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2012 (11) TMI 285 - ITAT, AHMEDABADReopening the assessment - disallowance on account of unabsorbed depreciation - Held that:- There was no escapement of any income because unabsorbed depreciation allowance by operation of the provisions of section 32(2), as it stood prior to 1.4.1997, was deemed to be part of the allowance for the previous year relevant to A.Y. 1997-98 and for all intends and purposes the unabsorbed depreciation for A.Ys.1993-94 to 1996-97 was deemed to be the depreciation allowances for A.Y. 1997-98. Subsequently sub-section(2) of section 32 was substituted w.e.f.1.4.97, whereby the earlier years unabsorbed depreciation deemed to be the part of the depreciation of the following previous year was no longer continued and further that the unabsorbed depreciation was granted to be carried forward for the period of eight years, thus it can be said that AO had overlooked the fact that in the line of the operation of section 32(2) as it stood to prior to 1.4.1997, the unabsorbed depreciation of A.Ys.1993-94 to 1996-97 already formed part of the depreciation allowance for the previous year relevant to A.Y. 1997-98. Thus, it was concluded that the assumption of the jurisdiction by the AO u/s.147 was invalid - This although the reopening was made within four years from the end of the assessment year, but still that was nothing but simplistic change of opinion because in the first round the original assessment was made u/s.143(3) that too after duly considering the claim of depreciation as per the statement of income furnished by the assessee, hence on those very facts there did not exist any reason to believe for escapement of assessment - in favour of assessee. Claim of depreciation - Held that:- As decided in Karnataka Co-operative Milk Producers Federation Ltd. Versus Deputy Commissioner of Income-tax (Asst.), Special Range-5, Bangalore [2006 (5) TMI 423 - ITAT BANGALORE] that prior to the amendment introduced during 1996-97, it was permissible to carry forward the unabsorbed depreciation and from 1993-94 to 1996-97, the unabsorbed depreciation has been carried forward. The amendment introduced limiting the time for carrying forward for a period of eight years has to be reckoned not from 1993-94 but from 1996-97 and the same was carried forward and by the year 2006-07 since again there is an amendment introduced during 2002 making this period of eight years as unlimited, from 2002 onwards even till 2006-07, it is permissible to carry forward the unabsorbed depreciation in view of the change in position of law - thus assessee is eligible for the claim of depreciation as per law for the year under consideration - in favour of assessee. Non deduction of TDS - Held that:- The provisions of section 40(a)(ia) were wrongly invoked under the facts and circumstances of the case where it was proved that the payment was merely reimbursement of the petty expenses - in favour of assessee. Exclusion of excise duty in closing stock valuation - Held that:- As decided in CIT Versus PARRY CONFECTIONARY LTD [2007 (6) TMI 161 - MADRAS HIGH COURT] the excise duty being not depicted to Profit & Loss account, therefore not assessable in the hands of the assessee - in favour of assessee.
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