TMI Blog2017 (6) TMI 139X X X X Extracts X X X X X X X X Extracts X X X X ..... ave to be preceded by spelling out the tangible fresh material that led the AO to come to that conclusion. None of this is found in the reasons to believe recorded by the AO in the case on hand. The necessity for tangible material to be present to trigger the reopening was emphasized in Commissioner of Income tax v. Orient Craft Ltd. (2013 (1) TMI 177 - DELHI HIGH COURT ). The repeated assertion by Mr. Manchanda that the claim for depreciation for AYs 2006-07 and 2007-08 was disallowed by the AO is not entirely correct. It overlooks the history of the litigation around the claims for those AYs with both ending in the Assessee ultimately succeeding on the point after the remand to the AO by the ITAT for AY 2006-07 and the level of the CIT (A) for AY 2007-08 . Mr. Manchanda has also not been able to counter the submission that for AYs 2011-12 and 2012-13 the same claim for depreciation has been allowed. - Decided in favour of assessee. - W.P.(C) 519/2016, W.P.(C) 522/2016 & W.P.(C) 761/2016 - - - Dated:- 30-5-2017 - S. MURALIDHAR CHANDER SHEKHAR JJ. Petitioner Through: Mr. Salil Kapoor, Mr. Sanat Kapoor, Ms. Ananya Kapoor, Mr. Sumit Lal Chandani and Ms. Soumya Singh, Adv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6-07, Mr. Salil Kapoor, learned counsel for the Petitioner states that the said disallowance was deleted by the AO in view of what transpired in the later AYs. 8. As far as AY 2007-08 was concerned, the AO again disallowed depreciation following his earlier order for AY 2006-07. However when the matter went in appeal at the instance of the Assessee, the CIT (A) by an order dated 6th September, 2013 (for AYs 2007-08) deleted the disallowance by holding as under: It is seen from the assessment order that the assessing officer has disallowed capitalization of the legal and professional charges by placing reliance on Article 13.4 of the Business Transfer Agreement according to which the seller (HML) shall bear all the cost and expenses (including professional fees and cost of advisors and counsel) in relation to this agreement. The Assessing officer there after refers to Section 43(1) wherein 'actual cost' is defined and Section 43(2) where in the word 'paid' is defined. The Assessing Officer held that since the liability to pay the professional and legal charges as per the agreement was that of the Hindustan Motors Limited therefore in view of the provision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ler) and Avtec Ltd. (Purchaser) which read thus: 13.4 Expenses The seller shall bear all the costs and expenses (including professional fees and costs of the advisors and counsel) in relation to this Agreement and the transactions contemplated herein, including in relation to all documents which are to be executed in accordance with the terms hereof . Since the seller i.e. Hindustan Motor Ltd. bore all the cost and expenses including professional fees therefore depreciation on professional charges capitalized to various blocks amounting to ₹ 7,16,299/- is not allowed as per the provision of section 43(1) of IT Act, 1961. In view of the above, I have reason to believe that due to failure on the part of the assessee to disclose all the material facts truly or fully, income of ₹ 7,16,299/- have escaped assessment. In view of above proceedings u/s 147 is to be initiated to assessed the income chargeable to tax which has escaped assessment (total amount of ₹ 7,16,299/- as discussed above on account of assessee s failure to disclose fully or truly all material facts necessary for its assessments for AY 2008-09. Necessary sanction of issue of no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner of Income tax, Delhi v. Kelvinator of India Ltd. [2010] 187 taxman 312 (SC). Reliance was also placed on the decisions of this Court in Mohan Gupta (HUF) v. Commissioner of Income Tax [2014] 366 ITR 115 (Del) and Commissioner of Income tax v. Orient Craft Ltd. [2013] 354 ITR 536 (Del) which was affirmed by the Supreme Court by the dismissal of the Special Leave Petition filed by the Revenue on 20th January, 2014. 16. In reply, Mr. Ashok Manchanda, learned counsel for the Revenue, submitted that although the Petitioner may have disclosed the BTA and the fact of claiming depreciation by allocating the professional legal charges etc. as capital expenses to the block of assets for claiming depreciation thereon for AY 2006-07 and 2007-08, no such disclosure was made at the time of assessment for the AYs 2008-09, 2009-10 and 2010-11. According to him, in none of the three AYs did the Petitioner mention in its return filed or during the assessment that this was a disputed claim and was disallowed by the AO for AYs 2006-07 and 2007-08. In the assessment orders for these three AYs, therefore, there is no discussion in relation to this issue. It inadvertently escaped the att ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e a full and true disclosure of all material facts relevant to the assessment. 21. Mr. Manchanda sought to emphasize that each AY was different and, therefore, the AO was not obliged to look into the previous records. The Court is unable to agree with this approach of the AO. If the AO was seeking to invoke Section 148 of the Act for AYs 2008-09 to 2010-11 it was incumbent on him to ascertain the status of the identical claim in the earlier AYs. After all he was seeking to reopen an assessment only on the aspect of the claim of depreciation. On this very aspect the Revenue had for AY 200607 taken the matter up to the ITAT and the matter had been remanded to the AO. For AY 2007-08, the CIT (A)'s order allowing the claim had attained finality. These facts could not have escaped the attention of the AO. In any event, there was no fresh material that the AO came across to warrant reopening of the assessments for AYs 2008-09 and 2009-10. The plea that the AO inadvertently allowed the claim for depreciation for AYs 2008-09, 2009-10 and 2010-11 cannot in the circumstances be accepted. 22. The Supreme Court in Commissioner of Income tax v. Kelvinator of India Ltd. (supra) while a ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
