TMI Blog2024 (1) TMI 314X X X X Extracts X X X X X X X X Extracts X X X X ..... O. The petitioner submitted its reply along with the relevant details and material. The AO after considering the same, accepted the claim made by the petitioner with regard to the subject temporary structure(s). Reliance placed on Explanation 2 (c) (iv) appended to Section 147 of the Act would not in our opinion further cause of the respondent/revenue. The reason we say so is, once it is accepted that the subject structure(s) were temporary no case can be made out that the depreciation allowance claimed was excessive. It is not in dispute that for temporary structures, the prescribed rate of depreciation is 100%. Whether the impugned notice issued under Section 148 of the Act was barred by time? - Although, in the reasons to believe the AO has not stated that the petitioner had failed to disclose full and truly all material facts, in our view, this aspect need not detain us in view of the reasons that we have given hereinabove, that is, it is a clear case of change of opinion. The provisions cited before us on behalf of respondent/revenue i.e., Explanation 1 and Explanation 2 (c) (iv) appended to Section 147 of the Act would not be applicable on the facts and circumstances obtainin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tionnaire dated 04.01.2016 was issued to which a reply dated 12.01.2016 was submitted by the petitioner. 11. The petitioner defended its stand with regard to the claim made qua depreciation of temporary structure at the rate of 100%. 11.1 Significantly, to enquire into this matter an officer was deputed by the AO to visit the premises of the petitioner and carry out a physical inspection of the subject temporary structure. 12. Evidently, it was only thereafter, that on 15.02.2016, the AO framed an Assessment Order under Section 143(3) of the Act and pegged the petitioner s income at Rs. 57,64,22,890/-. 13. The record also discloses that despite the AO having made an enquiry with regard to the claim of depreciation vis- -vis the subject temporary structure albeit before framing the Assessment Order under Section 143(3) of the Act, on 12.01.2017, a notice under Section 154/155 of the Act was served on the petitioner. 13.1 This notice was apparently issued based on an audit objection received from the office of Additional Commissioner of Income Tax Audit-2. It appears that the petitioner submitted several replies concerning the aforementioned notice. In this regard, reference is made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that the reassessment proceedings were wrongly triggered. It is emphasised that the issue concerning claim of depreciation vis-a-vis temporary structures at the rate of 100% was raised during the scrutiny-assessment. 20.1 In other words, Ms Kapoor s contention is that this is a clear case of change of opinion. 20.2 Furthermore, it is submitted that since the reassessment proceedings were triggered after four years from the end of the AY in issue, the provisions of the first proviso appended to Section 147 of the Act would also be applicable. The AO could not have triggered reassessment proceedings without fresh material coming to his notice which demonstrated that facts material for assessment were not truly and fairly disclosed by the petitioner. 21. On the other hand, Mr Singh in defence of the impugned action largely relied upon the order dated 01.07.2019 passed by the AO. Based on the said order, it was contended that a conjoint reading of Explanation 1 and Explanation 2 (c) (iv) appended to Section 147 of the Act would show that merely because material evidence could not be elicited and/or discovered by the AO after due diligence, it would not necessarily amount to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 100% depreciation is allowable on temporary wooden structure and tin shed as there are purely temporary erection. The assessee nature of addition are payment and are part of building where assessee is running its operations. 25. As indicated above, in response to this query, a reply dated 12.01.2016 was submitted to the AO. This reply concerns various other queries as well; however, as far as the issue at hand is concerned, the petitioner took the following stand. 8. Reasons for 100% depreciation on Temporary Erections In relation to the above query raised by your goodself, the Assessee would like to state that the addition made to fixed assets on account of temporary erections comprise of purely temporary structures such as wooden structures in the form of partitions, immovable wooden planks. Certain other expenditure such as flooring and carpets, ceilings, paint cost is also capitalized as a part of temporary erection. Such temporary erections are mainly related to the leased building and have no separate use if detached from the leased asset. Such assets are installed in order to make leased premises sufficient for business use of the Assessee. Therefore, the very nature of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of proceeding u/s. 147 of the I.T. Act in the case of M/s Kuehne Nagel Pvt. Ltd. for the A.Y. 2012-13 (PAN NO. AAACK2676H) - A.Y.: 2012-13-Assessment in the case of M/s Kuehne Nagel Pvt. Ltd. for A.Y. 2012-13 was completed on 15.02.2016 determining assessed income of Rs. 57,64,22,890/. It is seen from the assessment records that the assessee company has claimed depreciation on Temporary erection @ 100% of Rs. 3,19,19,234/-. On perusal of assessment records, it is found that depreciation has been wrongly claimed by the assessee on temporary erection @ 100% as stated. The same has resulted in an escapement of income. In view of these observations, reliance is placed on Explanation 1 and Explanation 2 (c) of Section 147 of the Income Tax Act and reproduced as below:- Explanation-I Production before the Assessing Officer of account of books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso. Explanation 2(c)- where an assessment has been made, but- (iv) Excessive loss or depreciation allowance or any other allowance under this Act ..... X X X X Extracts X X X X X X X X Extracts X X X X
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