TMI Blog2018 (7) TMI 583X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 2091/Bang/2017 - - - Dated:- 6-7-2018 - SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER For The Appellant : Shri T. Suryanarayana, Advocate For The Respondent : Shri M. Rajasekhar, Addl.CIT(DR)(ITAT), Bengaluru. ORDER Per N.V. Vasudevan, Judicial Member This is an appeal by the assessee against the order dated 20.7.2017 of the CIT(Appeals)-V, Bengaluru relating to assessment year 2009-10. 2. The facts material for adjudication of ground Nos.1 2 are that the assessee which is a company engaged in the business of rendering software development services filed its return of income for the AY 2009-10 on 30.9.2009. An order of assessment u/s. 143(3) of the Income-Tax Act, 1961 [ the Act ] was passed by the AO on 30.4.2013. Subsequently, a notice u/s. 148 of the Act dated 28.3.2016 was issued by the AO after recording the following reasons:- The assessee has claimed depreciation claimed wrongly at 100% of the eligible depreciation while actually the assessee is eligible for claiming only 50% of the eligible depreciation. Sl. No Block of Assets Additions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding installation reports and invoices evidencing the above were also enclosed by the assessee. The assessee submitted that it had considered the 'date of put to use' for the purpose of arriving at the quantum of depreciation under section 32 of the Act and accordingly there ought to be no change in the computation of depreciation as submitted by the Company in Annexure II of the Tax Audit Report for the year ended 31.03.2009. In view of the above, it was submitted that there is no excessive claim of depreciation for A.Y.2009-10, there is no escapement of income and therefore no basis for initiating reassessment proceedings under section 147 of the Act. 5. The AO, however, did not agree with the contentions put forth by the assessee and he computed excessive claim of depreciation as shown by him in the reasons recorded and added a sum of ₹ 2,93,11,262 to the total income of the assessee on account of disallowance of depreciation. 6. Before the CIT(Appeals), the assessee pointed out that in the case of assessee for AY 2009-10, assessment u/s. 143(3) of the Act was already completed by the AO. Assessee pointed out that assessment proceedings were sought to be reo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o placed reliance on the decision of the Hon ble Gujarat High Court in the case of General Motors India Pvt. Ltd. v. DCIT, 360 ITR 257 (Guj). 9. The ld. DR relied on the order of the CIT(Appeals). 10. We have given a careful consideration to the rival submissions. Proviso to Sec.147 lays down that that where an assessment under subsection (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment for that assessment year. 11. In the present case, it is not in dispute that proviso to section 147 of the Act will apply. It is also not in dispute that when the original assessment proceedings u/s. 143(3) was completed, audit report based on which assessment proceedings were initiated was very much avai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us between the amount of ₹ 10,06,617/- and the 10A unit. The disclosure has to be full and true. Both the criteria have to be met. in the assessee's case, by failing to bring out the nexus between the 10A unit and the interest income, the assessee has not discharged its responsibility of furnishing full disclosure of facts. As set out above, the note clearly sets out the interest income earned by the STP unit and the claim of the assessee for exemption under Section 10A. It is not the requirement of law that further the assessee should show the nexus between the amount claimed and 10A unit. When he has categorically stated that the interest, which is earned from STP unit, is eligible for exemption under Section 10A, even that nexus is manifest. The Assessing Authority has not, properly applied his mind towards the statutory provisions and has not taken into consideration that the original assessment passed under Section 143(3) which was also reopened once and adjustment was made. It is for the second time, he was raising all these objections. When admittedly the second reopening of the assessment is beyond four years, under law, it is barred by time and the findings recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rusal of the Reasons recorded by the AO in this case reveals that at the time of recording of these Reasons the AO had examined original assessment records only and report of the auditor filed in those proceedings and no fresh material had come in the possession of the AO. In response to our specific query also, Ld DR could not point out any fresh material available with the AO at the time of reopening of the case of the assessee. Thus, assertion of the assessee that there was no fresh material with AO for reopening of this case, remained uncontroverted. 14. In the light of the above facts with regard to recording of reasons, let us examine settled position of law on this issue. The Hon ble Supreme Court in the case of CIT vs. Kelvinator India Ltd. 320 ITR 561 (SC), has held that for reopening of the assessment, the AO should have in its possession tangible material . The term tangible material has been understood and explained by various courts subsequently. There has been unanimity of the courts on this issue that in absence of fresh material indicating escaped income, the AO cannot assume jurisdiction to reopen already concluded assessment. The decision in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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