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Income Tax - Case Laws
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2022 (11) TMI 1269 - GUJARAT HIGH COURT
Reopening of assessment - non disposal of objections - HELD THAT:- Our attention is drawn to the order dated 09.03.2022 received through e-mail by the assessee in relation to the very assessment year. The total income of the assessee is computed as nil. This, according to learned counsel, is no longer available on the website. The reason put forth by the other side is possibly because on 08.03.2022 the Court granted the interim order in favour of the petitioner. Not only the issue of disposal of objection has been put to the rest, but, ultimately, the assessment has been framed where no addition has been made to the income which has thus favoured the petition. The cause of the petition therefore no longer survives.
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2022 (11) TMI 1268 - GUJARAT HIGH COURT
Reopening of assessment - non disposal of objections - HELD THAT:- Our attention is drawn to the order dated 09.03.2022 received through e-mail by the assessee in relation to the very assessment year. The total income of the assessee is computed as nil. This, according to learned counsel, is no longer available on the website. The reason put forth by the other side is possibly because on 08.03.2022 the Court granted the interim order in favour of the petitioner. Not only the issue of disposal of objection has been put to the rest, but, ultimately, the assessment has been framed where no addition has been made to the income which has thus favoured the petition. The cause of the petition therefore no longer survives.
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2022 (11) TMI 1264 - DELHI HIGH COURT
Addition based on seized document - addition on account of receipt of rent - As stated as per the Seized Document, the Vasant Square Mall was in the possession of the Assessee before 01st October 2006 and the rent started with effect from 01st October 2006 - ITAT has held that the additions made by the AO are factually incorrect, illegal and arbitrary - HELD THAT:- In view of the factual finding returned by ITAT in the assessment proceedings to the effect that no fresh material was taken into account by the AO for making additions in the present proceedings and the sole basis for making the additions was the Seized Document, we find that the issues raised in the present appeal are covered in favour of the assessee and against the Revenue by the judgment of this Court VINITA CHAURASIA [2017 (5) TMI 992 - DELHI HIGH COURT] - The additions were deleted by the Court after detailed examination of the merits. The Special leave petition filed against the said judgment also stands dismissed. We therefore find that no substantial question of law arises from the impugned order of the ITAT. The appeals is dismissed.
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2022 (11) TMI 1263 - DELHI HIGH COURT
Reopening of assessment u/s 147 - order passed under Section 148A(d) - Non supply of incriminating material / information against the petitioner - HELD THAT:- As we have perused the reply dated 29th March, 2022 filed on 30th March, 2022 with the Assessing Officer. In the said reply, the petitioner has only asked to be served with the information / documents in possession of the respondent-revenue. The petitioner has given no reply on merits.
This Court is of the view that if the petitioner desired the requisite information / documents in possession of the respondent-revenue, he should have asked for the same on the day one and certainly not waited for seven months to approach this Court.
Since the matter has now progressed to the next stage i.e. Section 148 stage, this Court disposes of the present writ petition with a direction to the respondent-revenue to supply the incriminating material / information against the petitioner within four weeks.
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2022 (11) TMI 1262 - MADRAS HIGH COURT
Stay of demand - recovery proceedings - pre-condition for grant of stay of recovery - pre-condition for deposit of 20% of the total demand - HELD THAT:- The stay application has come to be dismissed by way of impugned order that contains a fatal flaw, being that the Assessing Authority proceeds on the basis that there is a pre-condition for deposit of 20% of the total demand for the grant of stay till disposal of first appeal.
This view patently erroneous insofar as the Income Tax Act does not provide for any pre-condition for grant of stay of recovery, as this Court has made clear on several occasions.
Office Memorandum (OM) referred to by the Assessing Authority in F.No.404/72/93-ITCC dated 31.07.2017 only increases the rate of disputed demand from 15% as set out under Instruction No.1914 dated 21.03.1996 to 20%. However, the actual tax to be demanded, ranging from 0% to 100%, would depend upon the existence of three factors, viz., (i) prima facie case, (ii) financial stringency and (iii) balance of convenience and it is only upon a consideration of the aforesaid factors that the officer would dispose an application for stay.
