TMI Blog2017 (1) TMI 985X X X X Extracts X X X X X X X X Extracts X X X X ..... rious judicial precedents. The assessment order passed cannot be called to be erroneous though may be prejudicial to the interest of the revenue. As both the ingredients does not stand fulfilled of being erroneous, as well as prejudicial to the interest of the revenue, the order passed by Ld. PR. CIT is hereby quash and set-aside. - Decided in favour of assessee - I.T.A. No. 2813/Del/2016 - - - Dated:- 12-1-2017 - Shri L. P. Sahu, Accountant Member And Smt. Beena A. Pillai, Judicial Member Appellant by : Sh. Ajay Vohra, Sr. Adv. Sh. Rohit Jain, Adv. Ms. Deepshree Raw, Adv. Respondent by : Ms. Rachna Singh, CIT (DR). ORDER Per Beena A. Pillai, JM 1. The present appeal has been filed by the assessee against the order dated 30.03.2016 passed by Principal Commissioner of Income Tax, Delhi-3 (hereinafter referred to as PR. CIT ) under section 263 of the Act, for the year under consideration on the following grounds of appeal: 1. That on the facts and circumstances of the case and in law, the impugned order dated 30.03.2016 passed by the Principal Commissioner of Income-tax (PCIT), under section 263 of the Income-tax Act, 1961 ('the Act') is without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e notice on 16.03.2015 initiating proceedings under section 263 of the Act which is as under: 3. On scrutiny of assessment record it is seen that the assessee company was a concessionaire of the Airport Metro Express project of Delhi Metro rail Corporation (DMRC) which has been developed under Build Operate and Transfer (BOT Scheme). The assessee had accepted the concession for a period of 30 years and the concession period commenced on the available date and shall end on the termination date. The assessee had claimed depreciation of ₹ 112,29,74,447/- during the A.Y 2011-12 on fixed assets of ₹ 1560,48,17,189/- @ 50 % of the eligible depreciation rates, as the assets were used for less than 180 days which was allowed in the assessment. As the assets were developed under BOT scheme the assessee was not eligible to claim of depreciation as it was not the owner of the assets. In BOT arrangement for development of airport metro project the possession of land was handed over to the assessee by DMRC( notified authority for the purpose of construction of the project) without any actual transfer of ownership and the assessee had only a right to develop and maintain the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the assessment has been completed without due application of mind and requisite inquiry, which renders it erroneous in so far as it is prejudicial to the interest of revenue. As mentioned above, the assessment order for the A.Y 2011-12 Is erroneous and prejudicial to the interest of revenue to the extent of allowing the claim of depreciation of ₹ 112,29,74,447/- to the assessee as against allowing amortization of value of fixed assets evenly over a period of 30 years. Therefore, the proceedings under section 263 of Income Tax Act are hereby initiated. 4. The Ld. PR. CIT was of the opinion that assessee was not eligible for depreciation on the value of the fixed assets for a period of 30 years, being the concession period granted to the assessee by DMRC, as laid down by the Hon ble Supreme Court in the case of Madras Industrial Investment Corporation Ltd vs. CIT reported in 225 ITR 802. He was of the opinion that the ratio laid down by Hon ble SC was applicable to the facts of assessee as assessee does not own the project wholly or partly, being an essential condition, for claiming the depreciation on the plant and machinery and therefore do not fall within the category ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than 180 days were submitted. 8. Ld. Counsel for assessee submitted that assessee had amortised the cost of the assets over concession period based on the projected revenue in the books of accounts, treating the same as in the nature of intangible assets being business or commercial rights and in the return of income assessee had claimed depreciation with respect to the cost in terms of section 32 (1) (ii) of the Act. It has been submitted that as per the terms of the concession agreement, assessee was granted permission to set up, own and operate the project along with substantial commercial rights, including but not limited to the right to collect fares from the project. He submitted that the plant and machinery installed were purchased by the assessee during the subsistence of the concession period and was legally owned by it. He thus, submitted that since the assets were used for the purposes of assessee s business, the assessee had rightly claim depreciation thereon under section 32 of the Act. 9. Ld. Counsel for the assessee submitted that the assessment was completed and the depreciation claimed by the assessee was duly verified by the assessing officer on the basis of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings has failed to examine above issues and has passed a cryptic order without proper application of mind. She thus submitted that the assessment order passed by Ld. AO is erroneous in sofar as prejudicial to the interest of the revenue. She placed reliance upon the following decisions to substantiate her preposition: Malabar Industrial Co Ltd vs. CIT reported in (2000) 243 ITR 83 (SC); Nabha Investments Pvt. Ltd. Vs. UOI, reported in (2000) 246 ITR 41 (Del) CIT vs. Nagesh knitwear s Pvt. Ltd reported in (2012) 345 ITR 135 (Del) CIT vs. Bhagwan Das reported in (2005) 272 ITR 367 (ALL) Pratap footwear vs. ACIT reported in (203) SOTA 638 (Jubbalpore) (Trib); 14. Ld. DR submitted that Assessing Officer is both an investigator and adjudicator, has to decide the issue by conducting proper investigation and enquiry. She submitted that in the present case Ld. AO has failed to investigate the issue of depreciation claimed by the assessee and has completed the assessment on the minimum amount of evidence that was placed before Ld. AO. She further submitted that it is to safeguard the interest of the revenue under such circumstances that the Ld. PR. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the CIT as to whether the order is erroneous insofar as it is prejudicial to the interest of the revenue, must be based on the materials available on record. There must be some prima facie material on record to show that, tax which was lawfully exiligible has not been imposed or that by the application of relevant statute on an incorrect or incomplete interpretation a lesser tax that was just, has been imposed. In the present facts of the case, Ld. AO had made enquiries regarding the additions that has been made to the fixed assets and the assessee had given details including the bills of purchase of the plant and machinery in that regard. All these are part of the record of the case. Assessment order cannot be termed as erroneous unless it is not in accordance with law. If an Income Tax Officer acting in accordance with law makes an assessment and takes a plausible view, the same cannot be branded as erroneous by Ld. PR CIT, simply because according to him order should have been written more elaborately. In case where there is inadequate enquiry but no lack of enquiry, Ld. PR CIT must give and record a finding that the order/enquiry made as erroneous. This can happen if an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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