Bombay High Court (HC) chaired by Justice Valmiki SA Menezes and Justice Dhiraj Singh Thakur decided that without new tangible material there shall be no re-assessment.
Further the court opined that in the absence of any tangible material, the present case is nothing but a case of change of opinion and thus does not satisfy the jurisdictional foundation under section 147 of Income Tax Act, 1961.
On the grounds that the income subject to tax for the mentioned assessment year had avoided assessment, the assessee objected to the notice issued under section 148 of the Income Tax Act requesting to reopen the assessment for the assessment year 2016–17.
The assessee, Clear Media (India) Private Limited, engaged in the FM radio broadcasting industry among other things, filed a return on income declaring a total loss; however, as part of the limited scrutiny, it was noted that the issue relating to intangible assets needed to be looked into.
The bench observed that the Assessing Officer (AO) believed that the assessee should have been allowed capitalization on Rs.31,44,39,730. As per provisions contained in Section 35ABB, the assessee was eligible for deduction of Rs.2,09,62,648 (1/15th of Rs.31,44,39,730).
It had, however, capitalised the aforementioned fee as an intangible asset and claimed 25% depreciation of Rs. 8,11,12,130, which was improper in light of the aforementioned provisions. Due to this failure, an allowance of excess depreciation claim in the amount of Rs. 6,10,49,482 has been made.
However, according to AO’s reassessment decision, the conditions outlined in Section 147’s provision are satisfied because the income subject to tax that represents the allowance for excess depreciation claim of Rs. 6,01,49,481 eluded assessment for the year in question.
The division bench highlighted tha case Jindal Photo Films Ltd. Vs. Deputy Commissioner of Income Tax where it stated that “a case of mere change of opinion which does not provide jurisdiction to the Assessing Officer to initiate proceedings under Section 147 of the Act.”
According to the HC, nothing new has occurred between the date of the order of assessment that was intended to be reopened and the date that the AO formed an opinion. Neither fresh information has been received nor is there a mention of any newly discovered records.
In addition, the AO has merely given the matter further thought and concluded that the assessee should have sought the benefit of a deduction under section 35ABB of Income Tax Act, which would have reduced the allowance under section 32 by Rs. 6,01,49,482.
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