This discussion does not find place in the present impugned order and rather, the Assessing Authority proceeds on the basis that 20% is the standard demand that the petitioner must be called upon to remit.
Thus impugned order is quashed. The stay petition is restored to the file of the Assessing Officer, who shall call upon the assessee, consider materials, if any, placed by the assessee before him in support of the aforesaid three conditions and pass orders upon the stay application, within a period of six (6) weeks from today.
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2022 (11) TMI 1261 - KARNATAKA HIGH COURT
Capital gain - 'Transfer' within the meaning of Section 2(47)(v) - recital to the effect that possession of the property in question was delivered in part performance of the contract - HELD THAT:- As in order to attract Section 2(47)(v) of the IT Act, it is absolutely essential that possession of the property in question should be delivered in terms of Section 53-A of the T.P. Act. In the instant case, a perusal of the Sale Agreement, Agency Agreement and GPA, will clearly indicate that possession of the said property covered under the said documents has not been delivered as mandatorily required under Section 53-A of the T.P. Act. In fact, the contents of the said documents will clearly indicate that there is no recital with regard to the petitioner handing over possession or putting the party in possession in part performance as required under Section 53- A of the T.P. Act.
Sale Agreement under which, the petitioner is said to have agreed to sell the said land in favour of the third party is also not a registered document as required under Section 17(1-A) of the Registration Act and on this ground also, it cannot be said that the petitioner had delivered or put the other party in possession in part performance for the purpose of Section 53- A of the T.P. Act.
Thus in the absence of any recital in the aforesaid three documents, much less any recital to the effect that possession of the property in question was delivered in part performance of the contract, the three documents executed by the petitioner cannot be construed or treated as constituting a 'Transfer' within the meaning of Section 2(47)(v) of the IT Act. Thus so long as the documents do not constitute a 'Transfer' within the meaning of Section 2(47)(v) of the IT Act, the petitioner cannot be made liable to pay capital gains tax on the amount received by him. Thus the impugned Assessment order deserves to be quashed and the matter remitted back to respondent 1- Assessing Officer for reconsideration afresh in accordance with law.
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2022 (11) TMI 1260 - GUJARAT HIGH COURT
Assessment proceedings maintainable against the dead person - Intimation from legal heir - HELD THAT:- Bachuji Balaji Thakor died on 22.10.2018 in whose name, notice was issued by the income tax authorities on 31.3.2021 under Section 148 of the Act seeking to reopen assessment in respect of Assessment Year 2016-2017. The petitioner herein who happens to be the legal representative intimated to the income tax officer concerned that the noticee Bachuji Balaji Thakor had died long back and that the notice was without jurisdiction. The Income Tax authorities did not pay heed to the said intimation.
The facts of the case did not offer any fact or circumstances to suggest that the legal representative of the deceased assessee in any manner submitted to the jurisdiction of the income tax authorities or in any way participated in the proceedings. On the contrary, communication dated 22.3.2022 was sent to the income tax officer by the legal representative that the noticee Bachuji Balaji Thakor had died.
the present petition deserves to be allowed. It is hereby allowed by holding that the impugned notice, which was against the dead assessee, could not have been sustained.
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2022 (11) TMI 1259 - ITAT DLEHI
Addition under the head ‘commission paid to others’ - commission expenses incurred by the Assessee, being a Medical Doctor by profession - claim of the Assessee that the Assessing Officer had made addition by completely misunderstanding and misinterpreting the facts of the case is frivolous and totally unwarranted - HELD THAT:- We are unable to accept the contradictory stand of the Assessee taken before the L. Commissioner because the contradictory stand of the Assessee clearly seems to be concocted story, twisting facts, erratic, vague and superfluous and thus liable to be depreciated. Even otherwise as per the judgements referred to above, the payment of commission by the Assessee for referring patients to it by any stretch of imagination, cannot be accepted as legal or as per public policy of India, hence such commission is not an allowable expense. Consequently the Assessee in any case is not entitled for any relief on merit, we are thus inclined not to interfere in sustaining the addition.
