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2023 (9) TMI 253 - ITAT INDORERevision u/s 263 - claim of depreciation after the receipt on account of affording charges and electrification charges is declared as revenue receipt - CIT observed that the AO passed the assessment order without making any inquiry on the issues of claim of depreciation and consequential carry forward loss - HELD THAT:- It is pertinent to note that for the preceding assessment years i.e. 2011-12 to 2013-14 the receipt on account of supply affordable and electrification charges capitalized by the assessee were treated as revenue by the department and therefore, the assessee being a consistent loss making company decided to suo moto declared these charges as revenue receipt from A.Y. 2014-15 onwards and thereby work out the depreciation on the enhanced written down value to the extent of the amount which was declared as revenue receipt. Once the assessee has explained the difference of increase in the claim of depreciation and the Pr. CIT did not find any fault or error in the said explanation then allowing the said claim by the AO as otherwise a correct and allowable claim cannot be held as prejudicial to the interest of the revenue. When the assessee has given correct calculation of the increase in the claim of depreciation as a consequence of declaration of supply affording charges and electrification charges as revenue receipt instead of capital receipt then allowing the said claim of the assessee by the AO without even conducting inquiry would not render the order of the AO as prejudicial to the interest of the revenue. Therefore, when the claim of the assessee is a correct and valid allowable claim then the not conducting an inquiry on the part of the AO is not epso facto permit the commissioner to invoke the provisions of section 263 of the Act. Accordingly we hold that twine conditions i.e. the order passed by the AO is erroneous so far as prejudicial to the interest of revenue are not satisfied and consequently the Pr. CIT is not permitted to invoke the provisions of section 263 of the Act. Hence the impugned order of the Pr. CIT is quashed. Decided in favour of assessee.
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