Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2019 (7) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (7) TMI 747 - AT - Income TaxRevision u/s 263 - notices were issued by Ld. CIT on four issues i.e deduction U/s. 35D; taxability of JVs; depreciation on Plant & Machinery and notional gain on capital items (Forex). - Ld. CIT on verification of the assessment records held that the Ld. AO had framed the assessment in the case of the assessee for both the AYs mechanically and without application of mind which is prejudicial to the interest of Revenue. Deduction U/s. 35D - expenses were incurred during the assessment year 2008-09 - alleged that assessee was not an ‘industrial undertaking’ but Civil Contractor - HELD THAT:- Though the assessee has incurred the expenditure during the AY 2008-09 wherein the assessee was not entitled for the claim of deduction U/s. 35D as the assessee was not an ‘industrial undertaking’, however the Act was amended and the word ‘industrial’ was omitted by the Finance Act, 2008 w.e.f 1/04/2009. The expenditure incurred by the assessee was subsequent to the 31st Day of March, 1970. In this situation, the assessee has fulfilled all the conditions stipulated under the Act for the residual period viz., AY 2010-11, 2011-12 and 2012-13. Therefore, there is no reason why the benefit of section 35D should not be allowed to the assessee for the AY 2010-11 to 2012-13. Hence, we do not find any error in the order of the Ld. AO for having granted the benefit of deduction U/s. 35.D of the Act for the AY 2010-11 and 2011-12. CIT is not right in his rem to invoke the provisions of section 263 on this count in the case of the assessee for both the relevant AYs. Share of profits from the Joint Ventures - CIT observed that the assessee had reduced the share of profits earned from JV projects while computing it’s loss declared in the return of income - CIT opined that the Ld. AO had blindly accepted the version of the assessee without primarily examining the issue whether the profits had been separately assessed or not - HELD THAT:- No merit in the order of the Ld. CIT on this issue because the CIT was at liberty to call for any information from the assessee or grant an opportunity to the assessee to furnish any such requisite details. However, in the case of the assessee the CIT had simply presumed that the assessee might not have assessed the profits derived from the JV projects separately and therefore, invoked the provisions of section 263 which in our view is not appropriate. Therefore, we hereby hold that the reason for invoking the provisions of section 263 on this issue is not warranted. Depreciation on Plant & Machinery and Notional gain - HELD THAT:- As per section 43A any gain or loss on account of changes in rate of exchange of currency shall go in enhancing or reducing the cost of capital asset acquired and shall not be adjusted to the taxable income. Notional gain on capital items (Forex) is notional gain on capital items due to change in foreign currency rates thus gain is not actual gain and moreover it is notional gain on capital items and hence the same is not taxable under, Income Tax Act, 1961 . CIT without verifying the submissions of the assessee hastily passed orders for the both AYs 2010-11 and 2011-12 which is not appropriate. Therefore, we do not find any merit in the action of the Ld. CIT for invoking his powers U/s. 263 of the Act on this issue also. Since all the reasons cited by the Ld. CIT for invoking his powers U/s. 263 of the Act are found to be devoid of merits we hereby quash the order passed by the Ld. CIT U/s. 263 of the Act in the case of the assessee for both the AYs 2010-11 and 2011-12. - Assessee appeal allowed
|