Jurisdiction of the Assessing Officer to extend the assessment proceedings beyond the points of limited scrutiny - As the case of the Assessee was selected for limited scrutiny and the addition in hand does not emanate from the grounds on which the case of the Assessee was picked up for limited scrutiny. Though the Ld. Commissioner, in the impugned order incorporated the legal contention of the Assessee objecting to the jurisdiction of the Assessing Officer to extend the assessment proceedings beyond the points of limited scrutiny, but the ld. Commissioner has not adverted to decide this contention of Assessee in the impugned order.
As it is settled law that the Revenue Authorities are not allowed to travel beyond the issues involved in limited scrutiny cases, except in exceptional circumstances and by completing the relevant formalities before proceeding to other issues, which in the instant case does not appears to have adhered to. Hence, we deem it appropriate to delete the addition in hand. Consequently, the appeal of the Assessee is liable to be allowed.
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2022 (11) TMI 1258 - ITAT PANAJI
Deduction u/s 80P(2)(a)(i) - Claim denied as it is only a Urban Co-operative Bank then a cooperative society and the said interest income represents deposits made in a cooperative bank and thus not entitled for the relief in issue as per section 80P(4) - HELD THAT:- Section 80P(2)(d) of the Act allows whole deduction of income by way of interest or dividend derived by Cooperative Society from its investments with any other co-operative society. This provision does not make any distinction with regard to the source of investment because this section envisages deduction in respect of any income derived by cooperative society from in his investment with a cooperative society. So the Revenue is not required to look another of investment whether it was formed as required within time or otherwise.
As heard the considered of the case of Totagars Co-operative Sales Society Ltd [2010 (2) TMI 3 - SUPREME COURT] which was relied by the Ld. DR and find that the Hon’ble Apex Court has dilapidated on the issue of deduction u/s 80P(2)(a)(i) but not on section 80P(2)(d). We also observed that in the case of Totagars Cooperative Sales Society Ltd, [2017 (1) TMI 1100 - KARNATAKA HIGH COURT] itself the Hon’ble High Court of Karnataka has allowed the claim of deduction u/s 80P(2)(d).
Considering all the judgments we hereby hold that the investment of assessee in cooperative bank is eligible investment u/s 80P(2)(d) of the Act. The interest of the said investment related to Cooperative Society, assessee is eligible for deduction u/s 80P(2)(a)(i) of the Act. Accordingly the appeals of the assessee are allowed. Appeal of assessee allowed.
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2022 (11) TMI 1257 - ITAT KOLKATA
Addition u/s 68 - unexplained cash credit - Non establishing identity, creditworthiness and genuineness of the transaction - HELD THAT:- DR has fairly agreed that the Assessing Officer in the remand report has reported that the assessee has duly established the identity, creditworthiness of the creditors and genuineness of the transaction and he has also fairly agreed that the issue is also squarely covered by the Decision of AMBITION AGENCIES PRIVATE LIMITED [2021 (11) TMI 750 - CALCUTTA HIGH COURT] and SMT. B. JAYALAKSHMI [2018 (8) TMI 208 - MADRAS HIGH COURT] - Decided against revenue.
Addition u/s 14A - expenditure incurred towards tax exempted income - HELD THAT:- As held in many decisions where the assessee has not derived any tax exempt income from investments, then no disallowance is attracted u/s 14A of the Act. - Decided against revenue.
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2022 (11) TMI 1256 - ITAT CHENNAI
Validity of re-opening of assessment - reasons to believe - change of opinion - fresh materials subsequent to completion of original assessment - Eligibility of exemption claimed u/s.10AA - HELD THAT:- Although, the original assessment has been completed u/s.143(3) of the Act, on 29.09.2011, but the AO has not considered the issue of exemption claimed u/s.10AA of the Act, in right perspective of law and thus, we are of the considered view that, when the AO has not expressed any opinion, the question of concept of ‘change of opinion’ does not arise.
