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TMI Blog2019 (2) TMI 637X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment we do not find any reason to reverse the decision of the ld CIT(A) wherein, he has quashed the reopening of assessment proceedings. - Decided against revenue Disallowance of depreciation - ownership with other people - Held that:- it is apparent that out of the total cost of ₹ 940030383/-, 54.13% amounting to ₹ 508621383/- belongs to the assessee and 45.87% amounting to ₹ 431409000/- belong to Bharti Mobile Ltd. The assessee has claimed depreciation only on ₹ 508621383/- as held by the ld CIT(A) and not on the full amount of ₹ 940030383/-. The ld Departmental Representative also could not show that the assessee has claimed depreciation on the assets beyond his share of ownership. In view of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0-2002. Subsequently, the AO recorded the reasons as under:- 2. It has been observed from the depreciation chart allowable as per IT Act that the assessee company owns network infrastructure jointly with a fellow subsidiary under an agreement in the proportion of 54:46 and hence the depreciation allowable to the assessee company has to be determined only on the network infrastructure capitalized to the above proportion. Since the depreciation was allowed on the total cost of the network infrastructure, the amount of depreciation allowed in excess has escaped assessment and, therefore, notice u/s 148 of the Act was issued after duly recording the reasons thereof u/s 147 of the Income Tax Act, 1961 and after obtaining necessary sanctio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany was asked to show cause as to why the depreciation allowed on the assets which was not capitalized in its book of accounts should not be withdrawn. In this regard, vide letter dated 23-10-2009. it has been submitted that the assessee company has capitalized only an amount of ₹ 50,86,21,383/- being 54% of the Total Network Cost of ₹ 94,00,30,383/- on pro rata basis as agreed with its subsidiary company, M/s. Bharti Mobile Ltd (BML) and correspondingly claimed depreciation @12.5% (being used for less than 6 months) on the same. In view of the above, it has been submitted that no disallowance on account of depreciation is called for. 4. The reply of the assessee company has been considered on its merits. On going throu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was assessed at ₹ 208463877/-. 6. Aggrieved the assessee preferred the appeal before the ld CIT(A) contesting the reopening of the assessment as well as disallowances of depreciation. With respect to the reopening ld CIT(A) held that ld AO has no information available with him for understatement or excessive claim of depreciation. Therefore, he held that reopening is not proper. On the issue of the merits she held that the assessee had entered into an agreement with Bharti Mobile Ltd for sharing of assets and the proportionate cost of the asset owned by the assessee was capitalised in its books. The assessee claimed depreciation only of its share of the assets. Therefore, he deleted the disallowances of depreciation of ₹ 539 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d balance sheet and tax audit report along with computation of income which clearly mentioned that the appellant has claimed depreciation on it s share of assets and from these details the Assessing Officer could not have drawn any inference or taken notice of the fact that the appellant had claimed excessive depreciation allowance in it s return of income. The Assessing Officer action of initiating jurisdiction under section 147 of the Act was uncalled for since the Assessing Officer has no information available with him from which it can be noticed that the assessee has either understated the income or has claimed excessive deduction or allowance or relief of the return. Accordingly, ground No. 1 is allowed. 11. From the above facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e order of the ld CIT(A) and vehemently stated that it has not claimed depreciation on the assets which was owned by the other owner. 15. We have carefully considered the rival contentions and find that the ld CIT(A) has given a categorical finding vide para No. 5 of his order as under:- 5. Finding on Ground of Appeal Nos. 2 I have considered the submission and the documents placed before me by the appellant. It is observed there from that the appellant had mentioned in the audited balance sheet that it has entered into an agreement with Bharti Mobile Limited for sharing of assets and the proportionate cost of assets owned by the appellant was capitalized in its books. The depreciation schedule attached to the audited balance shee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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