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TMI Blog2024 (8) TMI 692X X X X Extracts X X X X X X X X Extracts X X X X ..... or short "the Act") dated 31.03.2021 for Assessment Year 2014-2015. 5. Brief facts of the case are that the assessee company is engaged in developing, operating, maintenance of power projects and sale of power. The petitioner had filed its return of income for Assessment Year 2014-2015 on 29.11.2014 declaring total loss of Rs. 2041,13,27,813/- under the normal provisions and loss of Rs.327,21,42,998/- under section 115JB of the Act. 6. Case of the petitioner company was selected for scrutiny and questionnaires were issued which were replied by the petitioner. Thereafter notices were issued on 08.06.2016, 24.08.2016, 25.07.2017 and 13.11.2017. The petitioner replied to such notices on 23.06.2016, 16.10.2017 and 23.11.2017. 7. During the assessment proceedings, in relation to the claim of the depreciation of the petitioner, the Assessing Officer disallowed the excess depreciation of Rs. 5,80,87,237/- vide assessment order dated 07.12.2017. 8. Against the assessment order, the petitioner filed an appeal before the Commissioner of Income Tax (Appeals) which was partly allowed vide order dated 12.03.2020 and order giving effect to the same was also passed on 28.07.2020. 9. Responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Analysis of information collected/received: Scrutiny of records, it is noticed from balance sheet, profit and loss account, notes on account, 3CD report and computation of income that assessee has claimed depreciation of Rs. 3049,91,75,122/-. As per section. 32 (1)(ii) of the Act, depreciation is allowed in the case of any block of assets, such percentage on the written down value thereof as may be prescribed. As per section 32 (1)(iia) of the Act, in the case of any new machinery or plant(other than ships and aircrafts), which has been acquired and installed after the 31st day of March, 2005, by an assessee engaged in the business of manufacture or production of any article or thing or in the business of generation, transmission or distribution) of power, a further sum equal to twenty per cent of the actual cost of such machinery or plant shall be allowed as deduction under clause (ii) of section 32 (1) of the Act. As per proviso below section 32 (1) of the Act. where an asset referred to in clause (ii) or clause(ii) or clause (iia) or the first proviso to clause (iia), as the case may be is acquired by the assessee during the previous year and is put to use for the purposes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ange rate fluctuation as it is allowable only on new machinery acquired and put to use during the year. It is evident from these two tables that assessee has claimed depreciation of Rs.2991,11,66,989/- on this class of assets as under: (1) Depreciation @ 15 % on Rs. 18001.48,04,377/- being opening WDV of Rs.16978,10,68,589/- plus P&M of Rs.4,67,12,120/- put to use on or before 30.09.2013 plus Rs.1017,23,59,719 being increase in exchange rate liability less Rs.53,36,000 being reduction in P&M=Rs. 2700,22,20,657/- (2) Depreciation @ 7.5% on Rs.496,07,54,080/- being P&M of Rs.459,57,93,053/- put to use on or after 01.10.2013 plus Rs36,49,61,027/- being increase in exchange rate liability = Rs.37,20,56,556/-, (3) Additional depreciation on Rs. 1021,90,71,839/- @ 20% claimed on Rs.467,12,120/- put to use on or before 30.09.2013 plus Rs. 1017,23,59,719/- being increase in exchange rate liability Rs.204,38,14,367/- (4) Additional depreciation 10% claimed on Rs.496,07,54,080/- being P&M of Rs.459,57,93,053/- put to use on or after 01.10.2013 plus Rs.36,49,61,027/- being increase in exchange rate liability =Rs. 49,60,75,409/- Total depreciation claimed = Rs.2991,41,66,989 (2700, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent application of mind on part of the Assessing Officer. It was also pointed out that there is no reason to reopen the assessment as there is no failure on part of the petitioner to disclose any material relevant for assessment or any allegation to that effect is made in reasons recorded. Reliance was placed on the following decisions: i) Intercontinental (India) reported in (2016) 73 taxmann.com 232 (Gujarat) ii) Jivraj Tea Ltd. reported in (2016) 386 ITR 298, iii) Paladiya Brothers reported in 376 ITR 576, and iv) Rantnamani Metals & Tubes reported in 371 ITR 301. 15. It was further submitted that the assessment has been reopened due to audit objection, which was not acceptable to the Assessing Officer. Reliance was placed on the decision in case of Reckitt Benckiser Healthcare India (P.) Ltd. reported in (2017) 392 ITR 336. 16. On the other hand, learned Senior Standing Counsel Ms. Maithili Metha submitted that the petitioner has claimed depreciation on the amount capitalised on account of Foreign Exchange Fluctuation which could not be allowed under the provisions of section 32 (1) of the Act. It was pointed out from the assessment order that such aspects of claiming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the, objections raised by the assessee against the Notice issued u/s. 148 of the Act disposed off in accordance with the guidelines laid down by the Hon'ble Apex Court in the case of GKN Driveshaft (India) Ltd. V/s. ITO(2003) 259 ITR 19 (SC) and guidelines laid down by the Hon'ble High Court in the case of Shakari Khand Udhyog Mandal Ltd. Vs. ACIT in the Special civil application No. 3955 of 2014. Therefore, the Assessing officer has recorded his reasons in writing after due application of mind and forming independent opinion. Hence, notice u/s. 148 of the Act dated 31.03.2021 and order dated 09.11.2021 of preliminary objections disposed are not bad, illegal, contrary to law. The petitioner's contention regarding change of opinion is found to be devoid of any merit. The AO on verification of the details has noticed that the assessee has wrongly claimed additional depreciation of Rs. 203,11,71,943/- on exchange rate fluctuation of Rs. 1017,23,59,719/-. Considering the above facts, the AO has reasonable belief that by omission on the part of the assessee to disclose fully and truly all material facts necessary for the assessment, the income of the assessee has esca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or reopening of assessment. In this regard reliance is placed on the decision of Hon'ble Supreme Court in the case of CIT vs. P.V.S. Beedies Pvt. Ltd (237 ITR 13). The Hon'ble Supreme court ruled that, We are of the view that both the Tribunal and the High Court were in error in holding that the information given by internal audit party could not be treated as information within the meaning of Section 147(b) of the Income Tax Act. The audit party has merely pointed out a fact which has been overlooked by the Income Tax Officer in the assessment. The dispute as to whether reopening is permissible after audit party expresses an opinion on a question of law is now being considered by a larger Bench of this Court. There can be no dispute that the audit party is entitled to point out a factual error or omission in the assessment. Reopening of the case on the basis of a factual error pointed out by the audit party is permissible under law. In view of that we hold that reopening of the case under Section 147(b) in the facts of this case was on the basis of factual information given by the internal audit party and was valid in law. " In view of the above settled legal position, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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