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2016 (2) TMI 700 - AT - Income TaxRevision u/s 263 - subsidy received by the assessee under the West Bengal Incentive Scheme 2000 was capital or revenue subsidy - Held that:- It is clear from the order passed by AO u/s 143(3) of the Act and enquiry made by the AO before passing such order that the AO went in to the question as to whether the subsidy received by the assessee under the West Bengal Incentive Scheme 2000 was capital or revenue subsidy. Though the AO had not raise any specific query as to whether the subsidy in question has to be reduced from the value of fixed assets for the purpose of allowing depreciation invoking the provisions of Explanation 10 to section 43(1) of the Act. The assesse in its reply to the notice u/s 142(1) of the Act has clearly set out that the subsidy in question need not be reduced from the value of fixed assets. We have extracted the reply of the assessee in the earlier part of this order. Therefore the CIT in exercising his powers u/s 263 of the Act cannot come to a conclusion that there is a failure on the part of the AO to have made proper and adequate enquiry with regard to applicability of Explanation 10 to section 43(1) of the Act to the subsidy received by the assessee. Thus it cannot be said that the incentive in question was granted to meet any portion of the actual cost of fixed assets and the same is not required to be excluded from the cost of fixed assets on which the depreciation is to be allowed. We also find force in the submissions of learned counsel for the assessee that AO has taken one of the possible view and at best it would be a case where the CIT in exercising his powers u/s 263 of the Act wants to substitute his view with that of the view by the AO. Such a course is not permissible in the proceedings u/s 263 of the Act. For the reasons given above, we quash the order u/s 263 of the Act and allow the appeal of the assessee.
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