TMI Blog2005 (10) TMI 242X X X X Extracts X X X X X X X X Extracts X X X X ..... not based on the facts hence the disallowance made deserves to be deleted." 3. Briefly stated, the facts of this case are that assessment was completed under section 143(3) on 30-3-1998 at an income of Rs. 2.26 crores. Subsequently, on examination of record, it was noticed by the ld. CIT, inter alia, that depreciation at the rate of 100 per cent on the cost of Electronic Yarn Clearer System amounting to Rs. 8,37,601 was allowed as against normal rate of depreciation admissible at the rate of 25 per cent amounting to Rs. 2,09,265. The excessive depreciation on EYC system found to have been wrongly allowed was determined at Rs. 6,27,796. By taking shelter of certain decisions including Gee Vee Enterprises v. Addl. CIT [1975] 99 ITR 375 (Delhi) and CIT v. Kohinoor Tobacco Products (P.) Ltd. [1998] 234 ITR 557 (MP), he concluded that the assessment order was erroneous and prejudicial to the interest of the Revenue. In compliance to notice under section 263(1) it was stated on behalf of the assessee that it had settled the case for the year undo consideration under Kar Vivad Samadhan Scheme, 1998 and tax had also been deposited and further certificates under section 90(2) r/w section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the declaration under section 88. Similarly, clause (m) defines "tax arrear" to mean the amount of tax, penalty or interest determined on or before 31-3-1998 under direct tax enactment but remaining unpaid on the date of declaration. Section 88 provides that where any person makes on or after the 1-9-1998, but on or before 31-12-1998, a declaration to the designated authority in accordance with the provisions of section 89 in respect of tax arrear, then the amount payable under the scheme by the declarant shall be determined at the rates specified. Section 90(3) provides that every order passed by the sub-section (1) determining the sum payable under the scheme shall be conclusive as to the matter stated therein and no matter covered by such order shall be reopened in other proceeding under the direct tax enactment. As per section 91, immunity is granted from prosecution and imposition of penalty. Section 94, which is very important in the context of dispute under consideration, states as under: "For the removal of doubts, it is hereby declared that, save as otherwise expressly provided in sub-section (3) of section 90, nothing contained in this Scheme shall be construed as conf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter of declaration by the assessee in relation to the disputed income. To put it simply, the intention behind this provision is to curtail the power of the Assessing Officer to re-examine the issues which stand settled by his earlier adjudication and for which the assessee has settled the controversy under Kar Vivad Samadhan Scheme. This interpretation becomes more manifest when read with the later part of this sub-section, viz., "and no matter covered by such order shall be reopened in any other proceedings". On a combined reading of this provision, it becomes explicitly clear that the issues, which are the subject-matter of declaration in regard to into the disputed income have been taken away from the scope of re-examination, once the dispute is settle under this Scheme. It nowhere provides licence to the assessee to refrain the authorities from exercising jurisdiction on the matters, which are totally unconnected with the disputed income for which the assessee opted for KVSS. Our view gets fortified from a plain reading of section 94 which declares that no benefit, concession or immunity shall be conferred on the declarant in any assessment or proceedings other than those in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd are that the assessee claimed deduction of the entire cost of 8 sets of EYC systems containing 30 nodes in each set on the ground that each node of EYC system was less than Rs. 5,000 and hence the assessee was entitled to deduction of entire cost. The Assessing Officer allowed the claim of the assessee as such. The ld. CIT observed that the EYC node did not function independently but forms parts of the system which could be consisting of either 15 nodes or 30 nodes as the case may be. He further took note of the fact that 5 nodes of EYC made a lot and hence was connected by a connecting rail supplied by the manufacturer of the system. In his opinion, the assessee was entitled to depreciation on the normal rate of 25 per cent, which worked out to Rs. 2,09,265. He, therefore, made an addition of Rs. 6,27,796. 9. It was contended by the ld. AR that the EYC was an independent unit, which was installed on each drum of a winding machine and was connected to a control panel which was set to detect imperfections in yarn and removing them. By referring to a note on EYC dated 15-3-2005, it was pointed out that each EYC could have an independent control panel or a central control panel a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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