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2019 (7) TMI 1997 - AT - Income TaxReopening of assessment u/s 147 - Correct Assessment Year - assessee alleging that the A.O. has recorded the reasons to believe that the income of the assessee has escaped assessment for assessment year 2014-15, whereas on the basis of said reasons recorded, the assessment for the year under consideration i.e. assessment year 2010-11 has been reopened - HELD THAT:- We find that in the Performa, which was sent by the A.O. to the Principal Chief Commissioner of Income Tax, Panchkula seeking permission to issue notice u/s 148 of the Act to the assessee, assessment year has been mentioned “assessment year 2010-11”. A.O. recorded the reasons second time on 28.10.2015 wherein though in the title the assessment year has been mentioned as “assessment year 2014-15”, however, from the reading of the entire document it is apparent that the A.O. has mentioned the assessment year 2010-11. The mention of the assessment year 2014-15 in the title, in our view, is a clerical mistake. Moreover, the Ld. DR has also invited our attention to the copy of the order sheet entry dated 15.12.2015 to show that the copy of the reasons recorded was duly supplied to the assessee. Even the assessee has also placed on record the copy of the application dated 11.12.2015 moved by the Chartered Accountant of the assessee to supply the copy of reasons recorded, which were duly supplied to the assessee. Whether assessment reopened after the expiry of four years from the end of the relevant assessment year and that there was no failure on the part of the assessee to disclose fully and truly all material facts? - A perusal of the reasons recorded by the A.O. reveals that the A.O. has disputed eligibility of the assessee to claim deduction u/s 35AD of the Act. During the assessment proceedings for assessment year 2012-13, the A.O. noticed that the assessee had claimed deduction u/s 35AD of the Act while the assessee had been running its business for so many years. A.O. was of the view that the deduction u/s 35AD of the Act could be allowed only for prior period of commencement of the specified business. There is no allegation that the assessee had not fully and truly disclosed all the material facts for making the assessment. The assessee had claimed deduction u/s 35AD of the Act disclosing all the particulars. It is only of the interpretation of the relevant provisions of section, on the basis of which, A.O. formed the opinion during assessment proceedings for assessment year 2012-13 that the deduction to the assessee u/s 35AD of the Act was wrongly allowed for the assessment year under consideration. However so far as the assessee is concerned, the assessee on its part had disclosed fully and truly all the material facts necessary for its assessment. The case is squarely hit by the 1st proviso to section 147 of the Act since the reopening in this case since has been made after the expiry of four years from the end of the relevant assessment year. In view of our above observations, this ground of appeal of the assessee is allowed and reopening of assessment is set aside and the consequential assessment made is quashed. Deduction u/s 35AD - as per AO as assessee had existing business of warehousing and hence, it could not be said that the assessee had commenced the business of warehousing during the year under consideration, therefore, disallowed the deduction - As decided in assessee own case [2019 (3) TMI 2037 - ITAT CHANDIGARH] an assessee is eligible to claim deduction of the capital expenditure if such an expenditure has been incurred wholly and exclusively in a specified business. There is no condition of any date or year of commencement of specified business. In the second part, it has been provided that if such an expenditure has been incurred prior to the commencement of business and has been duly capitalized in the books of account, the claim will be allowed in the year in which the assessee commences operations of his specified business. There is neither any overlapping nor any contradiction in the aforesaid provision. The assessee is covered in the first part i.e. the assessee has incurred the expenditure on the specified business during the year in which operations of his business of warehousing were already going on. We do not find any justification on the part of the lower authorities in denying the deduction to the assessee u/s 35AD - Decided in favour of assessee.
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