M/S. SPEL SEMICONDUCTOR LTD., CHENNAI V. ITO, CORPORATE WARD - 6 (2), CHENNAI

ITA 104/CHNY/2020

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 5273 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 16-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Depreciation; Opportunity of being heard; Additional depreciation; Tangible material; Difference of opinion; Change of opinion; Set aside
• Section: 143(3)

Judgement Text

आयकर अपीलीय अिधकरण ’ ए’ Ɋायपीठ चेɄई मŐ। IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI माननीय ŵी महावीर िसंह, उपाȯƗ एवं माननीय ŵी मनोज कु मार अŤवाल ,लेखा सद˟ के समƗ। BEFORE HON’BLE SHRI MAHAVIR SINGH, VICE PRESIDENT AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकर अपील सं./ ITA No. 104/Chny/2020 (िनधाŊरण वषŊ / Assessment Year: 2012-13) M/s. Spel Semiconductor Ltd. No. 5, CMDA Industries Estate Chennai – 603 209. बनाम/ Vs. ITO Corporate Ward 6(2), Chennai – 600 034. ̾थायी लेखा सं./जीआइ आर सं./PAN/GIR No. AAACS-8519-B (अपीलाथŎ/Appellant) : (ŮȑथŎ / Respondent) अपीलाथŎ की ओरसे/ Appellant by : Shri. R. Vijayaraghavan (Advocate ) – Ld. AR ŮȑथŎ की ओरसे/Respondent by : Shri. ARV Sreenivasan (Addl. CIT) – Ld. DR सुनवाई की तारीख/ Date of Hearing : 05-04-2022 घोषणा की तारीख / Date of Pronouncement : 05-04-2022 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2012-13 arises out of the order of learned Commissioner of Income Tax (Appeals)-15, Chennai [CIT(A)] dated 31.10.2019 in the matter of assessment framed by the Ld. Assessing Officer [AO] u/s. 143(3) r.w.s. 147 of the Act on 22.12.2017. The grounds taken by the assessee read as under: - ITA No.104/Chny/2020 - 2 - 1. The Order of the Commissioner of Income Tax (Appeals) is contrary to law, facts and circumstances of the case. 2. The Commissioner of Income tax (Appeals) erred in dismissing the appeal without giving sufficient opportunity of being heard to the appellant. 3. The Commissioner of Income tax (Appeals) erred in confirming the reopening the assessment u/s.147 of the Act to disallow normal depreciation. 3.1 The Commissioner of Income tax (Appeals) should have found that the reopening was made by the Assessing officer to disallow normal depreciation on the ground that he had omitted to disallow the same in the order u/s 143(3) 3.2 The Commissioner of Income tax (Appeals) ought to have appreciated that the asset/equipment were purchased during the financial year 2010-11 but were commissioned and put to use for production during financial year 2011-12 relevant to the current assessment year 2012-13, and during the course of original assessment the Appellant had submitted the copies of the invoices of the assets to the Assessing Officer. 3.3 The Commissioner of Income tax (Appeals) ought to have appreciated that all the facts were available before the Assessing Officer at the time of original assessment under Section 143(3) and hence the reopening arose only due to change of opinion and not on account of concealment of any particulars by the Appellant; hence the order is to be quashed as being without jurisdiction. 3.4 The Appellant submits that the reopening of assessment cannot be done on the basis of change of opinion since the income which was alleged to have escaped assessment was based on the verification of income computation statement, which was available at the time of assessment proceedings and there was no new material brought on record to have reasons to believe that income has escaped assessment. 3.5 The Appellant submits that the principle that there must be tangible material on the basis of which an assessment is sought to be re-opened even within a period of four years is now well established by the judgment of the Hon'ble Supreme Court in CIT v. Kelvinator 320 ITR 561 (SC). 4. The Commissioner of Income Tax (Appeals) erred in confirming the disallowance of normal depreciation and additional depreciation on plant and machinery which were commissioned and put to use for production during financial year 2011-12 relevant to current assessment year 2012-13. 4.1 The Commissioner of Income Tax (Appeals) ought to have appreciated that during the original assessment the assessee had furnished full details of plant and machinery and after perusing the same, the Assessing Officer had granted depreciation as claimed by the Assessee and had only disallowed additional depreciation and, therefore, the reopening to disallow normal depreciation is not valid. 2. During hearing before us, Ld. AR did not urge legal grounds. The Ld. AR advanced argument assailing the impugned additions on merits ITA No.104/Chny/2020 - 3 - and submitted that normal depreciation was allowable. The necessary evidences, in this regard, were already submitted before lower authorities which have completely been ignored. The Ld. Sr. DR controverted the arguments of Ld. AR. Having heard rival submissions and after due consideration of material facts, our adjudication would be as under. 3. The assessee being resident corporate assessee is stated to be engaged in manufacturing of Integrated Circuits. Though the original return was already scrutinized u/s 143(3) on 27.03.2015, the case was reopened on the allegation that additional depreciation as claimed by the assessee was disallowed u/s 143(3). This was due to the reason that the assessee did not prove erection, acquisition, installation and use of the Machinery. However, the normal depreciation of Rs.896.14 Lacs as claimed by the assessee was omitted to be disallowed. In the absence of any clarification forthcoming from the assessee, the normal depreciation was disallowed and added back to the income of the assessee. 4. During appellate proceedings, the assessee assailed the validity of reassessment proceedings and inter-alia, submitted that out of total depreciation of Rs.896.14 Lacs, the amount of Rs.590.38 Lacs represent depreciation on plant and machinery installed in earlier years for which normal depreciation was allowed in earlier years also. The Ld. CIT(A) while upholding the reassessment proceedings, directed Ld. AO to restrict the normal depreciation corresponding to the additional depreciation only and allow depreciation on opening WDV. Aggrieved the assessee is in further appeal before us. 5. Going by the submissions made by Ld. AR, we find that documentary evidences as submitted by the assessee regarding ITA No.104/Chny/2020 - 4 - installation / purchase of Plant & Machinery has not been considered by Ld. AO. As per the submissions of Ld. AR, all the documents substantiating the purchase / installation of Plant & Machinery were furnished and normal depreciation would be allowable to the assessee. Concurring with the same, we set aside the impugned order and direct Ld. AO to reframe the assessment denovo with a direction to the assessee to substantiate its case. The normal depreciation on opening WDV of Plant & machinery shall be allowed to the assessee. 6. The appeal stands partly allowed for statistical purposes. Order pronounced on 05 th April, 2022. Sd/- (MAHAVIR SINGH) उपाȯƗ /VICE PRESIDENT Sd/- (MANOJ KUMAR AGGARWAL) लेखा सद˟ / ACCOUNTANT MEMBER चेɄई / Chennai; िदनांक / Dated : 05-04-2022 JPV आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथᱮ/Appellant 2. ᮧ᭜यथᱮ/Respondent 3. आयकर आयुᲦ (अपील)/CIT(A) 4. आयकर आयुᲦ/CIT 5. िवभागीय ᮧितिनिध/DR 6. गाडᭅ फाईल/GF