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2014 (2) TMI 931 - AT - Income TaxValidity of reassessment proceedings DTAA between India and Thailand - Held that - There is no new material or tangible evidence in the hands of the Revenue - It was only based on a change of opinion that reopening was resorted to - That a reopening cannot be done based on a change of opinion Relying upon CIT v. Kelvinator of India Ltd. 2010 (1) TMI 11 - SUPREME COURT OF INDIA - Revenue has no case that assessee had failed to disclose truly and fully any particulars necessary for its assessment - proviso to Section 147 is squarely applicable - Reopening done based on change of opinion after four years from the end of the assessment year could not be held as valid - The reopening and resultant reassessment are quashed Decided in favour of Assessee. Revision u/s 263 - Allowance of rural bad debts u/s 36(1)(vii) of the Act - Held that - The decision in Indian Overseas Bank v. Dy. CIT 2014 (2) TMI 930 - ITAT CHENNAI followed - There is always a possibility that an asset, which is fully recoverable, may not be so at future date - possibility of happening of such a contingency cannot be a sufficient reason to consider a provision made on standard assets also as a provision for bad and doubtful debts - claim of the assessee that provision for standard assets also has to be considered for applying the condition set out under Section 36(1)(viia) is not in accordance with law - a cryptic order of the Assessing Officer by itself may not show that there was no thought given by him on a claim of the assessee - here there was no enquiry made during the course of assessment proceedings - prejudicial to the interests of the Revenue is a term of wide import and not confined to loss of tax - An order without application of mind is definitely prejudicial to the interests of the revenue - We are in agreement with ld. CIT that the order of Assessing Officer was erroneous insofar as it was prejudicial to the interests of Revenue Decided against Assessee. Disallowance u/s 14A of the Act r.w Rule 8D of the Rules Held that - The decision in Godrej & Boyce Mfg. Co. Ltd. v. Dy. CIT 2010 (8) TMI 77 - BOMBAY HIGH COURT followed - Rule 8D could not be applied for assessment year - even after the application of Rule 8D, disallowance under Section 14A could be made the matter remitted back to the AO for Re-adjudication Decided in favour of Assessee. Depreciation on UPS claimed Held that - The decision in Indian Overseas Bank v. Dy. CIT 2014 (2) TMI 930 - ITAT CHENNAI followed - depreciation @ 60% granted by treating UPS as part of computer hardware - depreciation @ 60% on UPS is allowed Decided partly in favour of Assessee. Double Income Taxation Relief (DITR) allowed - Held that - The decision in Indian Overseas Bank v. Dy. CIT 2014 (2) TMI 930 - ITAT CHENNAI followed - The Tribunal need not refer it to the Assessing Officer as well just to see and pass an order - The Tribunal clearly directed the Assessing Officer to enquire into the existence of a DTAA between India and Bangkok - Enquiry means to investigate and apply the same - the Assessing Officer has rightly investigated and applied the same and decided the issue The order of the CIT(A) set aside Decided in favour of Revenue.
Issues Involved:
1. Validity of reassessment proceedings. 2. Allowance of rural bad debts. 3. Disallowance under Section 14A of the Income-tax Act. 4. Depreciation on UPS. 5. Bad debt relating to non-rural advances. 6. Double Income Taxation Relief (DITR). 7. Loss on revaluation of investments. Detailed Analysis: 1. Validity of Reassessment Proceedings: The assessee challenged the reassessment proceedings upheld by the CIT(A). The original assessment was completed on 18.2.2005, but a notice under Section 148 was issued on 24.3.2009, leading to reassessment on 17.12.2009. The reassessment included income from the Bangkok Branch, which the assessee argued was not taxable in India based on the Supreme Court decision in CIT v. P.V.A.L. Kulandagan Chettiar (267 ITR 654). The Tribunal found that the original assessment had already considered the Bangkok income issue, and the reopening was based on a change of opinion without new material evidence. Citing CIT v. Kelvinator of India Ltd. (320 ITR 561), the Tribunal quashed the reassessment as invalid under Section 147. 2. Allowance of Rural Bad Debts: The assessee contested the CIT(A)'s decision to remit the issue of rural bad debts allowance back to the Assessing Officer. The Tribunal referred to its previous decision in the assessee's appeal for assessment year 2007-08, which upheld that the deduction under Section 36(1)(viia) should be based on actual provision made in the books. The Tribunal found no reason to interfere with the CIT(A)'s order to remit the issue. 3. Disallowance under Section 14A: The assessee argued against the disallowance made under Section 14A, which the A.O. had based on Rule 8D, not applicable for the impugned assessment year. The Tribunal noted that the Bombay High Court in Godrej & Boyce Mfg. Co. Ltd. v. Dy. CIT (328 ITR 81) ruled Rule 8D inapplicable for earlier years but allowed disallowance under Section 14A. The Tribunal remitted the issue back to the A.O. for fresh consideration. 4. Depreciation on UPS: The assessee claimed 80% depreciation on UPS, considering it an energy-saving device. The Tribunal referred to its earlier decision, which allowed 60% depreciation treating UPS as part of computer hardware, based on the Delhi High Court's ruling in CIT v. Orient Ceramics & Industries Ltd. (56 DTR 397). The Tribunal upheld the higher depreciation rate for the UPS. 5. Bad Debt Relating to Non-Rural Advances: The Revenue's appeal contested the CIT(A)'s allowance of bad debt for non-rural advances. The Tribunal referenced the Supreme Court's decision in Catholic Syrian Bank Ltd. v. CIT (343 ITR 270), which favored the assessee, and dismissed the Revenue's ground. 6. Double Income Taxation Relief (DITR): The Revenue challenged the CIT(A)'s direction to allow DITR. The Tribunal referred to its decision in the assessee's case for assessment year 2006-07, which upheld the A.O.'s application of DTAA provisions between India and Thailand, allowing tax credit for taxes paid in Thailand. The Tribunal reversed the CIT(A)'s order, siding with the A.O. 7. Loss on Revaluation of Investments: The Revenue's appeal against the CIT(A)'s direction to allow loss on revaluation of investments was dismissed. The Tribunal noted that the issue had been decided in favor of the assessee in previous years, including assessment year 2006-07. Conclusion: - Assessee's appeal for 2002-03 is allowed. - Assessee's appeal for 2007-08 is partly allowed for statistical purposes. - Revenue's appeal for 2002-03 is dismissed as infructuous. - Revenue's appeal for 2007-08 is partly allowed. The order was pronounced on 26th September 2013 at Chennai.
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