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2018 (10) TMI 1443 - AT - Income TaxRevision u/s 263 - entitled for deduction u/s 80IA/80IC - disallowance of depreciation - Held that:- If we consider the facts and circumstances of the present case, then it would reveal that the assessee is entitled for deduction under section 80IA/80IC. The moment depreciation is being disallowed, it will be added to the total income of the assessee, and accordingly enhanced deduction would be given to the assessee. Therefore, order of the Commissioner is not sustainable on this issue. The assessee has raised specific plea before the Commissioner also, but without recording any logical finding the Commissioner just simply ignored it. He observed that it was not relevant in the present context, whereas, fulfillment of one of the conditions, which was very much relevant. No doubt the AO has issued a questionnaire inviting explanation of the assessee with regard to the details of the assets added in the block of assets. But he failed to conduct an inquiry whether the plant was put to use or not installed in the first half for granting of depreciation. As far as contentions of the assessee that proceedings had merged with proceedings pending before the ld.CIT(A) relating to computation of deduction admissible under section 80IA/IC is concerned, we are of the view that both the issues are separate issues. The eligible profit for grant of deduction under section 80IA/80IC could have many components viz. rental income, interest income, scrap sales, job charges whose exclusion or inclusion would lead to a controversy, which might be pending before CIT(A). How, the resolving of that controversy would give an idea to the ld.CIT that the issue of depreciation deserves to be examined and certain depreciation has to be disallowed to the assessee. This is a peripheral issue, not directly linked which could be construed as merged in that proceeding. No merit in this fold of contentions. Perusal of the show cause issued under section 263 does not indicate that it was issued on the instructions of audit report. It was issued on application of independent mind upon the record. The auditor could be an informer. Had it been treated as gospel truth and action under section 263 is being taken, then, the assessee would be justified. But where on an information of the auditor or from any other source, the competent authority, applied his independent mind and then taken action under section 263, then such action would not be declared illegal on the ground that it was taken on the auditor’s objection. The requirement under the law is that on the information come to the possession of the competent authority ought to be construed by him and mind should be applied independently. It should not be under tutelage of any other authority. Therefore, we reject all other alternative contentions of the assessee. However on non-fulfillment of twin conditions, i.e. no prejudice is being caused to the Revenue on account of grant of deprecation, we allow this ground of appeal and quash the order passed under section 263 of the Income Tax Act, 1961. - Decided in favour of assessee.
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