TMI Blog2012 (10) TMI 354X X X X Extracts X X X X X X X X Extracts X X X X ..... e time. The depreciation statement placed on record by the assessee shows that both the companies have claimed benefit of depreciation on pro-rata basis. - Appeal decides in favour of assessee - ITA No.132/Mds/2012 - - - Dated:- 13-7-2012 - SHRI ABRAHAM P.GEORGE AND SHRI VIKAS AWASTHY, JJ. Appellant by : Mr. K.Raghu, C.A. Respondent by : Mr. Vikramaditya, JCIT ORDER PER VIKAS AWASTHY, JUDICIAL MEMBER: The appeal has been filed by the assessee impugning the order of the CIT dated 21.12.2011 passed under section 263 of the Income Tax Act, 1961. 2. The brief facts of the case are that the assessee was a company registered under the provisions of the Companies Act, 1956 engaged in the business of steel cast ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of the depreciation of assets added after 31.8.06 between the assessee and the amalgamated company is not in order. Thus, as the allowing of Rs. 2363073 instead of only Rs.995077 in the order consideration is an to error inasmuch as the same is prejudicial to the interests of the Revenue it is decided to invoke provisions of the section 263 of the Act. The CIT vide order dated 21.12.2011 directed the Assessing Officer to redo the assessment afresh with reference to the observations in his impugned order. The CIT in his order held as under:- 4.1 Plain reading of the aforementioned provision gives an import that, usage of words as if amalgamation had not taken place is with reference to application of rates prescribed on the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant was allowed depreciation on its assets to the extent of Rs. 23,62,073/- instead of only Rs. 9,95,077/- eligible, for the reasons stated by him in the impugned order to render the order erroneous in so far as it is prejudicial to the interest of revenue, in the facts and circumstances of the case and in law. 3. The CIT has exceeded his jurisdiction in stating that the appellant (amalgamating company) was not entitled to depreciation, in respect of the additions to fixed assets from 1.9.06 notwithstanding the words of the proviso as if the amalgamation had not taken place with effect from 1.9.2006 in the facts and circumstances of the case and in law. 4. The CIT ought to have held that the quantum of depreciation allowed to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad not taken place and such deduction shall be apportioned between the amalgamating and amalgamated companies in the ratio of the number of days for which the assets were used by them. He submitted that both the companies i.e. amalgamating and amalgamated companies were liable for similar rate of tax and both the companies had earned profits. The amalgamating and amalgamated companies have claimed depreciation in accordance with the provisions of section 32 of the Act. He further submitted that the order of the CIT under section 263 is uncalled for and erroneous. The CIT has erred in stating that the assessee was not entitled to depreciation in respect of the additions to the fixed assets from 1.9.2006, notwithstanding the words of proviso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has to be read in conjunction with the erroneous order passed by the Assessing Officer. Where two views are possible and ITO has taken one view with which the CIT does not agree it cannot be treated as erroneous order prejudicial to the interest of the Revenue, unless the view taken by the ITO is unsustainable in law. In the present case the treatment of depreciation may be erroneous but certainly not prejudicial to the interest of the Revenue, as the benefit of depreciation has not been claimed by both the companies at the same time. The depreciation statement placed on record by the A.R. shows that both the companies have claimed benefit of depreciation on pro-rata basis. In view of the above, we hold that the impugned order passed by th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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