BOMBAY STOCK EXCHANGE LIMITED Vs. DEPUTY DIRECTOR OF

JUDGEMENT

(1.) Rule, made returnable forthwith. Counsel appearing on behalf of the Respondents waive service. With the consent of counsel and at their request, the Petition is taken up for hearing and final disposal.

(2.) The challenge in these proceedings is to a notice issued under Section 148 of the Income Tax Act 1961 on 11 March 2011 seeking to reopen an assessment for Assessment Year 2004 05.

(3.) The Petitioner filed its return of income for Assessment Year 2004 05 on 30 October 2004. An order of assessment was passed on 28 November 2006 under Section 143(3). The reopening of the assessment under Section 148 is by a notice dated 11 March 2011 which admittedly has been issued beyond a period of four years of the end of the relevant Assessment Year. The reasons which have been disclosed to the Petitioner for reopening the assessment furnished two grounds for the reopening of the assessment. Firstly, it has been stated that as against a total income of Rs.162.41 Crores, the assessee had applied an amount of Rs.113.94 Crores towards the object of the trust under Section 11(1)(a). This amount includes the provision for doubtful accounts amounting to Rs.1.60 Crores. The Assessing Officer has stated that the provision made in the accounts cannot be treated as income applied to the objects of the trust and consequently this amount has to be deducted while calculating the total amount applied to the objects under Section 11(1)(a). Since the provision for doubtful accounts was allowed as application of income, the Assessing Officer has stated that there is reason to believe that income chargeable to tax has escaped assessment. The second ground for reopening is that the assessee has claimed depreciation on fixed assets amounting to Rs.21.72 Crores in addition to an allowance of capital expenditure to the tune of Rs.19.91 Crores. According to the Assessing Officer the assessee was not entitled to claim both capital expenditure as application of income and also a depreciation on capital assets which would tantamount to a double deduction.