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TMI Blog2013 (9) TMI 365X X X X Extracts X X X X X X X X Extracts X X X X ..... om assessment - the information was supplied by the assessee, if the Assessing Officer fails to take note of the same or does not appreciate the evidence from all dimensions in the first instance, he cannot be permitted to reopen the assessment under section 147 of the Act to cover up his own folies - Once the entire evidence as required by the Assessing Officer was submitted by the assessee, duty was cast upon the Assessing Officer to take cognisance of the evidence and pass assessment order under section 143(3) of the Act - The Assessing Officer cannot review his own order under the guise of section 148 and reappreciate the evidence which was already before him at the time of original assessment – Decided against Revenue. Method of accounting in certain cases - Whether u/s 145A the excise duty element cannot be added to the value of closing in stock on the last day of the accounting year - Following Loknete Balasaheb Desai S. S. K. Ltd. [2011 (6) TMI 48 - BOMBAY HIGH COURT] - central excise liability was not incurred and consequently the addition of excise duty made by the assessing officer to the value of the excisable goods was liable to be deleted - The assessee had provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment order dated December 29, 2006. During the pendency of the said appeal, the Assessing Officer issued notice under section 148 on March 17, 2009. The Assessing Officer vide letter dated June 5, 2009 gave reasons for reopening the assessment which are reproduced hereunder: "In the Schedule 4 (fixed asset) of the balance-sheet additions made during the year is Rs. 14,33,133 thousands. This is the net of Rs.1,44,897 thousands pertaining to gains from foreign exchange rate fluctuation on loans taken to acquire the fixed asset. The assessee has claimed a deduction of Rs. 2,42,957 thousands from the profit as per the profit and loss account in the computation statement towards research and development capital expenses under section 35. Actual cost of addition during the year as per income-tax depreciation statement is Rs. 13,35,053 thousands and the assessee has deducted a sum of Rs. 1,46,04,383 from the actual cost of the asset while computing depreciation under section 32 whereas the assessee has made a profit of Rs. 1,44,897 thousands from foreign exchange rate fluctuation on loans taken to acquire the fixed assets. Hence, the assessee has not reduced the entire gain on f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of royalty payable by the assessee-company to M/s. Hyundai Motor Co. The agreement shall be effective for the period of 10 years commencing from April 1, 2002 and ending on March 31, 2012 unless terminated under any other provisions of the agreement. In this connection, the lump sum payment of Rs. 10,83,39,284 made by the assessee towards supply of technical know how requires to be capitalised after allowing depreciation under section 32(1)(ii) in view of the decision in the case of Scientific Engineering House P. Ltd. v. CIT [1986] 157 ITR 86 (SC) wherein it was held that where under an agreement the assessee made payment to its foreign collaborator for documents such as manufacture, drawings, processing documents, designs charts, plan, etc., the expenditure has to be treated as capital expenditure. 3. As per Taxation Laws (Amendment) Act, 2005, if the export turnover exceeds Rs. 10 crores, the benefit of deduction on the DEPB under section 80HHC shall be given subject to the fulfilment of conditions laid down as per the above amendment to section 80HHC(3) of the Act. Hence, the assessee has to prove that it had opted to choose either duty drawback or the DEPB/DFRC being the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the assessee preferred an appeal before the Commissioner of Income-tax (Appeals), LTU primarily on the following grounds : (i) Reopening of the assessment is beyond the period of four years ; (ii) The Assessing Officer reopened the assessment for the reasons that the appellant did not reduce the entire foreign exchange gain from the actual cost of asset for claiming depreciation under section 32 and deduction under section 35 of the Act ; (iii) The lump sum consideration paid towards technical know-how needs to be capitalised after allowing depreciation at 25 per cent. ; (iv) The assessee did not prove that it had opted to choose either duty draw back or DEPB/DFRC for the purpose of deduction under section 80HHC. The Commissioner of Income-tax (Appeals), vide order dated September 23, 2011, allowed the appeal of the assessee on the ground that the Assessing Officer had called for the details regarding these issues during the original assessment proceedings. The assessee vide letters dated September 13, 2006 and October 16, 2006 had furnished details in respect of queries raised by the Assessing Officer. The Assessing Officer after considering the contentions of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court in the case of CIT v. Cholamandalam Investment and Finance Co. Ltd. [2009] 309 ITR 110 (Mad). He contended that in the present case the entire documents were submitted by the assessee to the Assessing Officer and whatever queries raised were duly answered along with the evidence at the time of original assessment. He submitted that notice under section 148 of the Act was issued merely on the basis of change of opinion and no new issue or ground was raised in the reopening proceedings. We have heard the submissions made by both the parties and have gone through the orders of the