TMI Blog2024 (1) TMI 792X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of search/centralization of assessee s case), therefore, for the purpose of assessment u/s 153C/153A of the Act, AY. 2008-09 is an un-abated assessment and therefore the action of AO reversing/withdrawing the claim allowed in the original assessment on same set-off facts without any incriminating/seized materials qua assessee qua assessment year is not legally sustainable and therefore we uphold the action of Ld. CIT(A) on the legal issue and hold that the AO s action of making disallowance of spill over depreciation is legally unsustainable. See Abhisar Buildwell (P.) Ltd [ 2023 (4) TMI 1056 - SUPREME COURT] and Singhad Technical Education Society [ 2017 (8) TMI 1298 - SUPREME COURT] Decided in favour of assessee. - SHRI ABY T. VARKEY, JM AND SHRI AMARJIT SINGH, AM For the Appellant : Shri P. J. Pardiwala a/w S. M Bandi For the Respondent : Shri K. C. Selvamani (DR) ORDER PER BENCH: These are appeals preferred by the assessee and the revenue against the order of the Ld. Commissioner of Income Tax (Appeals)- 56, Mumbai [hereinafter referred to as the CIT(A) ] dated 30.06.2017 for AY. 2008-09 to AY. 2010-11. 2. The assessee has raised the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the return of income was filed on 29.09.2008 declaring total income at Rs. 1440,14,68,845/-. This return was taken up for scrutiny and also referred to the TPO for examination of the international transactions of the assessee. The AO passed the draft assessment order on 27.12.2011 making various disallowances and additions to the returned income. The assessee filed objection before Ld. Disputed Resolution Panel - 1, Mumbai (hereinafter referred as DRP) against the draft assessment order dated 27.12.2011 and the Ld. DRP passed the directions u/s 144C(5) of the Income Tax Act, 1961 (hereinafter the Act ) vide its order dated 04/09/2012 and the final assessment order was passed by AO u/s 143(3) r.w.s. 144C(13) of the Act on 21 st November 2012, determining total income at Rs. 2535,05,98,680/-. 7. Thereafter, a Search u/s 132 of the Act was conducted at the office of Aditya Birla Management Corporation Private Limited (ABMCPL) on 16th October 2013 at New Delhi. Pursuant to the search, the case of Assessee Company along with other connected cases were centralized by order u/s. 127(2) of the Act dated 14.10.2014 and the AO initiated assessment proceedings by issue of notice u/s 153 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Accountant on qualifying assets put to use in the second half of the immediately preceding previous year, ignoring the fact that the such claim of appellant has been allowed by his predecessor in all earlier assessment years, even though no incriminating material in this regard was found during the course of search and in original assessment order no addition in this regard was made. 11. Relevant facts as noted by the Ld. CIT(A) in respect of the only addition/disallowance made by AO under section 153C of the Act for AY. 2008-09 i.e. regarding disallowance of spill-over additional depreciation, which reads as under: - 17. The relevant facts are that the appellant claimed additional depreciation of Rs. 62,73,43,996/- u/s 32(iia) on assets put to use for less than 180 days in FY 2006-07 since restricted to 10% of the cost of assets in view of the second proviso to section 32, has been claimed in FY 2007-08 as allowable depreciation u/s 32(iia). 18. The AO has disallowed the claim of the appellant stating that, on a literal reading of section 32(1)(iia) and second proviso to section 32(1)(ii) restrict he additional depreciation to half the amount otherwise allowable. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccording to assessee, the additions/disallowance made by AO u/s 153C of the Act in respect of un-abated assessments was made without the aid of any incriminating/seized material qua assessee qua relevant assessment year, which action of AO is bad in law. 14. In this case, undisputedly before search on 16.10.2013 and centralizing of the case of assessee on 14.10.2014, the assessee s original assessment was passed on 21.11.2012 u/s 143(3)/144C(13) of the Act. Therefore assessment for AY. 2008-09 was not pending before AO on the date of search/centralization of assessee s case. Therefore, it (AY 2008-09) is an un-abated assessment. In such a scenario, it is trite law that the AO could not have made any new addition/disallowance without the aid of incriminating materials found/unearthed during search. It is a fact that in assessee s case, AO had allowed the spill over depreciation in the original/completed assessment dated 21.11.2012; and pursuant to search on 16.10.2013, assessee s case was centralized on 14.10.2014, and the present AO has framed the assessment u/s 153C of the Act, withdrawing/disallowing the same (Rs. 62,73,43,996/-), without any seized material to suggest that as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the additional depreciation on spill-over additional depreciation of Rs. 62,73,43,996/- for AY. 2008-09 by original assessment order dated 21.11.2012 ), the Ld. CIT(A) has found the claim to be legally tenable and has rightly cited the decision of the Hon ble High Court of Karnataka in the case of CIT Vs. Rittal India Pvt. Ltd.