AO has formed reasonable belief of escapement of income on the basis of fresh materials subsequent to completion of original assessment order and said materials may come from the assessment records also. Therefore, we are of the considered view that there is no merit in the arguments of the assessee that there is no fresh tangible material in the possession of the AO to form reasonable belief of escapement of income and thus, we reject the arguments of the assessee and uphold the reopening of assessment.
Computation of deduction u/s.10A / 10AA - AO has not accepted the claim of the assessee on the ground that no proper evidence has been filed to substantiate the claim - We find that if assessee is able to explain reduction in export turnover with necessary evidences, then the AO is bound to consider the turnover declared in revised return of income for the purpose of assessing income and also for claiming deduction u/s.10A / 10AA of the Act. As regards the second observation of the AO with regard to non-eligibility of the assessee for claiming such deduction, the assessee has filed necessary copies of approval from STPI under the provisions of Sec.10A / 10AA - From the above, it appears that the assessee is eligible for claiming deduction u/s.10A / 10AA of the Act. Since, the assessee has declared net loss for the year, the question of claiming deduction u/s.10A / 10AA of the Act, does not arise.
Deduction u/s.10A / 10AA of the Act, cannot be rejected, in case, the assessee is entitled for claiming such deduction. Therefore, we are of the considered view that the issue needs to go back to the file of the AO for fresh consideration and thus, we set aside the issue and direct the AO to re-consider the claim of the assessee in light of various averments including justification for reduction in export turn over and consider the issue of computation u/s.10A / 10AA of the Act, in accordance with law after providing reasonable opportunity of hearing to the assessee. Appeal filed by the assessee is partly allowed for statistical purposes.
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2022 (11) TMI 1255 - ITAT PUNE
Capital Gain on sale of land - liability to be taxed in the hands of the appellant - appellant requests your honour to kindly direct the learned assessing officer to allow the credit of income tax paid by the company on the capital gain on sale of land against the income tax payable by the appellant on the capital gain arises from the sale of said land - HELD THAT:- We hardly see any reason to accept the assessee’s instant latter argument in light of hon’ble apex court’s landmark decision in CIT vs., Ch Atchaiah [1995 (12) TMI 1 - SUPREME COURT] that the correct amount of income has to be assessed in right person’s hands only. Faced with this situation, we hardly see any reason to entertain the assessee’s instant remand request seeking credit of the alleged taxes payment by the company in this appellant’s hands. Rejected accordingly.
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2022 (11) TMI 1254 - ITAT KOLKATA
Addition u/s 68 - bogus LTCG - Penny stock purchases - HELD THAT:- Directorate of Income Tax (Investigation), Kolkata unearthed a racket of penny stock companies, which are managed by entry operators and brokers, wherein share prices are rigged, abnormally high so as to provide accommodation entries in the form of bogus long-term capital gain to various beneficiaries. The investigation report mentioned the list of 84 companies, which were found to be penny stock companies and all these companies have poor financial, no regular business activity was carried out and the share prices increased abnormally with the help of entry operators and brokers.
Recently Hon’ble Jurisdictional High Court in the case of Swati Bajaj & Others[2022 (6) TMI 670 - CALCUTTA HIGH COURT] dealing with the similar facts and the issue relating to the penny stock companies decided against the assessee thereby confirming the addition under section 68 of the Act as well as confirming the revisionary proceedings under section 263 - Appeal of the assessee is dismissed.
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2022 (11) TMI 1253 - ITAT DELHI
Benefit of exemption u/s 11 - society or trust draws its inspiration for certain charitable activities from religious tenents - Claim denied as activities carried out by the society during the instant assessment year were not found to be covered by any limb of ‘charitable purpose’ as defined in section 2 (15) - CIT-A allowed the exemption - HELD THAT:- As decided in own case [2018 (3) TMI 1903 - ITAT DELHI] imparting of education in theology, of the nature given in the New Theological College, is very much an education within the meaning of education as defined by the Hon'ble Supreme Court in the case of Sole Trustee LokShikshan Trust [1975 (8) TMI 1 - SUPREME COURT] and which would entitle an institution to claim exemption under the beneficial provisions of the Income Tax Act.
