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TMI Blog2017 (11) TMI 1700X X X X Extracts X X X X X X X X Extracts X X X X ..... for 25% rate of depreciation as plant and machinery than 10% in building head in the relevant block involving respective disallowance/addition of Rs. 66, 81, 91, 861/- & Rs. 50, 61, 62, 320/-, in proceedings u/s. 143(3) r. w. s. 147 of the Income Tax Act, 1961; in short "the Act". 2. Next assessment year 2004-05 involves four cases. The assessee has filed its appeal ITA Nos. 3077/Ahd/2011 against the CIT(A)-I, Baroda's order dated 20. 09. 2011 in case no. CAB-I/380/2006-07 inter alia upholding Assessing Officer's action disallowing / adding deferred revenue expenditure of Rs. 180, 18, 223/-, expenditure on right to use land of Rs. 1, 74, 032/- and Rs. 17, 33, 458/- being treated as capital in nature, disallowance of lease amortization charges of Rs. 21, 42, 722/- and prior period expenses of Rs. 2, 79, 29, 239/-; respectively in proceedings u/s. 143(3) of the Act. 3. Next come assessee's and Revenue's cross appeal ITA Nos. 3078 & 3117/Ahd/2011 against the CIT(A)-I, Baroda's order dated 20. 09. 2011 in case no. CAB-I/265/08-09 inter alia upholding Assessing Officer's action taking recourse to Section 147 reopening despite the same being alleged change of opinion resulting into dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... public sector undertakings as well as in reversing depreciation disallowance of Rs. 7, 55, 64, 034/- made after treating the Jetty & Trestle in question as part of building block entitled for 10% rate of depreciation than 25% applicable in plant and machinery block; respectively in proceedings u/s. 143(3) of the Act. Heard both the parties. Case files perused. 7. A combined perusal of the above pleadings makes it clear that some of the issues involved in the instant batch of nine appeals are identical. Take for instance Revenue's sole grievance of depreciation disallowance in case of assessee's Jetty & Trestle wherein the Assessing Officer has consistently treated the same to be a building qua its port terminal entitled for 10% rate of depreciation as against the tax payers stand that the same is rather a part of its plant and machinery eligible for 25% rate of depreciation. Its other grievance in assessment years 2002-03, 2003-04 & 2004-05 seeks to revive Assessing Officer's action reopening assessments vide Section 148 notices dated 27. 03. 2009, 26. 06. 2009 & 20. 06. 2009; respectively falling to be beyond four years from the end of the relevant assessment years hereinabove. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Trestle as building block of assets instead of plant and machinery in all cases on merits as well. Its appeal ITA No. 3115, 3116, 3117, 3118 & 3119/Ahd/2011 are accordingly declined. 10. This leaves us with Revenue's appeal ITA Nos. 3120/Ahd/2011 involving the remaining issue of bad debts disallowance of Rs. 26, 14, 88, 525/- made by the Assessing Officer on the ground that the debtors in question were in fact public sector undertakings in whose cases it could not be held that the sums in question had become actually bad. He therefore invoked the impugned disallowance in assessment order dated 19. 12. 2008. The CIT(A) quotes hon'ble apex court's judgment in TRF Limited case 323 ITR 397 (SC) holding that it was nowhere incumbent for an assessee to prove that the debts in question had actually become bad w. e. f. 01. 04. 1989. There is no dispute that the assessee had been duly including the said amounts as its income in preceding assessment years or that it has actually written off the same in the impugned assessment year. We therefore hold that the CIT (A) has rightly accepted assessee's claim of bad debts. The Revenue's instant remaining ground as well as main appeal ITA No. 3120 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are of the view that the very grievance raised in the impugned assessment year stands rendered infructuous. The assessee's appeal ITA No. 3077/Ahd/2011 fails accordingly. 14. Next assessee's appeal is ITA No. 3078/Ahd/2011. Its first substantive grievance seeks to challenge validity of reopening taken recourse to by the Assessing Officer as mere change of opinion. We proceed to adjudicate the instant legal ground. It is evident that the Assessing Officer had framed a regular assessment in assessee's case on 26. 12. 2006 inter alia making various disallowances/additions. He thereafter formed reasons to believe that its taxable income liable to be assessed had escaped assessment. He therefore issued Section 148 notice dated 04. 04. 2007. The assessee in turn stated that its earlier regular return be taken as the one filed in furtherance to the above reopening notice. It also showed a copy of reopening reasons. The Assessing Officer furnished the same reading as under: "It is noticed from the case records that the amount of Rs. 128042/- paid as income tax was capitalized on 31:3. 2001 by the assessee and consequently, during the assessment year 2004-05 depreciation Rs. 18006/- has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. 