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TMI Blog2016 (10) TMI 587X X X X Extracts X X X X X X X X Extracts X X X X ..... ared on behalf of assessee and Shri Vijay Shankar, Ld. DR represented on behalf of Revenue. First we take up ITA No.1655/Kol/2013 for A.Y 08-09. 3. In this appeal various grounds have been raised out of which ground No.8 is of general in nature and does not require separate adjudication. The other grounds raised by the assessee are as under:- "1. For that the order made by the Learned Commissioner of Income Tax - Ill, Kolkata, under section 263 of the Income tax Act, 1961 (the "Act") is illegal, invalid, not sustainable in law and liable to struck down. 2. For that the Learned Commissioner of Income Tax, erred in law in holding that the assessment order under section 143(3) is erroneous and prejudicial to the interest of the revenue in respect of depreciation allowable under the provisions of the Act, without appreciating that there was no error in such calculation. 3. For that the learned Commissioner of Income Tax was not justified in setting aside the order of the Assessing officer passed u/s 143(3) of the Act since the claim of depreciation had been computed in accordance with section 32 of the Act. 4.*For that the learned Commissioner of Income Tax was not justifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 29,83,023/- which was shown in the balance sheet. However the same amount was not adjusted in the depreciation account debited in the profit & loss account. In response to the notice the assessee submitted that the depreciation of Rs. 2,68,76,124/- was claimed in the profit & loss account books as per the companies Act which was duly added back in the computation of income and depreciation of Rs. 1,84,61,661/- as per the income tax act was claimed as deduction in the computation of income. The depreciation under the income tax act was calculated on the written down value of assets as appearing in the immediate preceding previous year. The assessee also explained that such a written down value was arrived at after reducing the amount of grant received from the value of the assets. The assessee received the last grant in relation to the capital assets in the AY 2002-03 and the same was adjusted with the value of the capital assets so as to arrive at the WDV of the block of assets for the purpose of charging the depreciation. For the amount of Rs. 29,83,023/- credited in the depreciation account, the assessee submitted that this relates to the accumulated depreciation on the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ets disposed during the year. The amount credited in the profit and loss account is merely an adjustment for depreciation charged in earlier years so that the return on value of the assets correctly computed in the books of the assessee. The adjustment made in the financial statement of the assessee does not have any impact on the amount of depreciation claimed under the provisions of the Income Tax Act as the written down value of the block of assets has been reduced by the amount of the sale proceeds. Accordingly the depreciation charged under the Companies Act and Income Tax Act is depicting the correct figure and he prayed before the Bench to confirm the order of AO. 6. On the other hand the ld. DR submitted that no paper book was submitted at the time proceedings under section 263 of the Act. The ld. DR vehemently supported the order of the CIT. 7. We have heard the rival contentions of both the parties and perused the materials available on record. The ld. CIT in the instant case held the order of the AO erroneous and prejudicial to the interest of Revenue on two counts. Firstly the AO has not carried out the proper verification whether the WDV of the block of assets has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 The assessee received the grant from NDDB in the earlier years in relation to capital assets which was shown on the liability side of the balance sheet under the head reserve and surplus in the books of accounts. On the other hand, assessee recognized the capital assets at gross purchase value. As per the policy of the assessee the depreciation pertaining to the grant was written off against the grant value shown in the balance sheet and the balance depreciation pertaining to the net value of the fixed assets was charged in the profit & loss account. The assessee for the year under consideration has calculated the depreciation in the books of accounts for Rs. 3,42,10,774/- out of which proportionate depreciation of Rs. 73,34,650/- was adjusted against the grant value shown in the balance sheet and the balance depreciation of Rs. 2,68,76,124/- proportionate to the net value of fixed assets was debited in the profit & loss account. The assessee accordingly has added the depreciation of Rs. 2,68,76,124/- in the statement of income and reduced the depreciation by the amount as worked out as per written down value of the assets under the income tax Act for an amount of Rs. 1,84,61,661 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judicial to the interest of the revenue in respect of depreciation allowable under the provisions of the Act, without appreciating that there was no error in such calculation. 3. For that the Ld CIT was not justified in setting aside the order of the Assessing officer passed u/s 143(3) of the Act since the claim of depreciation had been computed in accordance with section 32 of the Act. 4. For that the Ld CIT was not justified in setting aside the impugned assessment order on a mere presumption that the written down value of assets of the appellant (which has been duly accepted by the Revenue over the years) was arrived after non-adjustment of grants. 5. Without prejudice to the above, the Ld CIT was not justified in assuming jurisdiction u/s 263 of the Act on the assessment order for the AY 2009-10, in respect of an adjustment relating to AY 2002-03. 6. For that the order passed by the Ld CIT u/s 263 of the Act is against the settled principle of law that an order of Assessing officer should be both erroneous and prejudicial to the interest of the revenue, and such tests being not satisfied in the instant case, the order u/s 263 is liable to be quashed." 10. 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