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2014 (7) TMI 458 - ITAT COCHINReopening of assessment u/s 147 of the Act – Change of opinion – Held that:- The AO has pointed out five issues, on the basis of which he has entertained the belief that there was escapement of income - the assessee contended that the AO has already examined the issues and formed opinion, yet no material was placed to substantiate the claim - one of the issues related to the excessive claim of depreciation that was allowed in the original assessment order - AO found it to be excessive on the basis of tax audit report, the eligible depreciation certified by the tax auditor differed from the amount that was actually allowed in the assessment order - it cannot be said that the AO had formed any opinion - the assessee did not produce any material to substantiate its claim that the AO – thus, the contentions of the assessee cannot be accepted. Depreciation on fixed assets – Held that:- There was difference in the amount of depreciation that was claimed in the return of income and that was certified by the tax auditor - the assessee has furnished an explanation, viz., the opening WDV of automatic voltage controller and motor cars purchased in the earlier years got changed due to the application of wrong rate of depreciation in the earlier years - the explanation of the assessee was not examined by the AO - the AO was not justified in not examining the explanations given by the assessee before making the disallowance – thus, the matter is remitted back for fresh Adjudication – Decided in favour of Assessee. Assessment of inter-branch credit balance transferred to the reserve account – Held that:- As decided in assessee’s own case for the earlier assessment year, it has been held that, if the assessee bank has not claimed debit of such entries made in the branch, then credit of such entries cannot be treated as income – the AO will be required to ascertain as to whether the corresponding debit entry has been claimed by the branch as expenditure and if the same has not been claimed as expenditure, then the amount credited cannot be taxed as income - CIT(A) has followed the decision rendered by the co-ordinate bench of the Tribunal in the assessee’s own case – thus, there is no reason to interfere in the order of the CIT(A) – Decided against Assessee. Appreciation in valuation of securities held as “Stock in trade” – Held that:- The AO has not been properly appreciated about the method adopted by the assessee - If the assessee is following the method of valuation, the appreciation of value of any stock, the loss of which was claimed in the earlier year, would be automatically get adjusted in the valuation - the assessee has failed to furnish the details of valuation of stock in trade and has also failed to clarify the doubts raised by the AO and hence the AO was constrained to make adhoc disallowance - the assessee is claiming that it is following consistent method of valuation, the assessee should furnish all the relevant details and clarify the doubts raised by the AO in respect of the claim – thus, the matter is remitted back to the AO for fresh adjudication – Decided in favour of Assessee. Provision for bad debts written off u/s 36(1)(viia) of the Act – Held that:- The issue requires only clarification as to whether the assessee has to satisfy the AO that it has debited the bad debts written off by it (a) first to the “Provision for bad and doubtful debts account” and (b) the net debit balance found in the provision account was only claimed as deduction u/s 36(1)(vii) of the Act - the disallowance has been made since the AO was not properly appreciated of the methodology followed by the assessee for claiming deduction u/s 36(1)(vii) and 36(1)(viia) of the Act - this matter also requires examination at the end of the AO – thus, the matter is remitted back to the AO for fresh examination – Decided in favour of Revenue.
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