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2015 (6) TMI 1019 - ITAT MUMBAI

2015 (6) TMI 1019 - ITAT MUMBAI - TMI - Reopening of assessment - assessee had claimed depreciation in respect of tenancy rights, whereas according to the provisions of section 32 depreciation is allowable only on tangible assets and the amended provisions for depreciation pertaining to intangible assets also does not include within its fold, tenancy rights and that so, due to the wrong claim of depreciation made by the assessee, income had escaped assessment - Held that:- There was no tangible .....

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ng the completed assessment of the assessee were recorded. The reasons recorded, as reproduced above, do not talk of any independent tangible material having come to the notice of the A.O. In “CIT vs. Orient Craft Ltd.” (2013 (1) TMI 177 - DELHI HIGH COURT ), it has been held, inter alia, that the expression “reason to believe” cannot have two different standards and sets of meaning one applicable where the assessment order earlier made u/s 143(3) of the Act, and another applicable where the int .....

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me in the possession of the A.O. subsequent to the issue of the intimation u/s 143(1) of the Act, as such, and therefore, the notice reflected an arbitrary exercise of the power conferred u/s 147 of the Act.

It is held that in the absence of any tangible material before the A.O., the A.O. was not entitled to invoke the reassessment jurisdiction and to proceed to reopen the completed assessment of the assessee. Accordingly, the reassessment proceedings are found to be void ab initio, a .....

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6,23,587. 2. The learned Commissioner (Appeals) was wrong in concluding that tenancy rights did not fall within the block of Intangible Assets. 3. The learned Commissioner (Appeals) failed to appreciate that tenancy rights were a form of licence. As regards addition of Payment to Retired Partner 4. The learned Commissioner (Appeals) erred in confirming addition of payment made to a retired partner of ₹ 25,85,617 in terms of the partnership deed. 5. The learned Commissioner (Appeals) failed .....

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by way of an application:- The Learned Assessing Officer was not justified in reopening the assessment u/s 147 of the Act. The resort to the provisions of section 147 as also the order passed consequent thereto, are illegal and invalid. 3. Apropos the admission of the additional ground, it is seen that this additional ground is a legal ground. Though it has been raised for the first time before us, since it involves a purely legal issue, affecting the tax liability of the assessee and since it d .....

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ar as regards the merits of the additional ground, the ld. Counsel for the assessee argued that there was no tangible material before the A.O. at the time of recording of the reasons for re-opening the completed assessment of the assessee, so as to enable the A.O. to form a belief of escapement of income. Thus, according to the ld. Counsel for the assessee, the completed assessment of the assessee has wrongly been reopened. 5. On the other hand, the ld. D.R. has contended that in the return of i .....

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reopened. 6. We have heard the parties on this legal issue. The A.O. recorded the following reasons for reopening the completed assessment of the assessee:- The assessee M/s Wadia Gandhy & Co assessed under PAN AAAFW1081H has filed its return of income for the A. Y 2005-06 on 2611012005 admitting total income of ₹ 10,68,01,850/- and the return of income has been processed u/s 143(l)(a). On perusal of the return of income, it is seen that the assessee has claimed depreciation of ₹ .....

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now-how, patents, copy right, trade marks, licenses or franchises or any other business or commercial receipts of similar nature acquired on or after Ist April, 1998. In view of the above, the assessee's claim of depreciation of ₹ 36,23,5871- on the tenancy right property under intangible assets is not allowable and hence in my opinion, I have reasons to believe that the assessee has made a wrong claim of depreciation at ₹ 36,23,587/- which has escaped assessment and therefore if .....

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le only on tangible assets and the amended provisions for depreciation pertaining to intangible assets also does not include within its fold, tenancy rights and that so, due to the wrong claim of depreciation made by the assessee, income had escaped assessment. 8. Thus, evidently, there was no tangible material available with the A.O. at the time of recording of reasons for initiating reassessment proceeding so as to enable such reassessment proceedings to be initiated, the return of income file .....

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