SCA/18550/2015 JUDGMENT IN HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 18550 of 2015 FOR APPROVAL AND SIGNATURE : HONOURABLE Mr. JUSTICE M.R. SHAH and HONOURABLE Mr. JUSTICE B.N. KARIA 1 Whether Reporters of Local Papers may be allowed to see judgment ? 2 To be referred to Reporter or not ? 3 Whether their Lordships wish to see fair copy of judgment ? 4 Whether this case involves substantial question of law as to interpretation of Constitution of India or any order made thereunder ? AAKASH OILFIELD SERVICES PVT LTD Petitioner(s) Versus INCOME TAX OFFICER,WARD- (1) Respondent(s) Appearance: Mr SN DIVATIA, ADVOCATE for Petitioner Mr MANISH R BHATT, Sr Advocate with Mrs MAUNA M BHATT, Advocate for Respondent CORAM: HONOURABLE Mr. JUSTICE M.R. SHAH and HONOURABLE Mr. JUSTICE B.N. KARIA 20th April 2017 Page 1 of 12 HC-NIC Page 1 of 12 Created On Sun Apr 23 10:13:33 IST 2017 C/SCA/18550/2015 JUDGMENT ORAL JUDGMENT (PER : HONOURABLE Mr. JUSTICE M.R. SHAH) 1. By way of this petition under Article 226 of Constitution of India, petitioner has prayed for issuance of appropriate writ, order to quash and set- aside impugned notice under Section 148 of Income-tax Act, 1961 [hereinafter referred to as, Act ] by which Assessing Officer has sought to reopen assessment for Assessment Year 2010-2011 alleging inter alia that income chargeable to tax has escaped assessment within meaning of Section 147 of Act. petitioner has also challenged reopening of assessment for A.Y 2010-2011. 2. facts leading to present Special Civil Application in nutshell are as under :- 2.1 That petitioner filed return of income for Assessment Year 2010-2011 declaring total income of Rs. 1,06,85,470/=. That, alongwith return, assessee submitted tax audit report and audited annual accounts also. That, assessee claimed Page 2 of 12 HC-NIC Page 2 of 12 Created On Sun Apr 23 10:13:33 IST 2017 C/SCA/18550/2015 JUDGMENT depreciation on certain equipments at rate of 30% as against regular/normal depreciation. case was selected for scrutiny. assessee was served with notice under Section 142 [1] & [2] of Act. Number of questions were raised by Assessing Officer in notice dated 7th August 2012; including with respect to depreciation claimed by assessee at rate of 30%. That thereafter, Assessing Officer framed assessment allowing 30% depreciation on certain equipments against regular/normal depreciation; as claimed by assessee. 2.2 That thereafter, petitioner has been served with impugned Notice under Section 148 of Act alleging inter alia that income chargeable to tax has escaped assessment for Assessment Year 2010-2011 within meaning of Section 147 of Act. 2.3 reasons recorded to reopen assessment for A.Y 2010-2011 reads as under :- Page 3 of 12 HC-NIC Page 3 of 12 Created On Sun Apr 23 10:13:33 IST 2017 C/SCA/18550/2015 JUDGMENT As per Income Tax Act, 1961, motor buses, motor lorries and motor taxis used in business of running them on hire are eligible for depreciation at higher rate of 30% [Covered by sub item (3) of item III of Appendix-I of Rule-5]. However, vehicles other than those covered by this sub-items are eligible for depreciation at ordinary rate of 15% only. However, when Trucks/motor lorries are primarily used in assessee s own business, occasionally let out on hire, assessee will not be eligible for higher rate depreciation. Further as per CBDT Circular No. 652 dt. 14.06.1993, higher rate of depreciation will also be admissible on motor lorries used in assessee s business of transportation of goods on hire but not to its user in some other non-hiring business of assessee. assessee company engaged in business of Oil Field Services/Rig Shifting Services, filed return of income for A.Y. 2010-11 on 25.09.2010 declaring income of Rs. 1,06,85,470/-. same was