2007 i. e. within four years from the end of the assessment year and hence proviso below sec. 147 is not applicable. As held by the Hon. Supreme Court in the case of Rajesh Jhaveri Stock Brokers Pvt. Ltd. (2007) 291 ITR 500 (SC), under section 147 substituted w. e. f. 1, 4. 1989, only condition required to be fulfilled for reopening within four years is that the AO must have reason to believe that income, profits or gains chargeable to tax escaped assessment. The Supreme Court held that if the reopening is within four years from the end of the assessment year, i. e. in cases not falling under proviso to sec. 147; after 1. 4. 1989, if the AO for whatever reason has reason to believe that income had escaped assessment, it confers jurisdiction to reopen the assessment. Regarding 'change of opinion', Hon. High Court of Madras in the case of Shri Shakthi Textiles Ltd. (2010) 193 Taxman 216 (Mad) after considering Supreme Court's decision in the case of Kelvinator of India Ltd. , held that there is no legal necessity that the material referred to in sec. 147 of the Act should be fresh material collected subsequent to the original assessment order and even from the materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se in case of excessive depreciation computation. It is therefore a case wherein there has been a claim of non allowable depreciation claim having gone accepted during assessment. Hon'ble apex court's judgment in Raymond Woolen Mill vs. ITO (1999) 236 ITR 34 (SC) holds that sufficient prima facie material available with an Assessing Officer pointing towards escapement of taxable income from being assessed is enough in setting into motion the reopening in question. We therefore find no merit in assessee's instant argument. Its first substantive two substantive grounds are accordingly rejected. 19. The assessee's third substantive ground pleads that the CIT(A) has erred in law as well as on facts in confirming Assessing Officer's action making disallowances/additions on issues other than those forming reasons of the reopening. We do not find any substance in the instant argument since it has already come on record that the one of the addition of depreciation of Rs. 18, 006/- (supra) itself has attained finality which formed first reason of reopening. The assessee's instant third substantive ground is accordingly rejected. 20. The assessee's forth substantive ground seeks to reverse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncrease in assessee's already installed capacity in both the above instances. Or that the repair and maintenance expenditure in question pertains to replacement of assets concerned. We therefore observe that the assessee's arguments claiming both the above items as revenue expenditure deserve to be accepted in the impugned assessment year 2004-05 as well as in 2006-07. The corresponding grounds in these assessment years challenging the impugned identical disallowance are accepted. 21. The assessee's next substantive ground assails correctness of both the lower authorities findings disallowing/adding minimum assured quantity expenditure of Rs. 54, 00, 02, 000/- (supra) is found to be covered in its case appeal ITA No. 3076/Ahd/2011 for assessment year 2003-04 decided on 19. 07. 2016 wherein the issue stands accepted against the Revenue. Learned Departmental Representative is fair enough in not pointing out any distinction in the impugned assessment year. This disallowance therefore stands deleted. The assessee's next substantive ground raised without prejudice to the instant one stands rendered infructuous. Its appeal ITA No. 3078/Ahd/2011 is partly accepted. 22. This leaves us wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tter. Appellant's contention is that section 43A is not applicable due to assets being self constructed. Appellant submitted before the Assessing Officer through letter dated 14. 11. 2008 that the capitalization of foreign exchange loss in question pertained to plant, and machinery and jetty & trestle, which were constructed in India. Thus, the foreign exchange loss in question pertained to various machines and parts imported from outside India which were used for constructing the jetty etc. in India. Section 43A is applicable in respect of increase or reduction due to foreign exchange rate in respect of any assets acquired from outside India and machines and parts used for constructing the jetty etc. were 'assets' by themselves and exchange rate loss/gain in their respect would also be governed by section 43A. Further, Supreme Court in the case of ONGC (2010 189 Taxman 292 (SC) held that "actual payment" is a condition under amended section 43A w. e. f. 1. 4. 2003 and such payment of decreased/enhanced liability on account of fluctuation in foreign exchange rate has been made a condition precedent for making adjustment in the carrying amount of fixed assets. Since in appel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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