TMI Blog1996 (7) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... year 1972-73 under section 147(b) was invalid? 2. Whether the Tribunal was right in dismissing the Departmental appeal as infructuous?" Subsequent to the completion of the original assessment in the assessment year 1972-73 on March 12, 1973, the Income-tax Officer reopened the assessment on the basis of information received in the form of audit objection. In the original assessment a sum of Rs. 6,37,003 was claimed and allowed as deduction as capital expenditure on scientific research under section 35(2) of the Act. Out of this, a sum of Rs. 6,03,632 related to the laboratory building, the construction of which was started during the accounting year relevant to the assessment year 1970-71 and completed during the accounting year ended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appealed to the Tribunal. The Tribunal went through the reasons recorded by the Income-tax Officer for reopening the assessment under section 147(b) dated January 7, 1977. The Tribunal has also seen the income-tax records shown by the Department. According to the Tribunal construction of the building though started in 1969-70 was in fact completed only during the year of account. The new building was thus made fit for occupation only during the year of account. Hence, according to the Tribunal, the entire expenditure of Rs. 6,03,632 could be said to have been incurred only during the year of account and, therefore, the entire amount is allowable as expenditure incurred within the meaning of section 35(1)(iv) of the Act. The Tribunal also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of section 35(2) forms information in the hands of the Income-tax Officer for reopening the assessment under section 147(b) of the Act. In order to support this contention, learned standing counsel relied upon the decision of the Orissa High Court in Belpahar Refractories Ltd. v. CIT [1994] 207 ITR 144, wherein it was held that the words "incurred in any previous year" in clause (ia) of section 35(2) categorically laid down that the entire capital expenditure incurred in any previous year can be deducted for that previous year only. If the Legislature had intended that the capital expenditure on a capital asset could be carried forward to a subsequent year when the capital asset was finally brought into existence, there was no necessity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings under section 147(b) of the Act. Therefore, it is not correct on the part of the Tribunal to say that the audit party interpreted the law and, therefore, that would not constitute information for reopening the assessment under section 147(b) of the Act. On the other hand, learned counsel appearing for the assessee, while supporting the order passed by the Tribunal, submitted that when the original assessment was made, the assessee submitted all the informations with regard to the construction of the building in 1969-70 to 1972-73. It is only after looking into the information furnished by the assessee, the Income-tax Officer allowed deduction under section 35(1)(iv) read with section 35(2) of the Act. Pointing out the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure amounting to Rs. 6,03,632. In the original assessment, the Income-tax Officer allowed the entire expenditure, as though it was incurred only during the assessment year under consideration. The audit party pointed out that under section 35(1)(iv) read with section 35(2), only the expenditure incurred for the construction of the building in that assessment year alone can be allowed as deduction and the expenditure incurred in the previous assessment year cannot be allowed in the present assessment year. As per the decision of the Supreme Court in Indian and Eastern Newspaper Society v. CIT [1979] 119 ITR 996, an audit opinion in regard to the application or interpretation of law cannot be treated by the Income-tax Officer as info ..... X X X X Extracts X X X X X X X X Extracts X X X X
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