Pr. Commissioner Of Income Tax, Kota v. M/S. Mangalam Cement Ltd., Aditya Nagar, Morak, Ramganj Mandi, Kota

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR 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 GoyalFor Respondent(s) : _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE INDERJEET SINGHJudgment 04/09/2017 1. In both these appeals common question of law and facts areinvolved hence they are decided by this common judgment. 2.By way of these appeals, the appellant has assailed thejudgment and order of the Tribunal whereby Tribunal hasdismissed the appeal of the department. 3.Counsel for the appellant has framed following substantialquestion of law:- 3.1 Appeal No.211/2017 1. Whether the Tribunal was legally andfactually correct in upholding thedecision of CIT(A) in quashing thereassessment proceedings which wereinitiated adhering to the provisions ofsection 147? 2. Whether the Tribunal was legally andfactually correct in upholding thedecision of CIT(A) in deleting thedisallowance of additional depreciationmade by the Assessing OfficeramountingtoRs.18,16,98,068/-specifically when the assessee is entitledfor 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 andfactually correct in upholding thedecision of CIT(A) in quashing thereassessment proceedings which wereinitiated adhering to the provisions ofsection 147? 2. Whether the Tribunal was legally andfactually correct in upholding the decision ofCIT(A) in deleting the disallowance ofadditional depreciation made by theAssessingOfficeramountingtoRs.13,20,232/- specifically when theassessee is entitled for additionaldepreciationu/s.32(1)(iia)w.e.f.Assessment Year 2013-14? 4.Counsel for the appellant has taken us to the order of the AOand contended that AO while considering the matter has takeninto consideration the proceedings u/s 147 as well as theapplication and after considering the same he made thecomputation of income as under:- COMPUTATION OF TOTAL INCOME: A. Total Income as per Appeal effect orderRs. 84,09,10,490/- dated 30-01-2012 Add: (i) Disallowed additional depreciation Rs.18,16,98,068/-as discussed above -(ii) U/s. 43BRs.1,41,57,121/ - Assessed incomeRs.103,67,65,679/ - R/off Rs.103,67,65,680/ 4.1However, CIT(A) as well as the tribunal after going into detailconsidering the submissions of the parties has come to thefollowing conclusion:- 4.Counsel for the appellant has taken us to the order of the AOand contended that AO while considering the matter has takeninto consideration the proceedings u/s 147 as well as theapplication and after considering the same he made thecomputation of income as under:- COMPUTATION OF TOTAL INCOME: A. Total Income as per Appeal effect orderRs. 84,09,10,490/- dated 30-01-2012 Add: (i) Disallowed additional depreciation Rs.18,16,98,068/-as discussed above -(ii) U/s. 43BRs.1,41,57,121/ - Assessed incomeRs.103,67,65,679/ - R/off Rs.103,67,65,680/ 4.1However, CIT(A) as well as the tribunal after going into detailconsidering the submissions of the parties has come to thefollowing conclusion:- We have heard the rival contentions andpursued the material available on record.The Revenue has challenged the order of theld. CIT(A) wherein he has held that theclaim of additional depreciation and claim ofdeduction u/s 43B were considered by theAssessing Officer while completing theoriginal assessment u/s 143(3) of the Act.The ld. CIT(A) held reopening of theassessment by the AO as merely change ofopinion which is bad in law and the orderpassed u/s 147 read with section 143(3)was held to be void ab-initio. During thecourse of hearing, the ld. AR has alsosubmitted that both the issues regarding theclaim of additional depreciation on powerplant and windmill, and the claim ofdeduction u/s 43B were examined in thecourse of original assessment proceedingsu/s 143(3) of the Act. It was furthersubmitted that when the AO in the originalassessment proceeding has examined boththe issues, the issuance of notice u/s 148 onthose very issues is only on account ofchange of opinion and on such change ofopinion, reassessment proceedings initiatedby him even within a period of four years isillegal and bad in law. . In this case the assessment year involved isA.Y. 2008-09 where the assessment under section 143(3) was originally completed on31.12.2010 and notice has been issued u/s148 on 17.08.2012. Therefore, the provisoto section 147 is not relevant and thereforenot been considered by us. The limited issueunder consideration is whether the issue ofclaim of additional depreciation has beenexamined by the Assessing Officer in thecourse of original assessment proceedings ornot. The expression “change of opinion”postulates formation of an opinion and thena change thereof. In the context of section147, it implies that the AO has formed anopinion at the first instance in the originalassessment proceedings and later proposesor wishes to take a different view on aparticular matter. It would therefore berelevant to examine whether the issue ofclaim of additional depreciation as well asclaim of deduction u/s 43B was examined inthe course of original assessmentproceedings or not. Briefly the facts of the case are that theassessee is engaged in the business ofmanufacturing of cement. For uninterruptedsupply of power, assessee during the year,acquired and installed new P&M i.e. powerplant at Morak and a windmill at Jaisalmerfor production of electricity for captiveconsumption in manufacturing of cement.The electricity produced from power plant atMorak was directly utilized in manufacturingof cement whereas the electricity producedfrom windmill at Jaisalmer was supplied toJaipur Vidhyut Vitran Nigam Ltd. who in turnreduce that quantity of electricity from the power bill raised on the assessee. On theseP&M,assesseeclaimedadditionaldepreciationofRs.18,16,98,068/-(Rs.14,44,58,058+ Rs.3,72,40,000) u/s32(1)(iia) of the Act. Firstly, in the reason recorded before issueof notice u/s 148, the AO has stated asunder: “In this case, assessment u/s 43(3) of the ITAct was passed on 31.12.2010 at Rs.84,65,41,700/- as against returned incomeof Rs.76,09,97,363/-Later on it is revealedthat the assessee claimed and was alloweddeduction of depreciation Rs. 70.53 crore, power bill raised on the assessee. On theseP&M,assesseeclaimedadditionaldepreciationofRs.18,16,98,068/-(Rs.14,44,58,058+ Rs.3,72,40,000) u/s32(1)(iia) of the Act. Firstly, in the reason recorded before issueof notice u/s 148, the AO has stated asunder: “In this case, assessment u/s 43(3) of the ITAct was passed on 31.12.2010 at Rs.84,65,41,700/- as against returned incomeof Rs.76,09,97,363/-Later on it is revealedthat the assessee claimed and was alloweddeduction of depreciation Rs. 70.53 crore, which include Rs. 18,16,98,068/- being theamount of additional depreciation on the assets ofpower generating units. As the additionaldepreciation was allowable only on such planand machinery which came under the clause(ii) of section 32(i) of Income Tax Act, whilethe assets of power generating units havebeen covered under the clause (i) of the ibidsection, therefore no amount of additionaldepreciation was allowance on the assets ofMangalam Power Plant, Morak unit andMangalam 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.