TMI Blog2016 (12) TMI 119X X X X Extracts X X X X X X X X Extracts X X X X ..... r Section 32 read with Section 43 of the IT Act. Consequently the assessee is held entitled to depreciation at the rate of 25% as prescribed for plant and not at 10%, as applicable for building. - ITA No. 7/2014 & ITA No. 8/2014 - - - Dated:- 22-11-2016 - MR. HRISHIKESH ROY MR. JUSTICE NELSON SAILO JJ. For the Appellant: Mr. U.K. Borthakur Mr. D. Nath. . Advocates. For the Respondent: Mr. S. Sarma, Standing Counsel, Income Tax. JUDGEMENT AND ORDER (ORAL) (Hrishikesh Roy, J). Heard Mr UK Borthakur, the learned counsel for the appellant/assessee. Also heard Mr S Sarma, the learned Standing Counsel, Income Tax Department on behalf of the respondent. 2. These appeals have been filed under Section 260A of the Income Tax Act, 1961 (here-in-after referred to as the I.T. Act ), against the common order dated 13.12.2013 (Annexure-D) in the ITA No.4/Gau/2011 and the ITA No.5/Gau/2011 respectively of the Income Tax Appellate Tribunal, Guwahati Bench, whereby the Appeals preferred by the assessee were dismissed by declaring that the Assessing Officer was justified in re-assessing the tax, for excess claim towards depreciation, since the Gotanagar Truck Termi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 148 of the I.T. Act and they contended in their letter dated 18.7.2007 as follows :- The truck terminus has been constructed on a plot of land measuring 27 Bighas (36,415 sq. mtr.) of land allotted by Government of Assam. We spend an amount of ₹ 193.82 lakhs on development of land for construction of truck parking yards, RCC ramp for truck washing, dormitory for the truck drivers, lavatory to be used by the trucks drivers with an intention to earn income by way of parking fees from the trucks to be parked there. Around 300 trucks can be parked at a time there in the truck terminus. To earn the said income we made some investments like construction of ticket counter and office room measuring approximately 100 sq. mtr. We are earning income by way of parking fee only and not rent. Thus, the asset under the head Gotanagar Truck Terminus should be considered as plant and not as building . 7. However the above projection of the assessee was rejected and the Assessing Officer observed that plant as defined in Section 43(3) does not include building and the truck terminus with its superstructure and the land appurtenant thereto can t be a plant. Moreover earning thro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions, it requires fulfillment of one condition namely the AO has reason to believe that income has escaped assessment. Once, the said condition is fulfilled, the AO has the jurisdiction to take action under Section 147 of the Act. There being no finality of the assessment at the notice under Section 143(1) of the Act, it will be justified for the AO to take into consideration the materials placed before him by the assessee along with the original return of income. If such materials has escaped noticed of the AO, for whatever may be the reason, it is open to the AO to take into consideration such materials already available before him for forming believe within the meaning of Section 147 of the Act that there is escapement of income chargeable to tax. In the instant case, only intimation under Section 143(1) was received which are not orders of assessment. The proceeding under Section 147 of the Act, which was initiated by the AO on 10.04.2007 within four years from the end of the relevant assessment year, and the AO was satisfied that he has reason to believe that profit and gain chargeable to tax has escaped assessment in view of Explanation 2(b) to Section 147 of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer. In the instant case no reasons are disclosed by the Assessing Officer to proceed under Section 147/148 of the I.T. Act and therefore the entire proceeding is contended to be without jurisdiction. 10.2 Referring to the order passed by the assessing officer on 10.04.2007, the learned counsel for the assessee submits that what exactly was the basis of the belief of the Assessing Officer for initializing reassessment proceeding, is not disclosed in the order with which, the proceeding was started under Section 147 of the I.T. Act against the assessee and accordingly it is argued that the reassessment process is without any legal jurisdiction. 10.3 The appellant contends that the reason to believe has to be based on tangible and intelligible materials and there must be reasonable nexus of the materials with the belief of the Assessing Officer and unless the relevant material is discernable on the face of the order passed by the assessing officer, the same cannot be supplemented thereafter, through additional reasoning. 