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TMI Blog2012 (11) TMI 285X X X X Extracts X X X X X X X X Extracts X X X X ..... or the previous year relevant to A.Y. 1997-98. Thus, it was concluded that the assumption of the jurisdiction by the AO u/s.147 was invalid - This although the reopening was made within four years from the end of the assessment year, but still that was nothing but simplistic change of opinion because in the first round the original assessment was made u/s.143(3) that too after duly considering the claim of depreciation as per the statement of income furnished by the assessee, hence on those very facts there did not exist any reason to believe for escapement of assessment - in favour of assessee. Claim of depreciation - Held that:- As decided in Karnataka Co-operative Milk Producers Federation Ltd. Versus Deputy Commissioner of Income-tax (Asst.), Special Range-5, Bangalore [2006 (5) TMI 423 - ITAT BANGALORE] that prior to the amendment introduced during 1996-97, it was permissible to carry forward the unabsorbed depreciation and from 1993-94 to 1996-97, the unabsorbed depreciation has been carried forward. The amendment introduced limiting the time for carrying forward for a period of eight years has to be reckoned not from 1993-94 but from 1996-97 and the same was carried forwa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leaded that originally an assessment was made u/s.143(3) of the I.T.Act vide an order dated 22.8.2008 and the computation of the finally assessed income was made by the Assessing Officer as under:- Total income as per computation of total income Rs. Nil/- Book-profit u/s.115JB of the I.T. Act Rs.74,75,975/- (Unabsorbed depreciation of Rs.76,912/- for AY 1998-99 and of For AY 2000-01 is allowed to be carried forward) Rs.3,85,0678/- 2.1. He has also drawn our attention that as per the statement of income, the assessee has claimed the set off of brought forward losses/depreciation in the following manner: STATEMENT OF TOTAL INCOME Net Profit as per Profit Loss A/c Before Taxes 8,776,000 Add: Disallowances 5,378,949 Depreciation 35,349 Preliminary Preoperative expenses 105,580 Fringe Benefit Tax 5,519,878 14,295,878 Less: Preliminary Preoperative Exp. 35,349 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et off, then the remaining unabsorbed depreciation allowance shall be carried forward to the following assessment years not being more than eight assessment years immediately succeeding the assessment year for which the said allowance was first computed. As per the impugned reasons recorded, it was held that the assessee could be eligible for set off uptil A.Y. 2005-06 (97-98 + eight years). However, the assessee has made the claim in A.Y. 2006-07 resulted into an under assessment to the extent of Rs.68,36,912/-, as alleged by the Revenue Department. But the fact remained uncontroverted that while framing the assessment originally u/s.143(3) vide order dated 22.8.2008 the Assessing Officer has examined the claim as made by the assessee in the statement of total income , already reproduced (supra). Due to this reason, it is difficult to hold that passing of such an order u/s.143(3) of the I.T.Act by the Assessing Officer was without due diligence or without proper application of mind. In the case of Devesh Metcast Ltd. reported at 338 ITR 130 (supra), the Hon'ble Jurisdictional High Court has dealt with an identical situation wherein an assessment was reopened on an alleged erroneo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer between the date of the order of the original assessment sought to be reopened and the date of forming of the opinion by the Assessing Officer, nothing new, as stated, has happened, then in the opinion of the Respected Coordinate Bench the reopening of such an assessment tantamount to change of opinion. Case laws cited were Kaira District Cooperative Milk Producers Union Ltd. vs. ACIT 220 ITR 194 (Guj.) and Jindal Photo Films Ltd. vs. CIT Anr. 234 ITR 170 (Delhi). Following these decisions, we are also of the opinion that although the reopening was made within four years from the end of the assessment year, but still that was nothing but simplistic change of opinion because in the first round the original assessment was made u/s.143(3) that too after duly considering the claim of depreciation as per the statement of income furnished by the assessee, hence on those very facts there did not exist any reason to believe for escapement of assessment. On those very facts which were found to be already on record, the Assessing Officer had reopened the impugned assessment although there was no new material came to his knowledge for such an invocation of the provisions of section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proposed amendment is only prospective inasmuch as accumulative unabsorbed depreciation brought forward