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2021 (9) TMI 447 - AT - Income TaxRevision u/s 263 by CIT - case of assessee was selected for limited scrutiny - Additional depreciation on cost of windmill allowed by AO - as per the PCIT, the amount of liquidated damages was directly relatable to the procurement of windmill and was required to be reduced from the actual cost of windmill as per provisions of section 43(1) and on the balance amount, the depreciation should have been claimed and allowed, however AO in a routine and perfunctory manner without proper examination and verification of the facts of the case has allowed excess claim of depreciation - HELD THAT:- We find that the decision of the Hon’ble Supreme Court in case of Saurashtra Cement [2010 (7) TMI 11 - SUPREME COURT] as well as the decision of Shree Digvijay Cement Co Ltd [1981 (8) TMI 32 - GUJARAT HIGH COURT] supports the case of the assessee in treating the liquidated damages as capital receipts and not reducing the same from the cost of the windmill in terms of section 43(1) for the purposes of claim of depreciation and where such a claim is allowed by the Assessing officer, it cannot be held that there is erroneous application of provisions of law and legal position so emerging from reading of the aforesaid two decisions. During the course of assessment proceedings, we find that the matter was duly examined by the AO as evident from the notice issued u/s 143(2) wherein one of the reasons for selection of case has been stated to be claim of depreciation which was followed by specific queries raised on 11.10.2017, 7.11.2017, 10.11.2017 and 30.11.2017 and replies dated 10.11.2017 and 7.11.2017 submitted by the assessee providing the necessary information and documentation as well as the legal decisions referred supra in support of his claim. It is therefore not a case where the queries were raised and submissions were accepted on face value, rather the Assessing officer on receipt of initial submissions has examined the same and has thereafter raised further queries and sought submissions and once he was satisfied with the claim of the assessee, he has allowed the said claim - where the Assessing Officer has taken into consideration the factual and legal position and examined the matter at length and allowed the claim of the assessee, the opinion so formed by the Assessing Officer cannot be held as erroneous in nature - Decided in favour of assessee.
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