assessed u/s 143(3) and income was assessed at Rs. 1,08,22,910/- vide order dated 18.01.2013. assessee had Page 4 of 12 HC-NIC Page 4 of 12 Created On Sun Apr 23 10:13:33 IST 2017 C/SCA/18550/2015 JUDGMENT claimed depreciation on Truck, Tanker, Trailor, Air Compressor, Cranses, Bolero etc. at rate of 30% as per following details. Asset@ W.D.V. Addition Addition Total Depreci Depreci Excess 30% upto after ation at ation Deprecia 9/2009 9/2010 30% allowab tion le @ allowed 15% TATA- 5151 5151 1545 773 773 407 Tankers 807393 313000 0 838693 251608 125804 1258040 4=(867 4 0 0 6934- sold- 603000 Trailor 717500 140000 230000 441750 980250 490125 490125 A/c. 0 0 0 Truck 82594 0 Unit- 250435 0 82594 24778 12389 12389 321 Unit- 105710 0 250435 75131 37565 37565 8291 9 Unit- 425000 0 134256 402770 201385 201385 5676 7 Air 134256 0 134256 402770 201385 201385 Compre 7 7 ssor Bolero 321697 204411 460747 572183 164743 823719 823719 3 3 3 8 Tata- 258536 258536 77561 38780 38780 Ace Cranes 278535 564139 921725 176440 391061 195530 1955307 9 5 0 04 4 7 Setamin 326201 970262 279387 702614 171829 859147 859147 g 0 =11671 0 2 4 Unit 38- (Boiler) Cenvat- 196876 Total 133980 758191 120111 466178 117990 589954 58,99,54 83 9 20 05 94 6 6 Page 5 of 12 HC-NIC Page 5 of 12 Created On Sun Apr 23 10:13:33 IST 2017 C/SCA/18550/2015 JUDGMENT depreciation at higher rate of 30% was claimed on ground that assessee was claimed on ground that assessee was hiring Vehicles/Heavy vehicles Machinery. It was revealed from assessment records that assessee was not engaged in business of transportation of goods on hire, but was engaged in business of Oil Field Services/Rig Shifting Services work for which above vehicles were used. assessee was using above vehicles in their own business. Since assessee had not used these vehicles in transportation business of running them on hire. Further, as per P&L Account, no hire income has been shown. Even in case, they were used not solely for their own business, just by giving them on hire occasionally, assessee does not become eligible for higher depreciation of 30 percent; assessee was eligible for depreciation at normal rate of 15 percent only. In view of above facts, I have reasons to believe that income of Rs. 58,99,546/- has escaped assessment within meaning of provisions of section 147 of I.T. Act and hence notice u/s. 148 of Income Tax Act is issued If you have any objection against re- Page 6 of 12 HC-NIC Page 6 of 12 Created On Sun Apr 23 10:13:33 IST 2017 C/SCA/18550/2015 JUDGMENT assessment proceedings, then file same immediately. 2.4 On receipt of reasons recorded to reopen assessment for A.Y 2010-2011, assessee raised detailed objections against reopening. It was submitted on behalf of assessee that issue with respect to depreciation at rate of 30% claimed by assessee was gone into by Assessing Officer in scrutiny assessment, and therefore, reopening is solely on basis of change of opinion by subsequent officer, and therefore, reopening on aforesaid ground is not permissible. However, Assessing Officer has not agreed with objections submitted by assessee, and by order dated 19th September 2014, Assessing Officer has rejected objections. Hence, petitioner has preferred present Special Civil Application under Article 226 of Constitution of India for aforestated reliefs. 