licence fee during the original assessment proceedings. It is stated that in a case, where the AO had not applied its mind in the original assessment proceedings to a particular issue, the reassessment proceedings must be held to be valid. It is also stated that a change of opinion presupposes an earlier formation of an opinion which is not discernible from the order of assessment. It was further urged that unless there was sufficient material on record which would prove that the issue had been duly considered, mere silence or ....
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....allacious. An order of assessment can be passed either in terms of sub-section (1) of Section 143 or Sub-section (3) of Section 143. When a regular order of assessment is passed in terms of the said sub-section (3) of section 143 a presumption can be raised that such an order has been passed on application of mind. It is well known that a presumption can also be raised to the effect that in terms of clause (e) of section 114 of the Indian Evidence Act the judicial and official acts have been regularly performed. If it be held that an order which has been passed purportedly without anything further, the same would amount to giving premium to an authority exercising quasi- judicial function to take benefit of its own wrong." 10. In Jindal Photo Films Ltd. Vs. Deputy Commissioner of Income Tax [1998] 234 ITR 170 (Delhi), the Court, in the light of the facts before it and in the background of section 147 of the Act, observed : "...................all that the Income-tax Officer has said is that he was not right in allowing deduction under Section 80I because he had allowed the deductions wrongly and, therefore, he was of the opinion that the income had escaped assessment. Though he ....
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....on under section 32 of the Act. The basis for reopening with reference to the reasons furnished and referred to in the preceding paragraphs appears to be that the petitioner was eligible for deduction in terms of section 35ABB of the Act and that instead it had capitalized the non-refundable entry fee as intangible assets and claimed 25% depreciation of Rs.8,11,12,130/- which was not in order in accordance with section 35ABB and that failure to do so had resulted in allowance of excess depreciation claim of Rs.6,01,49,482/. 13. From a reading of the reasons for reopening, it can be stated that the petitioner was entitled to claim deduction under section 35ABB of the Act but it has not been specifically stated in the reasons that the petitioner was not entitled to claim depreciation @ 25% in terms of section 32 on the amount capitalized as "intangible assets". Even otherwise, it does appear to us that the issue with regard to claim of depreciation had been gone into by the AO and notwithstanding the fact that in the order of assessment, there was no specific discussion as regards this particular claim, yet, considering the ratio of the judgments referred hereinabove, it must be pre....