9911796707
TMI Blog2019 (3) TMI 2037X X X X Extracts X X X X X X X X Extracts X X X X ..... 47 of the Act. 2. That the learned A O has failed to provide any tangible material which has come to his notice and requires reopening of the assessment as per judgment of the Hon'ble Supreme Court cited as 320 ITR 56\ that the reasons must have a link with the formation of the belief. 3. That the learned A O has failed to dispose off preliminary objection no. 4 as such the order passed without disposing off preliminary objections fully deserves to be set aside as it is against the judgment of the Hon'ble Supreme Court cited as GKN Driveshafts (India) Ltd Vs. Income Tax Officer & Another (2003) 259 ITR 19(SC). 4. That the learned A0 has erred in adding Rs. 36,27,13,237/- under Section 35AD of the Act without going into the facts and merit of the case. 5. That the learned AO has not followed the law laid clown by the Hon'ble Supreme Conn in the case of CIT Vs Vegetable Products Ltd., [1973] 88 ITR 192 (SC) that if two reasonable constructions of a taxing provision are possible, that construction which favours the assessee must be adopted." 3. Apart from that, the assessee has also taken the following additional grounds of appeal : 1. That the learned A 0 has o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he year under consideration i.e. assessment year 2011-12 because of wrongful allowance of the claim u/s 35AD of the Act. He, therefore, after recording reasons as re-opening the assessment for the year under consideration. 5. A perusal of the aforesaid reasons recorded by the AO reveals that the AO had come into the knowledge of escapement of income of the assessee while conducting the assessment proceedings u/s 143(3) of the Act for the subsequent assessment year. Hence, it cannot be said that no information had come to the knowledge of the AO or that it was a case of change of opinion. Though before forming the opinion, the AO has also noted that the aforesaid issue escaped the attention of the AO for the year under consideration and the AO was of the view that the assessee was not entitled to the aforesaid claim of deduction u/s 35AD of the Act. In view of this, it cannot be said that it is a case of change of opinion or that no tangible information had come into the possession of the AO to form the belief of escapement of income for the year under consideration. 6. The next point raised by the ld. Counsel through additional grounds of appeal is that the sanction of the compet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s subjective and depends upon the facts of each case. After going through the relevant record, we do not think that the Joint Commissioner has not applied his mind while granting approval. Though the ld. Counsel in this respect has relied upon the decision in the case of Shri Ghanshyam Vs ITO, ITA No. 238/Agra/2018 and another vide order dated 19.06.2018, however, in view of our factual finding recorded above, the case law cited by the ld. Counsel cannot be applied to the case in hand. No other argument has been addressed in relation to ground Nos. 1 to 3 and additional grounds of appeal. 9. In view of this, ground Nos. 1 to 3 and additional ground of appeal are hereby dismissed. 10. Now coming to the issue on merits taken by the assessee vide ground Nos. 4 and 5 of the appeal. The brief facts relating to the issue are that the assessee has claimed deduction u/s 35AD of the Act from its profits on account of construction of warehouses in different Districts of Haryana, however, the AO has disallowed the deduction observing that as per the proviso to Section 35AD of the Act, the expenditure incurred wholly and exclusively for the purpose of any specified business shall be allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13. In our view, the lower authorities have wrongly interpreted the relevant provisions of the Act. There are two parts of the abovesaid provisions. In the first part, it has been mentioned that an assessee is eligible to claim deduction of the capital expenditure if such an expenditure has been incurred wholly and exclusively in a specified business. There is no condition of any date or year of commencement of specified business. However, in the second part, it has been provided that if such an expenditure has been incurred prior to the commencement of business and has been duly capitalized in the books of account, the claim will be allowed in the year in which the assessee commences operations of his specified business. There is neither any overlapping nor any contradiction in the aforesaid provision. The assessee is covered in the first part i.e. the assessee has incurred the expenditure on the specified business during the year in which operations of his business of warehousing were already going on. In view of this, we do not find any justification on the part of the lower authorities in denying the deduction to the assessee u/s 35AD of the Act. This ground is, accordingly, al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is regard, we find that it is the contention of the assessee that assessee is a public sector undertaking and is a vast organization. The expenses when not reported or identified up to the close of the year are subsequently booked under prior period expenses. This system of accounting of the assessee has been regularly accepted by the Department in the past. There is no change in the facts and circumstance of the case. It has also been submitted that necessary details were duly submitted before the Assessing officer that all of the expenses are supported by proper vouchers supporting evidence. It is not the case of the Assessing officer that any short coming has been noted in the vouchers. This is also not the case that any distortion in profit has been observed as compared to preceding year in view of the above said expenditure. In these circumstances, in our considered opinion, the Revenue has no cogent reason why the prior period expenses claimed by the assessee which have been consistently so claimed and allowed by the Department in earlier years should be disallowed in the current year. 19. A perusal of the order of the CIT(A) also reveals that the ld. CIT(A) has also followe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isallowance on account of machinery work in progress is called for. Even if, any disallowance for capital work in progress of Rs. 6,80,90,888/-is considered, the appellant has claimed that it did not borrow any interest bearing loan for capital work in progress during the year and all loans are brought forward against godowns which are fully constructed and in use. Further, the appellant is found to be having sufficient own funds. As per the balance sheet as on 31.03.2013, the appellant has reserve fund of Rs. 199.43 Crores and share capital of Rs. 5.84 Crores while the capital work in progress is only Rs. 6.80 Crores. The opening capital work in progress was Rs. 3,01,17,406/-. The appellant has also submitted that no addition was made on this account in the previous assessment year and huge own funds were available. I find that the AO has not established that any interest bearing funds were utilized during the year for further investment in opening capital work in progress. In view of the decision in CIT Vs. Raghuvir Synthetics Ltd. 354 ITR 222 (Guj.), CIT Vs. Reliance Utilities & Power Ltd. 313 ITR 340 (Bom.) and the decisions of jurisdictional ITAT as relied upon by the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
