ICICI SECURIRITES LTD ( EARLIER KNOWN AS ICICI BROKERAGE SERVICES LTD)( IN THE CASE OF ERSTWHILE ICICI WEB TRADE LTD WHICH WA MERGED WITH ICICI BROKERAGE SERVICES LTD), MUMBAI V. DCIT CIR 4(1), MUMBAI

ITA 51/MUM/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70900 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 27-08-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 04-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P SINGH
• Keywords: Depreciation; Tangible material; Difference of opinion; Change of opinion; Reassessment proceedings
• Section: 143(3); 32; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, M UMBAI . . '# '# '# '# , $ $ $ $ % % % % BEFORE SHRI VIJAY PAL RAO, JM, AND SHRI N. K. BILLA IYA, AM /. I.T.A. NO.51 /MUM/2011 ( & & & & '& '& '& '& / ASSESSMENT YEAR: 2004-05) ICICI SECURITIES LTD., (EARLIER KNOWN AS ICICI BROKERAGE SERVICES LIMITED) ICICI BANK TOWERS, 9 TH FLOOR, EAST WING, SOUTH TOWER, BANDRA- KURLA COMPLEX, MUMBAI- 400 051. / VS. DY. COMMISSIONER OF INCOME TAX, 4(1), AAYAKAR BHAVAN, MUMBAI- 400 020. ( $ /. ) /. PAN/GIR NO. AAACI6284P ( (* / APPELLANT ) : ( +,(* / RESPONDENT ) (* - / APPELLANT BY : AARTI VISSANJI +, (* - / RESPONDENT BY : SHRI O.P. SINGH /$ / DATE OF HEARING : 27.08. 2013 12' /$ /DATE OF PRONOUNCEMENT : 30 .08. 2013 3 3 3 3 / O R D E R PER : N.K. BILLAIYA (AM) THIS APPEAL BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER OF THE CIT(A)-11, MUMBAI, DATED 26.10.2010, PERTAINING TO ASSESSMENT YEAR 2004-05. 2 ITA 51 M 2011 (AY-2004-05) M/S. IC ICI SECURITIES LTD. V/S DY. CIT. 2. THE ASSESSEE HAS CHALLENGED THE CORRECTNESS OF T HE ORDER OF THE CIT(A) ON TWO GROUNDS. WITH GROUND NO. 1, THE ASSESSEE HAS CHALLE NGED THE RE-OPENING OF THE ASSESSMENT U/S 147 OF THE ACT. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE FILED ITS RETURN FOR ASSESSMENT YEAR 2004-05 ON 29.10.2004 DECLARING TOT AL INCOME AT RS. 9,76,34,310/-. THE RETURN WAS SELECTED FOR SCRUTINY AND ASSESSMENT U/S 143(3) OF THE ACT WAS COMPLETED ON 28.12.2006 AT THE INCOME OF RS. 32,23, 11,800/-. 4. SUBSEQUENTLY, IT CAME TO THE NOTICE OF THE AO TH AT THE ASSESSEE HAS CLAIMED DEPRECIATION OF RS. 51,12,70,737/- AND WAS ALLOWED DEPRECIATION TO THE TUNE OF RS. 4,60,26,648/-. IT WAS FURTHER NOTICED BY THE AO THA T THE ASSESSEE DID NOT CLAIM DEPRECIATION ON FIXED ASSESTS FOR ASSESSMENT YEAR 2 000-01 & 2001-02. ACCORDING TO THE AO THE W.D.V FOR THE YEAR UNDER CONSIDERATION W ERE INFLATED AND EXCESS DEPRECIATION AMOUNTING TO RS. 39,35,872/- WAS CLAIM ED AND ALLOWED DURING THE YEAR IN QUESTION. 5. THIS PROMPTED THE AO TO REOPEN THE ASSESSMENT U/ S 147 OF THE ACT. ACCORDINGLY, NOTICE U/S 148 WAS ISSUED AND SERVED U PON THE ASSESSEE. THE REASONS RECORDED FOR THE RE-OPENING OF THE ASSESSMENT WAS S UPPLIED TO THE ASSESSEE. 