as on 1st April, 1997, can still be set off against taxable business profits or income under any other head for the assessment year 197-98 and seven subsequent assessment years. Therefore, the proposed change will have effect only after 8 years and there is no cause for immediate concern about its likely impact on industry. Eight years is a period long enough for industry to adjust itself to the new dispensation and provide for depreciation accordingly. A number of Hon ble members have brought to my notice that the proposed amendment may adversely affect sick companies. I accept the suggestions made by them. I, therefore, propose to provide that the time limit of 8 years shall not apply to sick companies, during the period the company is treated as a :sick company under the Sick Industrial Companies (Special Provisions) Act, 1985. 5. 1. Thereafter, an another amendment took place by Finance Act, 2001 w.e.f. 01/04/2002. Through this amendment, sub-section(2) was substituted. The substitution was with the intention of restoring the earlier law, however, made some modificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch, the impugned order passed at Annex. Q is without taking into consideration the provisions under s. 32(2) of the Act which came to be introduced limiting/extending the period from eight years for an unlimited period. Further, carrying forward of unabsorbed depreciation for every year has to be calculated individually based on the audit report and to arrive at the exact amount to be carried forward. 7. In the light of the above discussion, we hereby hold that the assessee is eligible for the claim of depreciation as per law for the year under consideration. Ground Nos.3 4 are allowed. In the result, Assessee s appeal, i.e. ITA No.1125/Ahd/2012 is allowed. [B] ITA No.1077/Ahd/2012 (Revenue s appeal for A.Y. 2008-09) 8. This is an appeal filed by the Revenue arising from the order of ld. CIT(Appeals)-6 Ahmedabad dated 13/03/2012 and the solitary ground is reproduced below:- 1. Ld. CIT(A) erred in law and on facts in deleting the addition of Rs.21,71,149/- made u/s.40(a)(ia) r.w.s.194C of the Act despite the fact that the payment was towards a work contract. 8.1. Facts in brief as emerged from the corresponding assessment order passed u/s.143(3) of the I.T. Act d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said party happened to be a Clearing Forwarding Agent and the payment was in the nature of reimbursement of Shipping Freight, Ocean Freight, Bill of entry, Labour charges, re-packing charges, Fumigation charges, Documentation Charges and amount paid to CONCOR. The substantial amount was in relation to Shipping Freight paid to Aashita International. The assessee has also placed reliance on CBDT Circular No.723 dated 19.9.1995 which prescribes that no TDS was required to be deducted in respect of payment made to foreign shipping companies or their agents. The Assessing Officer was not convinced and he has noted that payment made to Clearing Forwarding Agent (in short CFA ) was on account of freight, other than ocean freight and there were charges amounting to Rs.21,71,149/-. The assessee has contended that the said amount was petty reimbursements to CFA. As per Assessing Officer, the payments were not below the prescribed limit for TDS deduction as prescribed u/s.194C of the I.T.Act. The Assessing Officer has placed reliance on CBDT Circular No.715 dated 8/8/1995 and then he has concluded that the position of CFA was to be as an independent contractor. Any payment made to CF ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 2. The ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.17,04,828/- which was made u/s.40(a)(ia) despite the fact that no payment is excluded from TDS u/s.194C of the Income-tax Act, 1961. 10.1 Apropos to ground No.1, facts in brief as emerged from the corresponding assessment order passed u/s.143(3) of the I.T.Act dated 18/11/2011 for A.Y. 2009-10 were that it was noted by the Assessing Officer that in the value of the closing stock of Rs.1,11,15,450/-, the assessee had not included the excise duty in the closing stock. As per Assessing Officer, the excise duty was @ 8.16% amounting to Rs.9,07,020/- which should have been added to the closing stock. In compliance, the assessee has submitted that the purchases were shown net of excise duty, therefore, valuation of raw-material was net of the duty. The duty which was remained to be utilized was shown as an asset in the balance-sheet. The CENVAT was receivable was shown as a closing balance of Rs.22,37,724/-. However, the Assessing Officer has opined that section 145A provides that the valuation of inventories for the purpose of determining the income chargeable under the head profits and gains of busine ..... X X X X Extracts X X X X X X X X Extracts X X X X
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