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2016 (10) TMI 587 - ITAT KOLKATA

2016 (10) TMI 587 - ITAT KOLKATA - TMI - Revision u/s 263 - as per CIT(A) AO has not examined the issue in depth so as to verify whether the written down value of the block of assets is net of grant amount and the amount of accumulated depreciation pertaining to the fixed assets disposed during the year was credited to the depreciation account and this aspect was not verified by the AO at the time of assessment - Held that:- The assessee received the grant from NDDB in the earlier years in relat .....

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or the year under consideration has calculated the depreciation in the books of accounts for ₹ 3,42,10,774/- out of which proportionate depreciation of ₹ 73,34,650/- was adjusted against the grant value shown in the balance sheet and the balance depreciation of ₹ 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 ₹ 2,68,76,124/- in the statement of income and reduced .....

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ments made by the ld. AR at the time of hearing. In view of above, we opined that the depreciation claimed by the assessee under the Companies Act and Income Tax Act is representing the correct figure. - Similarly for the amount credited to the depreciation account during the year for the assets disposed, the ld CIT in his impugned order u/s 263 of the Act at the outset failed to bring any error from the financial statement of the assessee and has just directed the AO for examination and ver .....

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ntrary to the arguments made by the ld. AR at the time of hearing. Accordingly we find no error in the order of AO having prejudice to the interest of Revenue. - Decided in favour of assessee. - ITA No. 1655/Kol/2013, ITA No. 729/Kol /2014 - Dated:- 9-9-2016 - Shri Waseem Ahmed, Accountant Member And Shri S.S.Viswanethra Ravi, Judicial Member Assessee : Smt. Sushmita Bose, AR & Shri Bikash Chandra, AR Revenue : Shri Vijay Shankar, CIT-DR ORDER Per Waseem Ahmed, Accountant Member Both appeals .....

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mp; 19.12.2011 for assessment years 2008-09 and 2009-10 respectively. 2. These appeals are heard together and deem it appropriate to dispose them by way of this common order. Smt.Sushmita Bose and Shri Bikash Chandra Ld. Advocates appeared 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 .....

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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 justified in setting aside the impugned assessment order on a mere pr .....

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ficer to re-examine the issue of credit of ₹ 29,83,023/-. 7. For that the order passed by the learned Commissioner of Income Tax 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. 4. The facts in brief are that the assessee in the present case is a Limited Company and engaged in .....

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7,900/-. Subsequently the learned CIT under section 263 of the Act issued notice vide letter dated 11-03-2013 by considering the order of the AO as erroneous in so far prejudicial to the interest of Revenue on the following counts. i. It was observed from the assessment records that the assessee has shown deferred income for ₹ 73,34,650/- in the financial statement in relation to the grant received from NDDB on the capital assets. The assessee has adjusted the amount of grant shown as defe .....

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ccount. In response to the notice the assessee submitted that the depreciation of ₹ 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 ₹ 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 .....

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that this relates to the accumulated depreciation on the assets disposed during the year. This amount was adjusted in the financial account and it has no impact on the amount of depreciation as per income tax Act. The sale proceeds of disposed assets were duly adjusted with the balance of written down value of the relevant block of assets. However, the ld. CIT disregarded the plea of the assessee with regard to the first dispute of adjustment of grant by holding that the AO has not examined the .....

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ew our attention on 21 of the paper book where the reconciliation statement for earlier years beginning from AY 2002-03 to AY 2009-10 was placed. As per the statement the assessee received the grant last in the AY 2002-03 which was duly adjusted with the relevant block of assets. The grant amount from NDDB was duly adjusted with the amount of proportionate depreciation as evident from the Schedule 2 and 19 of the audited balance sheet of the assessee which is placed on pages 82 & 92 of the p .....

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e 19 of the paper book. Ld. AR further drew our attention on page 129 of the paper book where it was mentioned in the audited accounts that the opening written down value appearing as on 01.04.2001 represents the Gross Value of the assets capitalized for the purpose of the Income Tax Act and no depreciation under the income tax act was claimed earlier. Similarly the ld. AR submitted that the amount of accumulated depreciation of ₹ 29,83,023/- relates to the capital assets disposed during t .....

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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 th .....

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ow, from the aforesaid discussion we find that the ld. CIT treated the order of the AO erroneous in so far as it is prejudicial to the interest of revenue. It is because that the AO has not verified the adjustment of the Grant with respect to WDV and amount credited in the depreciation account for the assets disposed during the year. Therefore the ld. CIT held the order erroneous in so far prejudicial to the interest of Revenue. Now to arrive at the correct conclusion of the case, we deem it nec .....

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reon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment…. The sum and substance of the above reproduced section 263(1) can be summarized in the following points:-: 1) The commissioner may call for an examine the record of any proceeding under the Act; 2) If he considers that the order passed by the AO is (i) Erroneous; and (ii) Is prejudicial to the interest of Revenue; 3) He has .....

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tated points/ provisions of section 263 of the Act. 7.1 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 th .....

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& loss account. The assessee accordingly has added the depreciation of ₹ 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 ₹ 1,84,61,661/-. We also find that the depreciation under the income tax act was calculated at the WDV which was brought forward from the earlier years. The WDV was duly accepted by the lower authorities. In the year under consider .....

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u/s 263 of the Act at the outset failed to bring any error from the financial statement of the assessee and has just directed the AO for examination and verification of the aforesaid amount. From the submission of the ld. AR, we find that this amount was adjusted with the figures of the depreciation account in the books of accounts. The aforesaid amount has not impacted the depreciation amount charged by the assessee in the computation of income. The aforesaid amount was the accumulated deprecia .....

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revision order unsustainable in law, and we, therefore, cancel the same. The issue gets the relief accordingly. Coming to ITA No. 729/Kol/2014 for AY 09-10. 9. In this appeal various grounds have been raised out of which ground No.7 is of general nature and does not require separate adjudication. The other grounds raised are as under:- 1. For that the order made by the Learned Commissioner of Income Tax - III, Kolkata,(Ld.CIT), under section 263 of the Income tax Act, 1961 (the "Act") .....

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