6. THE ASSESSEE RAISED OBJECTIONS QUESTIONING THE VALIDITY OF NOTICE AND THE RE- OPENING OF REASSESSMENT. THE OBJECTIONS RAISED BY T HE ASSESSEE WERE REJECTED BY THE AO. THE AO WAS OF THE FIRM BELIEF THAT EXPLANATION- 5 TO SECTION 32(1) OF THE ACT MAKES IT MANDATORY TO CLAIM DEPRECIATION FROM ASSES SMENT YEAR 2002-03 AND SUBSEQUENT YEARS. THEREFORE, WDV HAS TO BE TAKEN AF TER CALCULATING DEPRECIATION FOR EARLIER YEARS. THE AO WENT ON TO DISALLOW THE DEPRE CIATION AT RS. 39,35,872/- AND COMPLETED THE REASSESSMENT PROCEEDINGS. 7. THE ASSESSEE STRONGLY AGITATED THIS ISSUE BEFORE THE CIT(A). IT WAS SUBMITTED BEFORE THE CIT(A) THAT THE DETAILS OF DEPRECIATION U/S 32 OF THE ACT WERE GIVEN IN THE RETURN OF INCOME AS WELL AS IN THE TAX AUDIT REPORT . IT WAS FURTHER EXPLAINED THAT BY 3 ITA 51 M 2011 (AY-2004-05) M/S. IC ICI SECURITIES LTD. V/S DY. CIT. WAY OF NOTE IT WAS CLARIFIED THAT THE ASSESSEE HAS NOT CLAIMED DEPRECIATION FOR ASSESSMENT YEAR 2000-01 & 2001-02. THUS, THE ASSESS EE HAD MADE FULL AND TRUE DISCLOSURE OF ALL MATERIAL FACTS. IT WAS STRONGLY CONTENDED THAT THE AO HAS PASSED ORDER U/S 143(3) OF THE ACT AFTER CONSIDERING ALL THESE F ACTS. THEREFORE, THE RE-OPENING OF THE ASSESSMENT FOR THE SAME REASONS ONLY AMOUNT TO CHAN GE IN OPINION. 8. THE SUBMISSIONS MADE BY THE ASSESSEE DID NOT FI ND ANY FAVOUR OF THE CIT(A) WHO HELD THAT REASSESSMENT PROCEEDINGS ARE VALID. 9. AGGRIEVED BY THIS FINDING OF THE CIT(A), THE ASS ESSEE IS BEFORE US. 10. COUNSEL FOR THE ASSESSEE REITERATED WHAT HAS BE EN SUBMITTED BEFORE THE LOWER AUTHORITIES. IT IS THE SAY OF THE COUNSEL THAT THE FACTS RELATING TO THE CLAIM OF DEPRECIATION HAVE BEEN CLEARLY DISCLOSED AND CONSID ERED BY THE AO DURING THE ORIGINAL ASSESSMENT PROCEEDINGS. THEREFORE, THE SAME CANNOT BE MADE A BASIS FOR RE-OPENING OF THE ASSESSMENT U/S 147 OF THE ACT. 11. PER CONTRA THE DR STRONGLY SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE ORDER OF THE LOWER AUTHORITIES AND THE RELEVANT MATERIAL EVIDENCES BRO UGHT ON RECORD IN THE FORM OF PAPER BOOK. REASONS RECORDED FOR REOPENING OF THE ASSESSM ENT ARE AT PAGE 20 OF THE PAPER BOOK. THE RELEVANT PART OF THE REASONS ARE AS UNDER . THE ASSESSEE CLAIMED DEPRECIATION OF RS. 5,12,70,73 7/-. HOWEVER, THE DEPRECIATION OF RS. 4,60,26,648/- WAS ALLOWED DISAL LOWING THE DEPRECIATION ON STOCK EXCHANGE CARD. THE ASSESSEE COMPANY DID NO T CLAIM THE DEPRECIATION FOR A.Y. 2001-02 AND 2001-02 AND THE W .D.V FOR THE CURRENT ASSESSMENT YEAR WAS TAKEN WITHOUT CONSIDERING DEPRE CIATION CHARGES FOR A.Y.2001-01 & 2001-02. THE DEPRECIATION U/S 32 OF T HE ACT BEING MANDATORY, THE W.D.V. FOR THE CURRENT ASSESSMENT YE AR WAS REQUIRED TO BE TAKEN AFTER DEDUCTING THE DEPRECIATION NOTIONALLY. IN VIEW OF THE ABOVE I HAVE REASON TO BELIEV E THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT AT RS. 39,35,872/- AND T HIS CASE IS FIT FOR INITIATING PROCEEDINGS U/S. 147 OF THE I.T. ACT. 4 ITA 51 M 2011 (AY-2004-05) M/S. IC ICI SECURITIES LTD. V/S DY. CIT. 13. A PERUSAL OF THE COMPUTATION OF INCOME FOR TH E YEAR UNDER CONSIDERATION AT PAGE 2 AND 3 OF THE PAPER BOOK SHOW THAT THE ASSESSEE AD DED BOOK DEPRECIATION AT RS. 4,46,94,495/- AND THEREAFTER HAS DEDUCTED DEPRECIAT ION U/S 32 AT RS. 5,12,70,737/-. THE DEPRECIATION CHART IS AT PAGE 3 NOTE NO. 2 CLEARLY MENTION THAT THE ASSESSEE DID NOT CLAIM ANY DEPRECIATION FOR ASSESSMENT YEAR 2000-01 & 2001-02 RELYING ON DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF MAHINDRA MILLS 159 CTR 381. 14. IN THE ORIGINAL ASSESSMENT ORDER THE AO PICKED UP ONE ITEM THAT IS STOCK EXCHANGE CARD AND DISCUSSED THE CLAIM OF DEPRECIATI ON BY THE ASSESSEE AND DISALLOWED THE DEPRECIATION CLAIMED AT RS. 52,44,089/-. THIS C LEARLY SHOWS THAT THE AO HAD CONSIDERED THE ENTIRE DEPRECIATION CHART ALONG WITH THE NOTE APPENDED TO THE SAID DEPRECIATION CHART WHILE ALLOWING THE CLAIM OF DEPR ECIATION ON OTHER ASSETS. THE DEPRECIATION CHART CLEARLY SHOWS THE OPENING WDV IN RESPECT OF ALL OTHER ASSETS, THEREFORE, THE AO SUBSEQUENTLY, CANNOT SAY THAT ALL THE FACTS RELATING THE OPENING W.D.V. WERE NOT AVAILABLE AT THE TIME OF ORIGINAL A SSESSMENT PROCEEDINGS. 15. IN THE LIGHT OF THE ABOVE FACTS AVAILABLE AT THE TIME OF THE ORIGINAL ASSESSMENT PROCEEDINGS, WE DO NOT FIND ANY MERIT IN RE-OPENING THE ASSESSMENT FOR DISALLOWING THE DEPRECIATION. THE ACTION OF THE AO AT BEST BE TERME D AS CHANGE OF OPINION. NO NEW TANGIBLE MATERIAL EVIDENCE HAS BEEN BROUGHT ON RECO RD, THEREFORE, IN OUR HUMBLE OPINION THE RE-OPENING OF THE ASSESSMENT IS BAD-IN- LAW WHICH NULLIFIES THE REASSESSMENT ORDER. WE DRAW SUPPORT FROM THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF KELVINATOR OF INDIA LT D. 320 ITR 561. WE ACCORDINGLY SET ASIDE THE ASSESSMENT ORDER. 16. SINCE, WE HAVE HELD THAT THE REASSESSMENT ORDE R IS BAD-IN-LAW, WE DO NOT FIND IT NECESSARY TO DECIDE THE ISSUE ON MERITS AS RAISED B Y THE ASSESSEE VIDE GROUND - B AND ALL ITS SUB-GROUNDS. 5 ITA 51 M 2011 (AY-2004-05) M/S. IC ICI SECURITIES LTD. V/S DY. CIT. 17. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. /5 &/ 6/ / 7' ORDER PRONOUNCED ON 30TH DAY OF AUGUST, 2013. 3 12' 5 30.08.2013 2 9 SD/- SD/- ( VIJAY PAL RAO ) ( N. K. BILLAIYA ) / JUDICIAL MEMBER $ / ACCOUNTANT MEMBER MUMBAI: DATED : 30.08.2013 . /. PRAMOD KUMAR, PS 3 3 3 3 +/ +/ +/ +/ :'/ :'/ :'/ :'/ / COPY OF THE ORDER FORWARDED TO : 1. (* / THE APPELLANT 2. +,(* / THE RESPONDENT 3. ; ) ( / THE CIT(A); 4. ; / THE CIT CONCERNED; 5. <9 +/ , , / DR, ITAT, MUMBAI; 6. 9=& > / GUARD FILE 3 3 3 3 / BY ORDER, ? ?? ? / 7 7 7 7 (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI