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2012 (7) TMI 619 - AT - Income TaxAddition on depreciation claimed in P&L account - assessee excluded the same entirely including the profits of SEZ unit while working out the profits in IT computation Held that - CIT (A) considered that there is no need for making any adjustment and allowed the ground - there is no merit in AO s observation that assessee has claimed excess deduction. Claim of depreciation on motor car Held that - vehicles acquired by assessee eventhough had not been used in the business of running them on hire but for that reason depreciation @ 50% cannot be denied as entry in Dep Schedule covers the case of commercial vehicles acquired between the period 1.4.2001 to 31.3.2002 and put to use in this period for the purposes of any business or profession - no condition in this entry that the commercial vehicle shall be used in the business of running it on hire. Admittedly the vehicles are registered as commercial vehicles and falls within the entry for claim of depreciation at 50% In favor of assessee Reopening under section 147 - reopening was made after four years from the end of relevant Assessment year Held that - Reopening per se is bad in law as there is no failure on the part of assessee in furnishing necessary details at the time of filing the return or completion of the assessment originally under section 143(3) - mere change of opinion on existing facts available on record by AO which cannot be upheld Foreign exchange realization - Assessee has claimed total turnover which include the exchange rate difference - CIT (A) excluded the amount and took the income from export realization and restricted the claim Held that - Foreign exchange realization is on the export proceeds which are to be included in the total turnover and also in export turnover which assessee had done - foreign exchange realization being part of export proceeds are to be included in the export turnover. Therefore, the CIT (A) to that extent is not correct - Revenue appeal is dismissed.
Issues Involved:
1. Reopening of assessment under Section 147. 2. Excess claim of deduction under Section 10B. 3. Excess claim of depreciation in the computation of statement. 4. Change of written down value (WDV) from the assessment year 2001-02 onwards. 5. Depreciation on motor cars at 50% instead of 20%. Detailed Analysis: 1. Reopening of Assessment under Section 147: The assessee contested the reopening of the assessment under Section 147, arguing that the Assessing Officer (AO) did not record any satisfaction that there was a failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. The reopening was initiated after four years from the end of the assessment year, and the original assessment was completed under Section 143(3) after due examination. The tribunal held that the reopening was bad in law as there was no failure on the part of the assessee to disclose necessary details, and it was considered a mere change of opinion by the AO. This was supported by the judgment of the Hon'ble Supreme Court in CIT vs. Kelvinator of India Ltd 187 Taxman 312(SC)/320 ITR 561. 2. Excess Claim of Deduction under Section 10B: The AO restricted the exemption under Section 10B, which was contested by the assessee. The CIT (A) allowed the benefit to the assessee, relying on the principles laid down by the Hon'ble Karnataka High Court in CIT vs. Yokogawa India Ltd, 341 ITR 385, which stated that the deduction on export profit under Section 10B is to be allowed from the total income of the assessee. The tribunal upheld the CIT (A)'s decision, agreeing that the unabsorbed depreciation and losses cannot be set off against the income of the undertaking claimed under Section 10B. 3. Excess Claim of Depreciation in the Computation of Statement: The AO made an adjustment of Rs. 88,39,256/- for excess claim of depreciation, which was not upheld by the CIT (A), and relief was given to the assessee. The tribunal noted that the AO did not act upon the claim of excess depreciation on the basis of WDV of earlier years and upheld the CIT (A)'s decision. 4. Change of Written Down Value (WDV) from the Assessment Year 2001-02 Onwards: The AO noticed a change in the opening WDV for subsequent years, which could affect the depreciation allowable under the Income Tax Act. However, the AO did not make any adjustment regarding this issue. The tribunal found no merit in the AO's observation that the assessee claimed excess deduction and upheld the CIT (A)'s decision. 5. Depreciation on Motor Cars at 50% Instead of 20%: The AO restricted the depreciation on motor cars to 20%, which was contested by the assessee. The tribunal referred to the ITAT decision in Daleep S. Chandnani v. ACIT, 14 SOT 233, and LM Glasfiber (India) Pvt. Ltd vs. ACIT, which supported the claim of depreciation at 50%. The tribunal concluded that the vehicles were registered as commercial vehicles and fell within the entry for claiming depreciation at 50%, and thus there was no need for reopening the assessment on this issue. Conclusion: The tribunal held that the reopening of the assessment was bad in law and allowed the appeal filed by the assessee. The Revenue's appeal was dismissed. The tribunal also corrected the CIT (A)'s restriction of the claim under Section 10B by including the foreign exchange realization in the total turnover, which became an academic issue as the reopening was found to be invalid. The order was pronounced in the open court on 8.6.2012.
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