PR COMMISSIONER OF INCOME TAX KOTA vs. M/S MANGALAM CEMENT LTD

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 211 / 2017 Pr. Commissioner of Income Tax, Kota ----Appellant Versus M/s. Mangalam Cement Ltd., Aditya Nagar, Morak, Ramganj Mandi, Kota ----Respondent D.B. Income Tax Appeal No. 213 / 2017 Pr. Commissioner of Income Tax, Kota ----Appellant Versus M/s. Mangalam Cement Ltd., Aditya Nagar, Morak Ramganj Mandi, Kota ----Respondent _____________________________________________________ For Appellant(s) : Mrs. Parinitoo Jain with Ms. Shiva Goyal For Respondent(s) : _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE INDERJEET SINGH Judgment 04/09/2017 1. In both these appeals common question of law and facts are involved hence they are decided by this common judgment. 2. By way of these appeals, the appellant has assailed the judgment and order of the Tribunal whereby Tribunal has dismissed the appeal of the department. 3. Counsel for the appellant has framed following substantial question of law:-

(2 of 5) [ITA-211/2017] 3.1 Appeal No.211/2017 1. Whether the Tribunal was legally and factually correct in upholding the decision of CIT(A) in quashing the reassessment proceedings which were initiated adhering to the provisions of section 147? 2. Whether the Tribunal was legally and factually correct in upholding the decision of CIT(A) in deleting the disallowance of additional depreciation made by the Assessing Officer amounting

Rs.18,16,98,068/- specifically when the assessee is entitled for additional depreciation u/s. 32(1)(iia) w.e.f. Assessment Year 2013-14? 3.2 Appeal no.213/2017 1. Whether the Tribunal was legally and factually correct in upholding the decision of CIT(A) in quashing the reassessment proceedings which were initiated adhering to the provisions of section 147? 2. Whether the Tribunal was legally and factually correct in upholding the decision of CIT(A) in deleting the disallowance of additional depreciation made by the Assessing

Officer

amounting

to Rs.13,20,232/- specifically when the assessee is entitled for additional depreciation

u/s.

32(1)(iia)

w.e.f. Assessment Year 2013-14? 4. Counsel for the appellant has taken us to the order of the AO and contended that AO while considering the matter has taken into consideration the proceedings u/s 147 as well as the application and after considering the same he made the computation of income as under:-

(3 of 5) [ITA-211/2017] COMPUTATION OF TOTAL INCOME: A. Total Income as per Appeal effect order Rs. 84,09,10,490/- dated 30-01-2012 Add: (i) Disallowed additional depreciation Rs.18,16,98,068/- as discussed above (ii) U/s. 43B Rs.1,41,57,121/- Assessed income Rs.103,67,65,679/- R/off Rs.103,67,65,680/- 4.1 However, CIT(A) as well as the tribunal after going into detail considering the submissions of the parties has come to the following conclusion:- We have heard the rival contentions and pursued the material available on record. The Revenue has challenged the order of the ld. CIT(A) wherein he has held that the claim of additional depreciation and claim of deduction u/s 43B were considered by the Assessing Officer while completing the original assessment u/s 143(3) of the Act. The ld. CIT(A) held reopening of the assessment by the AO as merely change of opinion which is bad in law and the order passed u/s 147 read with section 143(3) was held to be void ab-initio. During the course of hearing, the ld. AR has also submitted that both the issues regarding the claim of additional depreciation on power plant and windmill, and the claim of deduction u/s 43B were examined in the course of original assessment proceedings u/s 143(3) of the Act. It was further submitted that when the AO in the original assessment proceeding has examined both the issues, the issuance of notice u/s 148 on those very issues is only on account of change of opinion and on such change of opinion, reassessment proceedings initiated by him even within a period of four years is illegal and bad in law. . In this case the assessment year involved is A.Y. 2008-09 where the assessment under

(4 of 5) [ITA-211/2017] section 143(3) was originally completed on 31.12.2010 and notice has been issued u/s 148 on 17.08.2012. Therefore, the proviso to section 147 is not relevant and therefore not been considered by us. The limited issue under consideration is whether the issue of claim of additional depreciation has been examined by the Assessing Officer in the course of original assessment proceedings or not. The expression “change of opinion” postulates formation of an opinion and then a change thereof. In the context of section 147, it implies that the AO has formed an opinion at the first instance in the original assessment proceedings and later proposes or wishes to take a different view on a particular matter. It would therefore be relevant to examine whether the issue of claim of additional depreciation as well as claim of deduction u/s 43B was examined in the course of original assessment proceedings or not. Briefly the facts of the case are that the assessee is engaged in the business of manufacturing of cement. For uninterrupted supply of power, assessee during the year, acquired and installed new P&M i.e. power plant at Morak and a windmill at Jaisalmer for production of electricity for captive consumption in manufacturing of cement. The electricity produced from power plant at Morak was directly utilized in manufacturing of cement whereas the electricity produced from windmill at Jaisalmer was supplied to Jaipur Vidhyut Vitran Nigam Ltd. who in turn reduce that quantity of electricity from the power bill raised on the assessee. On these P&M,

assessee

claimed

additional depreciation

Rs.

18,16,98,068/- (Rs.14,44,58,058+ Rs.3,72,40,000) u/s 32(1)(iia) of the Act. Firstly, in the reason recorded before issue of notice u/s 148, the AO has stated as under: “In this case, assessment u/s 43(3) of the IT Act was passed on 31.12.2010 at Rs. 84,65,41,700/- as against returned income of Rs.76,09,97,363/-Later on it is revealed that the assessee claimed and was allowed deduction of depreciation Rs. 70.53 crore,

(5 of 5) [ITA-211/2017] which include Rs. 18,16,98,068/- being the amount of additional depreciation on the assets of power generating units. As the additional depreciation was allowable only on such plan and machinery which came under the clause (ii) of section 32(i) of Income Tax Act, while the assets of power generating units have been covered under the clause (i) of the ibid section, therefore no amount of additional depreciation was allowance on the assets of Mangalam Power Plant, Morak unit and Mangalam Wind Power plant in Jaisalmer." 5. We are in complete agreement with the view taken by the tribunal. No substantial question of law arises. 6. The appeals stand dismissed. (INDERJEET SINGH),J. (K.S. JHAVERI),J. Bmg/7 & 9.