2012 (8) TMI 97 - AT - Income Tax

Rejecting the claim of the appellant to be assessed in the status of Joint Venture - assessee contested against assessing returned income on the protective basis in the hands of AOP and the same income to be assessed separately in their respective hands on substantive basis - Held that - When income returned by a person is not accepted by the revenue as his income and the income is assessed only on protective basis then the assessee s right over the income is not recognized by the revenue and the assessee has valid reasons to be aggrieved by such an order - the order of CIT(A) was set aside and matter was restored back to his file - in favour of assessee for statistical purpose. Disallowance of depreciation - Held that - As no material was brought on record before the tribunal to controvert this finding of CIT(A) that the assessee joint venture is not the owner of the assets - as this argument was not raised by the assessee before the authorities below that the assets in question on which the depreciation is claimed by the assessee were used by the assessee and on account of user of those assets only, the income was assessed in the hands of the assessee, and therefore, the assessee is at least beneficial owner of those assets and hence, eligible for depreciation - this matter should go back to the file of Ld. CIT(A) for fresh decision - in favour of assessee for statistical purpose.

Summary

Issues:
1. Rejection of claim to be assessed in the status of Joint Venture
2. Disallowance of depreciation claimed by the appellant
3. Initiation of penalty proceedings u/s 271(1)(C) of the Act
4. Levy of interest u/s 234A, 234B, 234C & 234D of the Act

Issue 1: Rejection of claim to be assessed in the status of Joint Venture

The appellant challenged the order of Ld. CIT(A) for the assessment year 2001-02, seeking to be assessed as a Joint Venture. The Hon'ble Tribunal in a previous case found that the income was assessed on a protective basis, and the appellant had valid reasons to be aggrieved by such an order. Consequently, the Tribunal set aside the order of Ld. CIT(A) and restored the matter for fresh adjudication. In the current case, the Tribunal followed the previous decision and also restored the matter back to the file of Ld. CIT(A) for a fresh decision on merit after affording reasonable opportunity of hearing to both parties.

Issue 2: Disallowance of depreciation claimed by the appellant

The Assessing Officer disallowed depreciation claimed by the appellant, leading to an addition of Rs.8,16,449. The appellant argued that the assets on which depreciation was claimed were used for business purposes, making them at least the beneficial owner eligible for depreciation. The Tribunal noted that this argument was not raised before the authorities below and decided to set aside the order of Ld. CIT(A) for a fresh decision. The matter was restored back to the file of Ld. CIT(A) for reevaluation after examining the contentions of the appellant.

Issue 3: Initiation of penalty proceedings u/s 271(1)(C) of the Act

The Tribunal deemed the issue of penalty proceedings premature and did not require adjudication at that stage.

Issue 4: Levy of interest u/s 234A, 234B, 234C & 234D of the Act

The ground related to the levy of interest was considered consequential and disposed of accordingly.

In conclusion, the appeals by the assessee were partly allowed for statistical purposes, with the Tribunal directing the matters to be reconsidered by the Ld. CIT(A) for fresh adjudication on the identified issues.