It also flows that merely because a society or trust draws its inspiration for certain charitable activities from religious tenents, as long as charitable activities of the society are not confined to the benefit of any particular community, it is entitled to exemption u/s 11 of the Income Tax Act.
In the present case of the assessee, while the donors to the society may have been giving to it in the belief that they were propagating and promoting Christianity, the society itself has confined its activities to the aims and objectives laid down in the Memorandum of Association in as much as in Theology can be described as vocational training and the school, run by it, impart a secular education. Accordingly, merely because it bears its activities on the basis of a religious calling, there is no reason to hold that section 13 (1) (b) of the Income Tax Act would be attracted to it. Therefore, in considered opinion, the assessee society is eligible to claim exemption u/s 11 of the Income Tax Act. - Decided against revenue.
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2022 (11) TMI 1252 - ITAT DELHI
Addition on account of share application money by invoking the provision u/s 68 - HELD THAT:- The appellant undoubtedly has failed in course of assessment and appellate proceedings to establish the identity and creditworthiness of the so-called share applicants and genuineness of transactions.
AO has rightly invoked the provisions of the section 68 to make addition on account of share application money and added it back to the total income of the appellant. Thus, hold that the action of the AO in making addition on account of share application money is justified and therefore the addition u/s 68 made by the AO is confirmed. Appeal of the assessee is dismissed.
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2022 (11) TMI 1251 - ITAT RAIPUR
Mercedes car gifted - Depreciation on car - capital account credited an amount towards value of a Mercedes Benz Car - Allowable business expenditure - HELD THAT:- No infirmity does emerge from the observation of the A.O who had rightly brought the value of the car to tax u/s. 28(iv) of the Act. Apropos, the assessee’s claim for depreciation on the aforesaid Mercedez Benz car, find that as observed by the A.O as the assessee had not only claimed any depreciation on the said car during the year under consideration, but had in fact claimed the depreciation on the entire value of the same only from A.Y.2014-15, therefore, the said fact establishes beyond doubt that the said vehicle was not being used for business purposes during the year under consideration.
Finding no infirmity in the view taken by the A.O who had rightly declined the assessee’s claim for depreciation on the aforesaid Mercedez Benz car as was raised in the course of the assessment proceedings, uphold the same. Thus, the Ground of appeal No.1 raised by the assessee is dismissed in terms of the aforesaid observations.
Disallowance u/s 40A(2)(A) of interest charges that were paid by the assessee to her seven family members - AO had while making the aforesaid disallowance resorted to the comparison between the unlikes i.e. comparison between interest rate paid on unsecured loan, as against that paid on loans raised from a bank.
As Section 40A(2)(a) of the Act presupposes a comparison between likes on the basis of which it could be gathered that the expenditure booked by the assessee as being excessive or unreasonable, therefore, the very basis leading to the aforesaid disallowance does not find favour for the reason that as in comparison to the loans raised from a bank which involves substantial formalities, hidden charges and offering of collateral securities etc., the raising of unsecured loan from a family member involves neither of such issues.
Thus we are unable to concur with the very basis leading to drawing of adverse inference by the lower authorities, and thus, is of the considered view that the matter in all fairness requires to be restored to the file of the A.O, with a direction to re-adjudicate the issue after considering the rates at which unsecured loans at the relevant point of time would be available. Assessee ground allowed for statistical purposes.
Difference in the account of MRF Tyres & Industries Ltd. - As the assessee had not only failed to reconcile the aforesaid discrepancy before the lower authorities, but also adopting callous approach had not placed on record anything to substantiate the same in the course of the proceedings before me, therefore, as constrained to uphold the said addition. Thus, the Ground of appeal raised by the assessee is dismissed in terms of the aforesaid observations. Ground raised by the assessee is dismissed.
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2022 (11) TMI 1250 - ITAT HYDERABAD
Reopening of assessment u/s 147 - reason to believe - tangible material before the AO - additional income offered to the closing stock - assessee has increased the opening stock to the extent of the disclosure made during the course of survey operation - HELD THAT:- As in absence of any tangible material before the AO, he could not have reopened the assessment for the impugned assessment year. In our opinion, mistake, if any has been committed by the assessee in AY 2009-10 and the AO was also aware of the same.
