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2015 (6) TMI 807 - AT - Income TaxValidity of reopening of assessment - Held that - The undisputed facts are that the reopening is made on the basis of the note enclosed with the return of income by the assessee. The submission of the assessee that the assessee has not added provision for doubtful debt in working of the book profit relying on the judgement of Hon ble Bombay High Court in the case of CIT vs. Echjay Forgings Pvt.Ltd. reported at 2001 (2) TMI 56 - BOMBAY High Court is not disputed by the Revenue that the material on the basis of which re-opening of assessment was proposed was already before the assessing officer in the form of note. In view of the judgement of Hon ble Jurisdictional High Court in the case of Vishwanth Engineers vs. ACIT reported at (2012 (5) TMI 146 - Gujarat High Court ) the AO should not have reopened the assessment. - Decided in favour of assessee. Disallowances of operational and maintenance expenses and excess interest charged to GEB amount debited to P&L account of provision for doubtful debts to book profit u/s.115JB - Held that - The authorities below have not given any finding that the assessee has not reduced the debtors from the asset side of the balance sheet to the extent to the corresponding amount so that, at the end of the year, the amount of debtors is shown as net of the provision for the impugned bad debt. In the absence of the same therefore, respectfully following the ratio laid down in the case(s) of CIT vs. Yokogawa India Ltd. 2011 (8) TMI 766 - KARNATAKA HIGH COURT and CIT vs. Kirloskar Systems Ltd.(2013 (12) TMI 9 - KARNATAKA HIGH COURT) and also following the decision of Coordinate Bench in the case of ACIT vs. Vodafone Essar Gujarat Ltd.(2012 (6) TMI 415 - ITAT, Ahmedabad), we hereby set aside the order of the ld.CIT(A) on this issue and direct the AO to delete the disallowances. Thus, this ground of assessee s appeal is allowed.- Decided in favour of assessee. Granting depreciation although not claimed by the assessee - Held that - The issue is now squarely covered in favour of assessee by the judgement of Hon ble Jurisdictional High Court rendered in the case of DCIT vs. Sun Pharmaceuticals Ind.Ltd. 2015 (1) TMI 704 - GUJARAT HIGH COURT wherein held that depreciation not claimed for by the assessee, cannot be allowed as a deduction despite the introduction of the concept of block assets. - Decided in favour of assessee. Addition made to the book profit of the assessee u/s.115JB - CIT(A) deleted the addition - Held that - The ld.counsel for the assessee relied on the decision of Hon ble Apex Court rendered in the case of CIT vs. HCL Comnet Systems & Services Ltd. reported at (2008 (9) TMI 18 - SUPREME COURT ). We find that the ld.CIT(A) has given a finding on fact. This finding is not controverted by the Revenue by placing any contrary material on record. Therefore, we do not deem fit to interfere with the order of ld.CIT(A), same is hereby affirmed. - Decided in favour of assessee.
Issues Involved:
1. Validity of reopening the assessment under Section 147 of the Income Tax Act. 2. Disallowance of provisions for bad debts in computing book profit under Section 115JB. 3. Granting of depreciation not claimed by the assessee. 4. Levy of interest under Sections 234A, 234B, and 234C. 5. Disallowance of earthquake relief expenses. 6. Additional grounds raised by the assessee regarding bad debts. Issue-wise Detailed Analysis: 1. Validity of Reopening the Assessment under Section 147: The assessee challenged the reopening of the assessment, arguing that the notice under Section 148 was issued without jurisdiction as the reasons for reopening were based on already existing material. The Tribunal referred to several judgments, including the Hon'ble Gujarat High Court in Vishwanth Engineers vs. ACIT, which emphasized that reopening based on a mere change of opinion is not permissible. The Tribunal concluded that the Assessing Officer (AO) had no new tangible material to justify reopening the assessment and thus, the reassessment was invalid. 2. Disallowance of Provisions for Bad Debts in Computing Book Profit under Section 115JB: The assessee contested the disallowance of provisions for bad debts in computing book profit under Section 115JB. The Tribunal referred to the judgment of the Hon'ble Karnataka High Court in CIT vs. Yokogawa India Ltd., which held that provisions for bad and doubtful debts are not provisions for liability but are in the nature of diminution in the value of assets. The Tribunal found that the authorities below did not provide evidence that the assessee had not reduced the debtors from the asset side of the balance sheet. Consequently, the Tribunal directed the AO to delete the disallowances, allowing this ground of the assessee's appeal. 3. Granting of Depreciation Not Claimed by the Assessee: The assessee argued against the AO's action of granting depreciation that was not claimed. The Tribunal relied on the Hon'ble Gujarat High Court's decision in DCIT vs. Sun Pharmaceuticals Ind. Ltd., which held that depreciation not claimed by the assessee cannot be allowed as a deduction despite the concept of block assets. The Tribunal set aside the order of the CIT(A) and deleted the addition made by the AO, thus allowing this ground of the assessee's appeal. 4. Levy of Interest under Sections 234A, 234B, and 234C: The assessee challenged the levy of interest under Sections 234A, 234B, and 234C. The Tribunal noted that since the reassessment was held invalid, the grounds related to the levy of interest were also allowed in favor of the assessee. 5. Disallowance of Earthquake Relief Expenses: The CIT(A) upheld the AO's disallowance of earthquake relief expenses amounting to Rs. 1,52,000. The Tribunal did not provide a detailed analysis on this issue, implying that the disallowance was sustained. 6. Additional Grounds Raised by the Assessee Regarding Bad Debts: The assessee raised an additional ground that the amount of bad debts written off against the provision for bad and doubtful debts should be reduced if the provision is disallowed. Since the Tribunal allowed the main ground regarding the disallowance of provisions for bad debts, this additional ground became academic and was not adjudicated. Revenue's Appeal: The Revenue appealed against the deletion of Rs. 20,16,16,831 out of the addition of Rs. 21,80,58,244 made to the book profit under Section 115JB. The Tribunal found that the CIT(A) had correctly applied the law as per the judgment in Apollo Tyres Ltd. and upheld the CIT(A)'s order, dismissing the Revenue's appeal. Conclusion: The Tribunal allowed the assessee's appeal partly by invalidating the reassessment, deleting disallowances related to provisions for bad debts and depreciation not claimed, and setting aside the levy of interest under Sections 234A, 234B, and 234C. The Revenue's appeal was dismissed.
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