2008 (10) TMI 263 - AT - Income Tax

Summary

Issues involved:
The issues involved in this judgment are whether the notice under section 148 was rightly issued as per Explanation 1 to the proviso to section 147 of the Income Tax Act, 1961, and whether the claim of depreciation of Rs. 16,20,35,856 was admissible to the assessee company.

Notice u/s 148:
The Revenue contended that the notice under section 148 was validly issued as per Explanation 1 to the proviso to section 147. The Explanation states that the production of account books or evidence that could have been discovered by the Assessing Officer will not necessarily amount to disclosure. On the other hand, the Authorized Representative argued that the notice for reopening the assessment was erroneous and beyond the time limit prescribed by law. It was asserted that all relevant information regarding depreciation claimed was available to the Assessing Officer during the reassessment, and no new information had come to light. The Tribunal held that the reopening of assessment was not valid as the conditions for invoking section 147 were not satisfied, and it was deemed a change of opinion by the Assessing Officer.

Claim of Depreciation:
Regarding the claim of depreciation, the Assessing Officer had disallowed Rs. 16,20,35,856 on account of depreciation. The Authorized Representative argued that the restriction of depreciation to 50% should only apply if the asset was acquired during the year and used for less than 180 days, which was not the case here. The assets in question were acquired in earlier years and used for more than 180 days during the assessment year. The Tribunal found that the reassessment under section 143(3) read with section 147 was not validly made. It was noted that the amendment to section 43A requiring proof of remittance for claiming depreciation on foreign exchange fluctuation was not applicable for earlier assessment years. Therefore, the Tribunal upheld the order of the CIT(A) annulling the reassessment and deleting the demand raised by the Revenue.

Conclusion:
In conclusion, the Tribunal dismissed the appeal of the Revenue, holding that the notice under section 148 was not validly issued and the claim of depreciation disallowed by the Assessing Officer was found to be admissible. The order of the CIT(A) annulling the reassessment and deleting the demand was confirmed.