authorities below. The judgment/orders referred to by the respective parties have also been examined by us. It is an admitted fact that in original assessment proceedings under section 143(3) of the Act, the Assessing Officer had completed the assessment, vide order dated December 29, 2006 making certain additions. A perusal of the original assessment order dated December 29, 2006 which is at pages 32 to 37 of the paper book shows that the Assessing Officer had made detailed study of books of account of the assessee and thereafter had reworked the deduction under section 80HHC of the Act. The A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn in the said judgment/order is not applicable in the facts and circumstances of the present case. In the instant case, the Assessing Officer not only examined the documents/evidence originally submitted by the assessee but has asked for further documents. Admittedly, the information was supplied by the assessee, if the Assessing Officer fails to take note of the same or does not appreciate the evidence from all dimensions in the first instance, he cannot be permitted to reopen the assessment under section 147 of the Act to cover up his own folies. Once the entire evidence as required by the Assessing Officer is submitted by the assessee, duty is cast upon the Assessing Officer to take cognisance of the evidence and pass assessment order under section 143(3) of the Act. The Assessing Officer cannot review his own order under the guise of section 148 and reappreciate the evidence which was already before him at the time of original assessment. Therefore, we uphold the order of the Commissioner of Income-tax (Appeals) and dismiss the appeal of the Revenue. I. T. A. No. 1988/Mds/2011 and C. O. No. 43/Mds/2012 : The Revenue in I. T. A. No. 1988/Mds/2011 has impugned the order of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Direct Taxes No. 7 of 2009 and also from Finance Bill 2010-11 that whatever the expenditure incurred by the assessee in foreign currency for the purpose of utilisation of services even though the services rendered outside India is taxable. Since the assessee has incurred expenditure in foreign currency to the tune of Rs. 3,88,92,59,000 the same has to be allowed only subject to the provisions of section 195 of the Act. Hence, the assessee has not disclosed all the necessary facts for the purpose of allowability of the same in the return of income on the above issue. Thus, the above claim of expenditure in foreign currency shall be disallowed as per the provisions of section 40(a)(i) of the Income-tax Act. Therefore, it is clear that the assessee has not disclosed all the material facts for the assessment year 2005-06 for the purpose of assessment. Hence, I have reasons to believe that the income has escaped the assessment within the purview of section 147 of the Income-tax Act." The Assessing Officer after rejecting the objection of the assessee vide assessment order dated December 27, 2010 passed under section 143(3) read with section 147 determined the total income of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to reopen the assessment on the basis of change of opinion. He further contended that notice under section 148 was served on the assessee after expiry of time limit mentioned in the Act. The assessee had filed the return of income under section 139 within due date and had produced all the relevant documents with regard to notice served by the Department under section 143(2). Therefore, the reopening of assessment by the Assessing Officer is without jurisdiction. In order to support his contentions, he relied on the judgment of the hon'ble Supreme Court of India in the case of Kelvinator of India Ltd. reported as [2010] 320 ITR 561 (SC). On the issues raised by the Departmental representative, the authorised representative submitted that there would be no double deduction as mentioned by the Departmental representative and there is no question of further addition in the inventory. The authorised representative submitted that there was substantial increase in the cost of finished goods as on March 31, 2005 as compared to March 31, 2004. On closing stock the excise duty has been provided as per Accounting Standard 2 issued by the Institute of Chartered Accountants of India. Due to s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loss account cannot be allowed. With regard to compliance with the provisions of section 43B is concerned, the assessee had stated that the amount of excise duty debited in the profit and loss account has been paid in the next year before the due date of filing of return and therefore, disallowance on this ground is not warranted. The case of the assessee is squarely covered by the decision of the hon'ble Bombay High Court in the case of Loknete Balasaheb Desai S. S. K. Ltd. [2011] 339 ITR 288 (Bom). Therefore, the appeal of the Revenue is dismissed being devoid of merits. The cross-objections have been filed by the assessee impugning the order of the Commissioner of Income-tax (Appeals) relevant to the assessment year 2005-06 on the issue of jurisdiction. The cross-objections have been filed by the assessee with the delay of 57 days. The assessee has not filed any application for condonation of delay. Since, no reasons whatsoever have been furnished by the assessee for filing the cross-objections beyond the period of limitation, the cross-objections of the assessee are dismissed being barred by limitation. In the result, both the appeals of the Revenue and the cross-objection ..... X X X X Extracts X X X X X X X X Extracts X X X X
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