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2015 (1) TMI 191 - AT - Income TaxValidity of exercise of power u/s 263 - Allowability of depreciation on two dredgers - Held that:- AO while completing the assessment has not at all applied his mind to this issue and has not made any enquiry - claim of depreciation on the very same dredgers in AY 2009-10 could not have been allowed - AO while framing assessment for the AY has not at all examined this issue and without applying his mind to the facts and materials on record has allowed assessee's claim of depreciation even on these two dredgers - even assessee also admits this fact in the application filed u/s 154 of the Act - assessment order passed is certainly not only erroneous but also prejudicial to the interests of revenue - CIT's power u/s 263 cannot be curtailed due to application filed u/s 154 of the Act as the proceedings are different - CIT was justified in revising the assessment order u/s 263 of the Act so far as the issue of allowability of depreciation claimed on the two dredgers is concerned. Applicability of provisions of section 40(a)(ia) on equipment contractual charges – Held that:- ITO(TDS) while examining assessee's compliance to TDS provisions issued show cause notice on 16/03/2011, specifically seeking assessee's reply on compliance to TDS provisions on payment of equipment contractual charges of ₹ 5506.46 lakhs - when AO has made enquiry in respect of compliance to TDS provisions on payment of equipment contractual charges and after considering facts and evidences brought on record has completed the assessment, the assessment order cannot be considered to be erroneous and prejudicial to the interests of revenue for non consideration of applicability of section 40(a)(ia) - as AO has considered the issue of TDS on equipment contractual charges and since the order passed u/s 201 & 201(1A) also reveals that assessee has complied to TDS provisions, direction of CIT in respect of applicability of section 40(a)(ia), is not correct and the assessment order on this issue cannot be considered to be erroneous and prejudicial to the interests of revenue - the validity of the order passed u/s 263 is upheld and the AO is directed to only examine the issue of allowability of depreciation on the two dredgers – Decided partly in favour of assessee.
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