3. Learned advocate appearing on behalf of petitioner has chosen to remain absent. However, Page 7 of 12 HC-NIC Page 7 of 12 Created On Sun Apr 23 10:13:33 IST 2017 C/SCA/18550/2015 JUDGMENT considering order passed by Division Bench of this Court dated 3rd November 2015, in which Division Bench has quoted submissions made on behalf of petitioner, it appears that reopening of assessment for A.Y 2010-2011 is sought to be challenged mainly on ground that reopening is nothing, but change of opinion by subsequent Officer in as much as at time of scrutiny assessment, claim of petitioner of depreciation at rate of 30% was gone into and even specific query was raised vide item no. 28 with regard to claim of 30% depreciation, as against regular depreciation and petitioner replied to same and only thereafter, Assessing Officer accepted claim of petitioner for depreciation at rate of 30% against regular depreciation, and therefore, it is case on behalf of petitioner that impugned reopening is nothing but change of opinion by subsequent Officer, and therefore, reopening of assessment is not permissible. Page 8 of 12 HC-NIC Page 8 of 12 Created On Sun Apr 23 10:13:33 IST 2017 C/SCA/18550/2015 JUDGMENT 4. Shri Manish R. Bhatt, learned Senior Advocate appearing on behalf of Revenue has tried to support impugned notice by submitting that as Assessing Officer has formed opinion that on particular items/equipments, assessee was not entitled to claim 30% depreciation against regular depreciation, and therefore, income chargeable to tax has escaped assessment, and therefore, Assessing Officer is justified in reopening assessment. 4.1 It is further submitted by Shri M.R Bhatt, learned counsel for Revenue that even in present case, reopening of assessment is within period of four years. 4.2 Making above submissions, it is requested to dismissed present writ petition. 5. Having heard learned counsel Shri Manish R Bhatt appearing on behalf of Revenue and considering submissions made in petition and earlier order passed by this Court on 3rd November 2015, in Page 9 of 12 HC-NIC Page 9 of 12 Created On Sun Apr 23 10:13:33 IST 2017 C/SCA/18550/2015 JUDGMENT which submissions made on behalf of petitioner-assessee are recorded, and reasons recorded by Assessing Officer to reopen assessment for A.Y 2010-2011, it appears that assessment for A.Y 2010-2011 is sought to be reopened on ground that petitioner had claimed depreciation at higher rate ie., 30% instead of eligible normal rate of depreciation ie., 15%. However, it is required to be noted that entire aspect with respect to depreciation claimed by assessee at rate of 30% was gone into by Assessing Officer at time of scrutiny assessment. specific query was raised by Assessing Officer in notice under Section 142 [1] of Act; more particularly, in Item No. 28 thereof. Item No. 28 was with respect to claim of 30% depreciation, as against regular depreciation claimed by assessee. assessee replied to same and thereafter, Assessing Officer dealt with said issue and while passing scrutiny assessment, accepted claim of Page 10 of 12 HC-NIC Page 10 of 12 Created On Sun Apr 23 10:13:33 IST 2017 C/SCA/18550/2015 JUDGMENT petitioner. Under circumstances, subsequent reopening of assessment on aforesaid ground can be said to be change of opinion by subsequent Assessing Officer. 5.1 As per catena of decisions of Hon ble Supreme Court as well as of this Court, merely on change of opinion of subsequent officer, reopening of assessment is not permissible. Under circumstances, on aforesaid ground alone, impugned Notice under Section 148 of Act and impugned reopening of assessment for A.Y 2010- 2011 deserves to be quashed and set-aside. 6. In view of above and for reasons aforestated, petition succeeds. Impugned notice under Section 148 of Act dated 28th April 2014 and reopening of assessment for A.Y 2010-2011 dated 19th September 2014 are hereby quashed and set-aside. Rule nisi made absolute. No cost. [M.R Shah, J.] Page 11 of 12 HC-NIC Page 11 of 12 Created On Sun Apr 23 10:13:33 IST 2017 C/SCA/18550/2015 JUDGMENT [B.N Karia, J.] Prakash Page 12 of 12 HC-NIC Page 12 of 12 Created On Sun Apr 23 10:13:33 IST 2017 Aakash Oilfield Services Pvt Ltd. v. Income-tax Officer, Ward-(1)