Therefore, instead of reopening the assessment for AY 2009-10, AO could not have reopened the assessment for AY 2010-11. We quash the reassessment proceedings and the grounds raised by the assessee on this issue are allowed.
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2022 (11) TMI 1249 - ITAT HYDERABAD
Reduction of the land development expenses - Disallowance of unverifiable expenses - AR submitted that the persons to whom the payment was made are not to be found, and their addresses could be culled out only from the sale deeds executed by them in favour of the assessee - HELD THAT:- As no evidence is produced in support of the claim of the assessee. It could be seen from the assessment order, basing on the PAN details, an attempt to verify the claim of the assessee was made, but such persons were not to be found in such address. Subsequently on the orders has been furnished by the assessee, the Income Tax Inspector was deputed to cause enquiries at the address is given by the assessee, but such addresses were found to be incorrect.
In the circumstances, there is no course open to the Assessing Officer to verify the alleged expenditure - So also in respect of the other expense said to have been paid to the marketing executive towards salary incentives etc., no occasion for such payments seems to be probable because admittedly the commercial activity of the assessee had not commenced and not even a single plot was sold or book for sale during the relevant assessment year.
All the circumstances would go to show that there is no possibility to verify the expenses and therefore it cannot be said that the authorities below went wrong in reducing such expenses. We accordingly find that the grounds of appeal are devoid of merits and the appeal of assessee is liable to be dismissed.
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2022 (11) TMI 1248 - ITAT KOLKATA
Assessment u/s 143(3) - accommodation entries provider - transaction between the appellant and other related concerns as accommodation entry and treating the appellant as alleged accommodation entry provider - as argued assessee is not an accommodation entry provider AND no opportunity of cross examination was provided regarding the alleged credible information received by ld. AO - HELD THAT:- Complete details of the source of the funds received during the year as well as the amounts transferred to other companies has been filed by the assessee. Revenue authorities have failed to find any defect in such details. In the past for AY 2013-14 assessee’s case was assessed u/s 143(3) of the Act and the assessee has not been held to be entry provider but has been assessed to be engaged in business of share investment. This plea of ld. D/R that most of the companies are having meagre income and no source of funds is also not correct as in the case of P G Industries Ltd., returned income is 1.14 Cr. and in case of Priceless Overseas Ltd., returned income is 59.97 lakh. It is also not in dispute that the assessee has requested for cross examination but no such opportunity was provided to the assessee to cross examine Mr. Mahendra Sethia who claimed to have been managing the assessee company as an accommodation entry provider.
And not providing of such opportunity of cross examination renders the assessment proceedings as invalid and bad in law as held in the case of Andaman Timber Industries v. CCE [2015 (10) TMI 442 - SUPREME COURT]
Therefore since the assessee has explained the transactions carried out during the year in the bank account held in Vijaya Bank and the complete details of the deposits and withdrawal and the source and the documentary evidences in support thereof, the transactions, in my view are carried out in the regular course of business and by no stretch up imagination, the assessee company can be held as an accommodation entry provider/shell company. Therefore, set aside the finding of ld. CIT(A) and delete the addition of commission income - Decided in favour of assessee.
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2022 (11) TMI 1247 - ITAT PUNE
Rectification of mistake u/s 154 - expiry of time limit prescribed u/s 154(7) - claim of additional depreciation made first-time through rectification application after the expiry of time limit prescribed u/s 154(7) - statutory limit of four years from the end of the financial year - whether claim for additional depreciation u/s 32(1)(iia) of the Act is in modification of original claim made in the ITR or a fresh claim to testify its allowance through rectification application? - HELD THAT:- Since, the Ld. AR failed to bring on record any substantial evidence in support of allowability of belated claim made through belated application of rectification and in the absence of any order of relaxation from the CBDT, we beyond any iota of doubt are inclined to hold the orders of both the tax authorities free from any infirmity, ergo the ground number 3 and its counter parts stand adjudicated against the assessee.
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