TMI Blog2005 (11) TMI 529X X X X Extracts X X X X X X X X Extracts X X X X ..... le income under section 115JA of the Act at ₹ 1,21,177 which was processed under section 143(1) on 28-5-1999. It was noticed by the assessee subsequently that assessee has claimed depreciation @ 10 per cent on the advance/deposits of ₹ 18,00,000 given as security to the lessor against lease hold building. As per the Assessing Officer, the assessee is not owner of the property and the advance/security was refundable after the expiry of lease period. The assessee claimed depreciation on the said advance. Assessee also claimed lease rent in its Profit Loss Account. The assessee claimed depreciation by taking the value of advance/security advanced at ₹ 14,58,000 as WD value under the head 'Lease-hold Building' at ₹ 1,45,800. As per the Assessing Officer, the assessee claimed wrong depreciation to the extent of ₹ 1,45,800 and the same escaped assessment within the meaning of section 148, read with Explanation 2(c)(iv) of the said section. Notice under section 148 was issued on 21-1-2003. Notice under section 142 was served upon the assessee on 5-3-2003 calling upon the assessee to file the return and to produce other documents. The assessee sought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments, which will be discussed while concluding the issue. The learned DR further contended that in the case, there is another assessment and the word 'escapement' has been used. The Assessing Officer has not passed any order and merely there is a processing of the return and not order under section 143(3). Mrs. Garg strongly contended that even the building was not owned by the assessee and similar claim for the assessment year 1996-97 has not been allowed. It was also contended that even the assessee claimed lease rent. Our attention was also invited to section 32 of the Act. 4. I have considered the rival submissions. The assessee hired a building on lease and advanced a sum of ₹ 14,58,000 as per lease agreement, which is refundable after the expiry of lease period and claimed depreciation @ 10 per cent i.e., ₹ 1,45,800. As per the agreement, the nature of payment is purely an advance and is refundable after the expiry of lease period meaning thereby the assessee-company is not the owner of the building. The assessee in its first ground has challenged the re-opening of the case under section 148 of the Act. 5. During arguments, the learned counsel for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer relied upon the decision of the Full Bench of Hon'ble High Court of Delhi in the case of CIT v. Kelvinator of India Ltd. [2002] 256 ITR 1 wherein the amendment of section 147 with effect from 1-4-1997 was held to be not altered the position and was held that mere change of opinion of Assessing Officer not a ground for re-assessment. The learned counsel also contended that if the Assessing Officer has not taken the assessment to logical conclusion, it is not the fault of the assessee. Reliance was also placed on the decision of the Hon'ble Supreme Court of India in the case of CIT v. Beharilal Ramcharan Ltd.: [1987] 166 ITR 157 wherein the respondent-company incurred a loss of ₹ 3,17,500 in the assessment year 1957-58 over sale of shares to three associate concerns. In the assessment order, the ITO disallowed the loss in computing its profit on the ground that the sum of ₹ 3,17,500 was a capital loss being loss on sale of investment. The ACIT confirmed the disallowance characterizing to loss as notional capital loss. For the assessment year 1965-66, the respondent claimed carry forward of the capital loss of ₹ 3,17,500 and set off against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment proceedings under section 147 merely on the basis of change of opinion. The appeal of the revenue was dismissed. 7. On the other hand, the learned DR relied upon the decision of the Chandigarh Bench of the Tribunal in the case of Palbro Auto Parts (P.) Ltd. [IT Appeal Nos. 71 to 75 (Chd.) of 2002] wherein the assessee filed returns for the assessment years 1994-95 to 1998-99 and the same were processed under section 143(1)(a). Subsequently, assessment for 1998-99 was made under section 143(3) in which Assessing Officer found that the assessee had not excluded 90 per cent of interest on FDR from business profit while computing the deduction under section 80HHC. The Assessing Officer accordingly restricted the claim of the assessee under section 80HHC by excluding 90 per cent of interest from the business profit for the purpose of computation of deduction under section 80HHC. For assessment years 1994-95 to 1997-98, the Assessing Officer found that assessee has claimed excessive deduction under section 80HHC and accordingly issued notice under section 148 for the respective assessment years. Reassessments were framed by restricting the deduction under section 80HHC. On appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of section 147 with effect from 1-4-1989 and intimation under section 143(1)(a) was considered and was held that the said section does not amount to assessment. It was held that at the stage of notice of reassessment, reasonable belief that income has escaped is sufficient. The notice of reassessment was held to be valid. 9. If the facts in the present case before us and the judicial pronouncement from both the sides, as we have discussed in the preceding para are analysed, one fact is oozing out that in the present case, the processing was made under section 143(1) on 28-5-1999 by the Assessing Officer and not under section 143(3). Subsequently, it was noticed that assessee has claimed depreciation @ 10 per cent on the advance/deposit of ₹ 18 lakhs given as security to the lessor against lease hold building. Undisputedly, no regular assessment has been made by the Assessing Officer in the present case meaning thereby, no opinion has been expressed by the Assessing Officer. Had the assessment been made by the Assessing Officer under section 143(3), the position would have been altogether different. Their Lordship of the Delhi High Court in the case of CIT v. Kelvinato ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice. Held, dismissing the writ petition, that the notice did not suffer from any illegality. It was based on the bona fide action of the competent authority to determine whether or not the vehicles in respect of which the petitioner had been claiming depreciation, were actually owned by it. 10. In the present case, there is merely a processing under section 143(1) and not an order under section 143(3) of the Act meaning thereby one cannot say that the Assessing Officer has expressed any opinion so there can be no change of opinion. It can be said that no assessment was framed or no order was passed under section 143(3). The word used in section 148 is escapement . The Hon'ble Apex Court in the case of Phool Chand Bajrang Lal (supra) at page 459 has held that one purpose of section 147 is to ensure that a party cannot get away by wilfully making a false and untrue statement at the time of the original assessment and when that falsity comes to notice to turn around and say, You accepted my lie, now your hands are tied and you can do nothing. It would be a travesty of justice to allow the assessee that latitude. The Hon'ble Apex Court while coming to a particular c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s escaped assessment. This reason for reopening of the assessment is expressly covered in Explanation 2(c)(iv) attached to section 147. After substitution with effect from 1-4-1989. The present case is squarely covered under section 147 for the purposes of reopening. Even as per the lease-hold agreement the nature of payment is purely an advance which is refundable after the expiry of lease period meaning thereby the assessee is not the owner of the building. In view of these facts, the money paid as advance cannot be said part of capital investment in the building nor building is owned by the assessee. Even for assessment year 1996-97 in the case of assessee itself, similar, stand was taken. In view of these facts, there is no merit in the ground raised by the assessee. Therefore, I am in agreement with the conclusion of the learned CIT (Appeals). The disallowance of depreciation of ₹ 1,45,800 deserves to be upheld. 11. The next ground pertains to charging of interest under section 234(b) of the Act. Learned counsel for the assessee contended that charging of interest is consequential in nature. After considering the rival submissions, I am of the view that charging of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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