TMI Blog2010 (11) TMI 570X X X X Extracts X X X X X X X X Extracts X X X X ..... the department and the Cross objections by the assessee. Both of them are directed against the order of the CIT(A) dated 9th June, 2010 for assessment year 2002-03. Grounds of appeal and grounds of Cross Objections are as under:- ITA No.4173/Del/2010 1. The order of Learned CIT (Appeals) is erroneous contrary to facts law. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT (Appeals) has erred in annulling the assessment order passed u/s 147/143 (3) of the IT Act 2.1. The Ld. CIT (Appeals) ignored the fact that the case of the assessee was opened u/s 147/148 of the IT Act after following due procedure laid down by law. 3. On the facts and in the circumstances of the case and in law, the learned CIT (Appeals) has erred in deleting the addition of Rs.46,78,313/- made by the A.O. by restricting the depreciation on ITG Networking Equipment @ 25% as against 60% claimed by the assessee without discussing the merits of the addition made by the A.O. 4. The appellant craves leave to add, to alter, or amend any grounds of appeal raised above at the time of hearing. CO. No.345/Del/2010 1. Based on the facts and circumstances of the case, the not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment was completed u/s 143(3) on 29th March, 2005 at an income of Rs.24,12,86,195/-. Thereafter, upon noticing that the assessee had claimed depreciation @ 60% amounting to Rs.80,19,964/- on ITG networking equipment which, according to the Assessing Officer, was to be allowable @ 25% i.e., a sum of Rs. 33,41,651/-, therefore, excess claim resulted in underassessment of income at Rs.46,78,313/-. Accordingly, notice u/s 148 was issued, copy of which is placed at pages 100 and 101 of the paper book. The notice issued u/s 148 is dated 18th /23rd July, 2007 and with the said notice, the reasons for issuing the notice u/s 148 as filed at page 101 of the paper book are as below:- Microsoft Corporation India Pvt. Ltd. Assessment Year 2002-03 Reasons for issuing notice u/s 148 of the IT Act, 1961. In the case of M/s Microsoft Corporation India Pvt Ltd., it has been found that depreciation on networking equipments has been allowed inadvertently @ 60% under the category of computer whereas it should have been allowed @ 25% as in the case of Plant and Machinery , as Networking equipments forms a part of plant and machinery. The incorrect allowance of incorrect depreciati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns for reopening the assessment and relying upon the findings recorded by the CIT (A) that there was no failure on the part of the assessee to disclose fully and truly all material facts, Ld. AR submitted that CIT (A) has rightly quashed the assessment order on the ground that re-assessment proceedings were time barred. 8. Ld. AR further placed reliance inter alia upon the following two decisions of Hon ble Delhi High Court:- (i) Well Intertrade Pvt. Ltd. (formerly Wel Intertrade Ltd.) Another, Petitioners v. ITO (2008) (308 ITR 22) (ii) M/s Haryana Acrylic Manufacturing Company v. CIT-IV and Another 308 ITR 38. 9. These decisions were relied upon by him for raising the contention that where the assessee has disclosed fully and truly all material facts necessary for assessment, pre-condition for invoking proviso to section 147 is not satisfied and notice as well as proceedings pursuant thereto are liable to be quashed and also the contention that where reasons recorded did not indicate the failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment, then also, the initiation of re-assessment proceedings would be w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for its assessment for that assessment year. 12. According to the facts of the present case, it is not the allegation of the department that the assessee did not file return either u/s 139/142 (1) or u/s 148. It is found that in response to notice u/s 148 the assessee vide letter dated 30th August, 2007 has offered the income as per revised return filed on 31.03.2004. Such fact is stated in the reply filed by the assessee dated 8th January, 2008, copy of which is filed at pages 102 to 112 of the paper book. Thus, returns having been filed in response to notice u/s 139 as well as section 148, the other condition to be fulfilled for non-applicability of first proviso to section 147 is that there should not be a failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. From the above discussion, it has already been made clear that neither it is the allegation of the Assessing Officer that there was any such failure of the assessee nor the record has shown such failure. Rather, the issue on merit was required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h were also annexed with the return of income. In the light of these facts, it will be difficult, well nigh impossible, to conclude that there was a failure to disclose all material facts on the part of the assessee. It is also clear that no allegation of the failure has been made in the recorded reason which was supplied to the assessee. Therefore, it is held that the pre-condition, as mentioned above, for issue of notice u/s 148, is not satisfied or even does not exist. It is not a case where the information lay embedded, which the department could discern but did not discern. The information was disclosed in the most transparent manner in the statement of income, which was adopted in the assessment order. Therefore, the ratio of the decision of jurisdictional High Court, mentioned above, is squarely applicable to the facts of the case. Accordingly, it is held that the AO did not have jurisdiction to issue notice u/s 147. Consequently, assessment made thereon was bad in law. 14. So far as it relates to merits of the issue i.e., regarding grant of depreciation @ 60% on ITG networking equipments, it was the contention of Ld. AR that this issue is covered in favour of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... integrated with a computer . In other words, when a device is used as part of the computer in its functions, then it would be termed as a computer. 15. We find that vide letter dated 17th March, 2005 submitted by the assessee to the. Assessing Officer during the course of original assessment proceedings, the note as required by the Assessing Officer with regard to justification of claim of depreciation @ 60% was submitted as under : 14. Note on depreciation rate of 60 per cent on ITG networking equipments. As-per the Income Tax Rules, 1962 ( the rules ), depreciation is available on computer and computer software at the rate of 60 per cent. The definition of computer systems has been provided under section 36(1)(xi) of the Act to mean: a device or collection of devices including input and output support devices and excluding calculators which are not programmable and capable of being used in conjunction with external files, or more of which contain computer programmes, electronic instructions, input data and output data, that performs functions including, but not limited to logic, arithmetic, data storage and retrieval, communication and control As evident from th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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