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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI MAHAVIR SINGHAND SHRI MANOJ KUMAR AGGARWAL
आयकर अपीलीय अिधकरण, ‘ए’ �यायपीठ, चे�ई IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI �ी महावीर �संह, उपा�य� एवं �ी मनोज कुमार अ�वाल, लेखा सद�य के सम� BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENTAND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER
आयकर अपील सं./ITA No.: 2843/CHNY/2019 िनधा�रण वष� /Assessment Year: 2010-11 Ashok Leyland Limited, The ACIT, 1, Sardar Patel Road, vs. LTU 2, Guindy, Chennai -600 032. Chennai. PAN: AAACA 4651L (अपीलाथ�/Appellant) (��यथ�/Respondent) अपीलाथ� क� ओर से/Appellant by : Shri Vikram Vijayaraghavan, Advocate ��यथ� क� ओर से/Respondent by : Shri AR.V. Sreenivasan, Addl.CIT सुनवाई क� तार�ख/Date of Hearing : 29.08.2022 घोषणा क� तार�ख/Date of Pronouncement : 29.08.2022 आदेश /O R D E R PER MAHAVIR SINGH, VICE PRESIDENT: This appeal by the assessee is arising out of the order of Commissioner of Income Tax (Appeals)-9, Chennai in ITA No.181/CIT(A)-9/2018-19 dated 01.08.2019. The re-assessment was framed by the DCIT,LTU-2, Chennai for the assessment year 2010-11 u/s.143(3) r.w.s.147 of the Income Tax Act, 1961 (hereinafter the ‘Act’) vide order dated 28.09.2018.
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The first issue in this appeal of assessee is as regards to the assumption of jurisdiction by the AO in reopening of assessment and consequentially framing of reassessment u/s.143(3) r.w.s. 147 of the Act. For this, the ld.counsel for the assessee drew our attention to Ground No.2.2, which reads as under:- “2.2 CIT(A) failed to consider the fact that, initiation of reassessment proceedings beyond four years from end of relevant AY 2010-11 for which an assessment u/s 143(3) was already made and in the absence of any failure on part of Appellant to disclose material facts as per Explanation 1 to section 147, is required to be quashed.”
The ld.counsel for the assessee stated the brief facts relating to this jurisdictional issue that the assessment year involved is 2010-11 and original assessment was framed by the DCIT, LTU, Chennai u/s.143(3) r.w.s. 144C(3) of the Act, vide order dated 21.05.2014. Subsequently, notice u/s.148 of the Act dated 31.03.2017 was issued for reopening of assessment and that was beyond 4 years. The ld.counsel for the assessee took us through the reasons recorded for reopening of assessment supplied by AO vide letter dated 20.12.2017, which are enclosed in assessee’s paper-book at page 60 and the relevant reasons read as under:- “The assessee coy is engaged in manufacture of commercial vehicles and automobile spare. For the A/Y 2010-11, the assessee e-filed the ROI on 30/09/10. Subsequently the assessee filed two revised returns, on 31/03/12 declaring income 'NIL. The processed return was taken up for scrutiny and
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the same was completed on 21/05/14 by making certain additions and arriving at total income of Rs. 328.88 crores. The depreciation statement reveals that the assessee had claimed additional depreciation on electrical installation and data processing equipment as shown Asset Block Addl. Depn. @20% Addl. Depn @ 10% Total Electrical 40,59,060 1,89,59,781 2,30,18,841 installation Data Processing 21,39,308 27,20,398 48,59,706 Equipment Additional depreciation is not allowed on the above assets and hence the total additional depreciation claimed for Rs. 2,78,78,547/- requires to be withdrawn.
Further, exchange fluctuations amounting to Rs.39,21,957/- (I half) and Rs.5,46,29,562/- (II half) were added to the asset value and additional depreciation was claimed on the Plant and Machinery. Additional depreciation is allowable only to addition made during the year and not on the value of exchange fluctuations. Hence an amount of Rs.62,47,347/- (Rs.7,84,391/- and Rs.54,62,956/-) requires to be disallowed. Thus, a total amount of Rs.3,41,25,894/- allowed as additional depreciation is required to be withdrawn and if this is considered, there would be an additional tax effect of Rs.1,15,99,391/-.”