[380 ITR 423] wherein the Hon ble High Court upheld the action of the Tribunal allowing such a claim i.e. spill over additional depreciation u/s 32(1)(iia) of the Act, as well as the decision of the Hon ble Madras High Court in the case of CIT Vs. Shri T. P Textiles Pvt. Ltd. (2017) 394 ITR 483 wherein the Hon ble High Court had also taken into consideration the insertion of third proviso to clause (ii) sub-section (1) of section 32 of the Act w.e.f. 1st April, 2016 and reiterated the view taken by Hon ble Karnataka High Court in the case of Rittal India Pvt. Ltd. (supra). The Hon ble Bombay High Court has endorsed the same view in the decision rendered in the case of PCIT Vs. Godrej Industries Ltd (ITA. No. 511 of 2016 dated 24 th Nov, 2018) wherein the Hon ble Bombay High Court in similar case answered the question of law framed as under: - Whether, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovides that when the assessment made under Section 153(A)(1) is annulled, the assessment or reassessment that stood abated shall stand revived. 10. Thus on a plain reading of Section 153A of the Income-tax Act, it becomes clear that on initiation of proceedings under Section 153A, it is only the assessment/reassessment proceedings that are pending on the date of conducting search under Section 132 or making requisition under Section 132A of the Act stand abated and not the assessments/reassessments already finalised for those assessment years covered under Section 153A of the Act. By a circular No. 8 of 2003 dated 18- 9-2003 (See 263 ITR (St) 61 at 107) the CBDT has clarified that on initiation of proceedings under Section 153A, the proceedings pending in appeal, revision or rectification proceedings against finalised assessment/reassessment shall not abate. It is only because, the finalised assessments/reassessments do not abate, the appeal, revision or rectification pending against finalised assessments/reassessments would not abate. Therefore, the argument of the revenue, that on initiation of proceedings under Section 153A, the assessments/ reassessments finalised for the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the light of the discussion and as noted (supra) the Ld. Departmental Representative has failed to show from records any incriminating material found during the search that could have resulted in addition/disallowance in the hands of assessee in the relevant assessment year. It is an undisputed fact that on the date of search/centralization of the case of assessee, assessment for assessment year 2008-09 was not pending before AO, so it is an un-abated assessment. In such a scenario, the un-abated assessment could not have been disturbed without the aid of incriminating/seized material. Since the finding of fact returned by the Ld. CIT(A) that AY. 2008-09 was an un-abated assessment, and there was no incriminating material to withdraw the claim of assessee, we find the action of Ld. CIT(A) correct in law and therefore, we concur with his findings that in the absence of any incriminating material, no addition or disallowance could have been made in the assessment order passed under section 153C/153A of the Act, in the case of non-abated assessments. 21. We sum up the aforesaid discussion and find that AY. 2008-09 was un-abated assessment and AO framed assessment u/s 153C/153A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent dated 30.04.2013 and as in the case for AY. 2008-09 has made (ii) similar disallowance of spill over additional depreciation of Rs. 92,68,36,561/- u/s 32(1)(iia) of the Act and (iii) also disallowed excess negative realization on sale of Sulphuric Acid to BGH Exim to the tune of Rs. 1,08,02,000/-. In respect of both the additions of Rs. 92,68,36,561/- as well as Rs. 1,08,02,000/-, we find that AO in his re-assessment order u/s 153C of the Act has not mentioned about any incriminating material to make such disallowance. Since this year i.e. AY. 2009-10 is also an un- abated assessment, AO ought not to have made any disallowance without the aid of any incriminating materials found/unearthed during search qua assessee qua AY. 2009-10. Therefore, both additions cannot be legally sustained. And on the same reasoning and judicial precedent cited (supra) for AY. 2008-09, we confirm the impugned action of the Ld. CIT(A) who held at para no. 20 as well as para no. 23 of the impugned order that the disallowance made by AO of Rs. 92,68,36,561/- as well as Rs. 1,08,02,000/- cannot be legally sustained in the absence of any incriminating material qua assessee qua AY. 2009-10; and thus we up ..... X X X X Extracts X X X X X X X X Extracts X X X X
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