10.4 The appellant contends that income is earned from the truck terminus for which parking fee is collected and therefore the tangible asset fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the IT Act was justified on the materials. This Section allows the assessing officer to reassess income only if, he has reason to believe that income for concerned assessment year has escaped assessment. The material basis for the reason to believe will justify the action of the Assessing Officer to act against a particular assessee. Therefore it is relevant to determine whether relevant materials existed on which reasonable person could have formulated the requisite belief to conclude prima facie that, income for the concerned assessment year, has escaped assessment. 12. When the assessing officer takes action under Section 147 of the IT Act and issues notice for reassessment under Section 148, he has to record his reasons and such reasons is subject to judicial scrutiny. The expression reason to believe was explained in various decisions and the substance of the conclusion in those decision are culled out by our Court in CIT Vs. Shiv Shakti Flour Mills (P) Ltd, reported in (2010) 327 ITR 430 (Gauhati) in the following passage:- 14. The expression reason to believe came to be discussed in various decisions of various High Courts as well as of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erials. In other words, there must be rational or intelligible nexus between the reason and the belief so that any reasonable person properly instructed on facts and on laws, can reasonably entertain the belief needed for acting under Section 147 of the IT Act. It is also important that the relevant materials must appear from the order whereby the Assessing Officer has decided to proceed with the reassessment and the satisfaction of the officer cannot be supplemented by the Revenue, through subsequent explanation/affidavit. The validity of the action under Section 147 should therefore be construed objectively from reasons disclosed in the order itself and not with any supplementary explanation. 14. The Supreme Court while examining the power for ordering re-assessment in Commissioner of Income Tax Vs. Kelvinator of India Ltd. reported in (2010)320 ITR 561(SC) , referred to the CBDT Circular No. 549 dated October 31, 1989 and observed that the power conferred upon the Assessing Officer to reopen assessment on the basis of just his opinion, was taken away and the expression reason to believe was reintroduced in Section 147. Therefore the Apex Court opined that the power to reop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income, can be a plant and need not connote only factories or require use of machineries. Of course buildings are excluded from the definition of plant, under Section 43(3) of the IT Act. 18. In the above context, the Madhya Pradesh High Court in Babul Agrawal Vs. Commissioner of Income-Tax reported in (2005)272 ITR 454(MP) was considering whether depreciation on open plinth godowns provided by the assessee, to store FCI rice, should be allowed depreciation at the rate prescribed for building and not as plant. Answering the question, the Division Bench made the following observation: 13. ... On a careful perusal of the same, we are of the considered view that it is the functional test which becomes the real criteria for treating a particular tool as plant or not. As has been indicated by their Lordships of the apex court, the definition of the term plant is of a wide magnitude. In the instant case, as is perceptible, the assessee is not involved in letting out the premises to earn rent. It is evincible from the analysis made by the first appellate authority, the assessee is trading with godowns, structure is a temporary measure, it is like a platform as is ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal, through his order dated 09.11.2010 (Annexure-C). Also before the Tribunal, the jurisdictional question to act under Section 147 of the IT Act was again raised by the assessee and the Tribunal too rejected the contention. Moreover, the substantial question of law formulated by the High Court when the appeals were admitted on 24.06.2014 touches on the jurisdictional question for reopening of assessment under Section 147/148 of the IT Act, this being an important question of law going to the very foundation of the reassessment proceeding. Therefore in our considered understanding, this question cannot be left out of consideration in the proceeding under Section 260A of the IT Act. Moreover, the relevant facts pertaining to the jurisdictional question are already on record and therefore no impediment is noticed to answer the question of law posed before us. The jurisdictional question of law arises from the fact found by the Income Tax authority i.e. earning from parking fee collected from truck terminus and since tax liability of the assessee is dependent on this very issue, the contention raised by the learned counsel for the Revenue that this question cannot be examined by us i ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