The ld.counsel for the assessee stated that the first issue is regarding excess depreciation allowed by the AO in the original assessment @ 20% instead of 10% on electrical installations and data processing equipment. Second reason was addition of asset value and additional depreciation on exchange fluctuation to be withdrawn. The ld.counsel for the assessee stated that admittedly the reopening by issuing notice u/s.148 of the Act is beyond 4 years and from the very reasons recorded and reproduced above does not
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indicate any failure on the part of the assessee to file fully and truly all material facts necessary for its assessment for the relevant assessment year 2010-11. The ld.counsel for the assessee consequently took us through the order of CIT(A) wherein the issue of reopening was dealt in and the CIT(A) has adjudicated the issue in para 7.3 as under:- “7.3 I have perused the findings of the AO as per the assessment order, remand report and the contention of the appellant. On perusal of the written submission of the A.R as well as the remand report of the AO, the undisputed facts are that notice u/s.148 has been issued on 31.3.2017 and the same was served on the appellant on 03.04.2017. The AO has also stated that the appellant has misunderstood the provisions of Sec. 153(2) especially with respect to the words in the Act being issued' and 'served'. As the notice u/s.148 has been served on the appellant only on 03.4.2017, I am in agreement with the AO that the reassessment in this case can be completed till 31.12.2018. The reassessment order in this case was passed on 28.09.2018, i.e. within the limitation period prescribed as per the provisions of the Act. Moreover, the AO has also stated that the appellant has not raised this issue during the reassessment proceedings and hence as per Sec.292BB of the Act, the appellant is precluded from taking such an objection at this stage. In view of these factual and legal position, it is held that the notice u/s. 148 has been issued as per the provisions of the Act and the reassessment order u/s. 143(3) r.w.s. 147 was also passed within the limitation period as per the provisions of the Act. Therefore, this ground of appeal is dismissed.”
4.1 The ld.counsel for the assessee stated that the CIT(A) has not at all adjudicated the issue of reopening in view of the proviso to section 147 of the Act and whether there is any failure on the part of the assessee to disclose fully and truly all the material facts.
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According to him, once there is no adjudication by CIT(A) on this issue of reopening, the reassessment has to be quashed.
When these facts were confronted to ld. Senior DR, he only relied on the order of CIT(A).
After hearing rival contentions and going through the facts, we noted that the CIT(A) has not adjudicated this issue and was misdirected in adjudicating the issue of limitation of notice u/s. 148 of the Act. Rather, he has to adjudicate the issue of applicability of proviso to section 147 of the Act. We, accordingly set aside this jurisdictional issue to the file of CIT(A) for fresh adjudication after considering the submissions of the assessee. Accordingly, we set aside the order of CIT(A) on this issue and on this very issue, the appeal of the assessee is allowed for statistical purposes.
6.1 Coming to merits of the case, the issue regarding disallowance of additional depreciation of Rs.2,37,57,282/- claimed on electrical installations of Rs.45,59,706/- on data processing equipments and another ground relating to disallowance of additional depreciation of Rs.5,85,51,519/- claimed on exchange fluctuation capitalized to
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plant and machinery in the block of assets u/s.43A of the Act. We are of the view that on these two issues also, the CIT(A) has not adjudicated the issue properly and since the issue of reopening is going back to the file of the CIT(A), we set aside the order of CIT(A) on merits also and remand the matter back to his file for fresh adjudication. In the result, the entire appeal of the assessee is set aside and matter remanded back to the file of the CIT(A) for fresh adjudication.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 29th August, 2022 at Chennai.
Sd/- Sd/- (महावीर �सह ) (मनोज कुमार अ�वाल) (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) उपा�य� /VICE PRESIDENT लेखा सद�य /ACCOUNTANT MEMBER चे�ई/Chennai, �दनांक/Dated, the 29th August, 2022 RSR आदेश क� �ितिलिप अ�ेिषत/Copy to: 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकर आयु� (अपील)/CIT(A) 4. आयकर आयु� /CIT 5. िवभागीय �ितिनिध/DR 6. गाड� फाईल/GF.