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TMI Blog2017 (9) TMI 462X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal the revenue has raised following grounds:- "1.On the facts and in the circumstances of the case, the CIT(A) has erred in restoring the matter back to the AO to adjudicate the same de-novo in respect of disallowance of depreciation on product development expenditure and technical know how fees capitalized in the light of the order passed by Hon'ble ITAT for AY 2003-04." 2. "The appellant craves to amend modify, alter, add or forego any ground of appeal at any time before or during the hearing of this appeal." 3. Whereas in the Cross Objections the assessee has raised following grounds:- "1.The order of assessment is bad in law and as the initiation of reassessmentproceedings u/s 147 has been exercised in utter disregard of the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... :- "The Ld CIT(A) has erred in law and on facts in affirming the jurisdiction of the AO under section 147, ignoring that there was no tangible material with the AO for forming a belief that any income has escaped assessment on account of failure of assessee to disclose the material facts fully and truly." 5. The brief facts qua the validity of reopening of assessment proceedings u/s 147 as challenged by the assessee in its Cross Objections and Additional ground are that the return of income was filed u/s 139(1) declaring a loss of Rs. 37,30,07,965/-; as against the said returned income, assessment u/s 143(3) was completed vide order dated 15.12.2006, whereby income was computed at loss of Rs. 25,55,48,473/-. It appears from the record th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is only referring to the records/materials already on record and allowed by the AO during the course of original assessment proceedings and he is substituting the same with his own opinion that the expenditure on 'product development' is in the nature of capital on which no depreciation is allowable; secondly; there is no information or tangible material coming on record to show that the assessee's claim of depreciation of 25% of the "product development expenses" is factually or legally incorrect; and lastly; no failure has been ascribed by the Assessing Officer upon the assessee that it has failed to disclose fully and truly all material facts necessary for assessment. 7. Here in this case, the reopening has been done beyond the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or kind of asset on which depreciation can be allowed. At least nothing is borne out from the "reasons recorded", which alone is the foundational fact and jurisdictional point and has to be examined once the jurisdiction to reopen the assessment u/s 147 is challenged. 8. Before us, the Ld. DR had relied upon the following decisions to justify the validity of reopening by the Assessing Officer:- 1. Honda Siel Power Products Ltd. v. DY. CIT f20121 20 taxmann.com 5 (SC)/2012 206 Taxman 33 (SC)(MAG.[2012] 340 ITR 64 (SC)[2012] 247 CTR 316 (SC). 2. Honda Siel Power Products Ltd. v. Dy. CIT T20in 10 taxmann.com 2 (Delhi)[2011] 197 Taxman 415 (Delhi)[2012] 340 ITR 53 (Delhi) [2012] 247 CTR 322 (Delhi). 3. CIT Vs P.V.S. Beedies (P.) Ltd. [19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evant assessment year in the facts of the present case is bad in law which cannot be sustained.In support of his contention he also relied upon the catena of decisions for which separate compilation has been filed. 10. After considering the rival submissions and on perusal of the materials placed on record and also in view of our observations made in the foregoing paragraphs, we find that the assessee has given all the particulars of "product development expenses" and also reconciliation of capitalization of fixed assets before the Assessing Officer during the course of the original assessment proceedings which included the 'product development' expenditure also. This fact is clearly borne out from the letter dated 15.12.2006 filed before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with regard to the proportionate expenses relatable to tax free exempt income which were claimed as deduction under the cumulative head expenditure for the purpose of disallowance u/s 14A. In light of such a categorical finding, the ratio of the Hon'ble Court does not have any binding precedence on the facts of the present case because as discussed in detail herein above there was no failure or omission on part of the assessee to disclose fully and truly material fact and in any case this issue is always a question of fact. So far as the decision of the Hon'ble Supreme Court in the case of CIT Vs P.V.S. Beedies (P.) Ltd. [1999] 103 Taxman 294 (SC) [1999] 237 ITR 13 (SC) [1999] 155 CTR 538 (SC) is concerned, we find that this was the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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