TMI Blog2018 (5) TMI 1538X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. The impugned order passed under section 263 of the Act is barred by limitation prescribed under section 263 of the Act, since, it was passed more than two years after the end of the financial year in which the original assessment order - Decided against the revenue. - ITA no.4025/Mum/2017 And ITA no.4026/Mum/2017 - - - Dated:- 23-5-2018 - SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER For The Assessee : Shri Sanjay R. Parikh For The Revenue : Shri Abhijit Patankar ORDER PERSAKTIJIT DEY, J.M. These two appeals by the assessee are against two separate orders of the learned Principal Commissioner of Income Tax, Mumbai, passed under section 263 Income Tax Act, 1961 (for short the Act ) for the assessment years 2009 10 and 2010 11. ITA no.4025/Mum./2017 A.Y. 2009 10 2. In grounds no.1 and 2, the assessee has challenged the impugned order passed under section 263 of the Act to be barred by the limitation prescribed under the statute. Ground no. 4 and 5 are on the issue of validity of exercise of jurisdiction under section 263 of the Act as well as on merit. 3. Brief facts are,the assessee a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act with a direction to verify the details of the property given on rent and as well as used for business for determining the value of the property which can be considered as related to the business activity for determining the correct depreciation allowable under the Act. 4. The learned Authorised Representative submitted, the re opening of assessment under section 147 of the Act was made by the Assessing Officer for the specific purpose of bringing to tax the bogus purchases alleged to have been made from a party. He submitted, the issue of claim of depreciation on which the revisional authority exercised his power under section 263 of the Act was never a subject matter of dispute in the proceedings initiated under section 147 of the Act and the order passed in consequence thereof. He submitted, if at all, the issue relating to claim of depreciation will be arising out of the original assessment order passed under section 143(3) of the Act. Referring to the provisions of section 263(2) of the Act the learned Authorised Representative submitted, as per the said provision, the order under section 263 of the Act has to be passed before expiry of two years from the end of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been accepted by the Department. He submitted, in the impugned assessment year the assessee has claimed depreciation on the opening written down value of the building. He submitted, during the year, the depreciation claimed by the assessee was on a block of asset of which the building is a part of. Referring to the provisions of section 43(6)(c) of the Act, he submitted, as per the said provision, in the case of block of asset, the Assessing Officer can make adjustment to the written down value of the assets within the block either by increasing the actual cost of any asset acquired during the previous year or reducing the value of any asset within the block which is sold or discarded or demolished during the previous year. Drawing our attention to the depreciation schedule, a copy of which is at Page 5 of the paper book, he submitted, there is neither any acquisition of asset nor reduction of the value of asset in terms of section 43(6)(c) of the Act requiring adjustment of the written down value. Thus, he submitted, under no circumstances depreciation claimed by the assessee on the written down value can be disallowed in the impugned assessment year when the Department has a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the order dated 30th March 2015, passed under section 143(3) r/w section 147 of the Act, we find the aforesaid submission of the assessee to be correct. A reading of the reassessment order makes it clear that the re opening of assessment was made only for the purpose of bringing to tax the alleged bogus purchases made by the assessee from M/s. Vinay Trading Co. Thus, it is clear from the facts on record that the issue of claim of depreciation on the building was never an issue in the re assessment proceedings.Rather, the issue of claim of depreciation, if at all, arises out of the original assessment order passed under section 143(3) of the Act on 28th November 2011.Therefore, the issue before us is, whetherthe limitation period of two years as prescribed under section 263(2) of the Act is applicable from the original assessment order passed under section 143(3) of the Act 28.11.2011 or the order dated 30th March 2015, passed under section 143(3) r/w 147 of the Act? The Hon'ble Jurisdictional High Court in Lark Chemicals Ltd. (supra) while dealing with identical issue has held that if the issue on which the proceedings under section 263 of the Act is initiated is not a subj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Allahabad High Court as referred to above, we hold that the impugned order passed under section 263 of the Act is barred by limitation prescribed under section 263 of the Act, since, it was passed more than two years after the end of the financial year in which the original assessment order dated 28th November 2011, under section 143(3) of the Act was passed. Thus, the impugned order passed under section 263 of the Act is invalid, hence, deserves to be quashed. 9. Having held so, we propose to deal with the merits of the issue. As could be seen from the facts of the record, the building on which the assessee has claimed depreciation was partly used for the purpose of business and part of it was let out and the rental income received from the letout portion was offered as house property income. However, the assessee claimed depreciation on the part of the building used for the purpose of business which also formed part of the block of asset. It is seen from record, out of the total value of the building at ₹ 15,56,05,819, the assessee had allocated an amount of ₹ 7,92,92,270 towards the part of building used for business and such allocation was made by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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