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Unichem Laboratories Ltd Versus DCIT-5 (3) , Mumbai

2015 (9) TMI 429 - ITAT MUMBAI

Validity of reopening of assessment - Held that:- AO assumed the jurisdiction u/s 148, once a definite information was received from the office of DIT (Invt.), Ludhiana. This, according to us is a good enough reason to initiate proceedings for reopening. As mentioned by the revenue authorities that it was not a case, where four years had elapsed and that the AO needed some evidence of incriminatory nature to initiate the reassessment proceedings.We, therefore sustain the order of the CIT(A) on t .....

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we find that as a consequence of award of the Arbitration in favour of the assessee, the assessee was able to repossess the equipment and sell the same on as is where is basis. The factual aspect of claim and allowance of depreciation has been held to be in favour of the lessor, by the courts.

As the fact that the assessee repossessed the APEC equipment and sell it, goes to prove the genuineness of the transaction and the title of the equipment always lay with the assessee. In these c .....

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t assessment has been validly reopened. The conditions necessary for re-opening of the assessment not being satisfied in the present case, the reopening of the assessment ought to be held to be without jurisdiction and invalid and the assessment order passed ought to be cancelled. 2. Learned CIT (A) has erred in confirming the disallowance of depreciation of ₹ 1,19,88,000/- on the Air Pollution Control Equipment leased to Prakash Industries Ltd on the ground that the real nature of the tra .....

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itiation of reassessment proceedings u/s 148. 3. The facts in the proceedings are that the instant proceedings are 2nd round after having been set aside by the order of the ITAT. In the assessment order, the AO mentions that vide ITAT order, the AO was invested with twin jurisdiction, i.e. (i) to consider the submissions of the assessee afresh with regard to reopening of assessment u/s 147 and (ii) to consider the ratio laid down in the case of Asea Brown Boveri Ltd. on the facts of the case. 4. .....

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the supposed equipment was presumed to have been supplied by M/s Sahib Engineering Works, Ludhiana, to the assessee and not by the assessee, who in turn had acquired the equipment from M/s Ashish Engineering Works, Durg. On receipt of this information, the case of the assessee was reopened u/s 147 by recording the following reasons, "A report dated 11/03/1999 DI (Inv) Ludhina addressed to DG (Inv), New Delhi and CC II, Mumbai states that in course of investigation into Prakash Industries i .....

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on control equipment) has been entered into for ₹ 1,19,88,000/- between Unichem Lab Ltd. and M/s. Prakash Industries, which has resulted in a claim of depreciation of ₹ 1,19,88,000/- of Unichem Lab Ltd. for AY 95-96. The order u/s. 143(3) in this case for AY 95-96 has apparently allowed this claim of depreciation. Now on receipt of this report from DI (Inv) Ludhiana, since there is prima facie reason to believe that depreciation of ₹ 1,19,88,000/- has been wrongly allowed to th .....

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ion u/s 148, once a definite information was received from the office of DIT (Invt.), Ludhiana. This, according to us is a good enough reason to initiate proceedings for reopening. As mentioned by the revenue authorities that it was not a case, where four years had elapsed and that the AO needed some evidence of incriminatory nature to initiate the reassessment proceedings. 7. We, therefore sustain the order of the CIT(A) on this issue and sustain the reopening of assessment u/s 147/148. 8. Grou .....

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rks, Ludhiana. On the other hand, the department had cracked the racket of hawala transactions wherein PIL was one of the beneficiary. It was also noticed that the name of the assessee also appeared in the list of dubious transactions, prepared by the joint Investigation Wings at various places, featuring at sl. No. 68. 10. In the proceedings before the revenue authorities, the assessee submitted detailed evidence to prove that the transaction in question was an actual transaction and submitted .....

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made by the assessee. 11. Against this order of the CIT(A), the assessee is in appeal before the ITAT. 12. Before us the AR submitted the entire facts, pertaining to the case. The AR submitted before us the copy of lease Agreement dated 24.09.1994, signed by Unichem Laboratories Ltd. (assessee as lessor) and PIL (as lessee) and also pointed out that the ITAT in its order dated 10.07.2007 have held that the instant transaction was a genuine transaction and not just a paper transaction as comprehe .....

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financed by the assessee in the names of third parties. This ratio was applied in the decision of the coordinate Bench at Mumbai in the case of DCB Bank Ltd. vs DCIT, ITA No. 3000/Mum/2001 and 4892/Mum/2003 and other connected appeals of the assessee for various assessment years (wherein one of us was a party). The issue of depreciation came up in the case of IndusInd Bank Ltd. vs Add. CIT, reported in 135 ITD 165 (Mum SB), wherein the SB held that "only lessor can claim depreciation in ca .....

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