TMI Blog2018 (2) TMI 2073X X X X Extracts X X X X X X X X Extracts X X X X ..... reement, assessee was granted right to collect and retain toll for the defined concession period. The right to collect toll was considered by assessee to be a form of licence and thus an intangible right as per provisions of Sec.32(1)(ii) of the Act and therefore being eligible for depreciation at 25%. We find that on identical facts namely the issue of depreciation on intangible rights, was before the Coordinate Bench of Pune Tribunal in the case of Ashoka Infrastructure Pvt. Ltd [ 2013 (8) TMI 588 - ITAT PUNE] has held that the right to collect toll is capital expenditure and consequently the assessee is entitled to claim depreciation on such intangible assets as provided u/s 32(1)(ii) of the Act. Before us no material has been placed by the Revenue to demonstrate that the aforesaid decision of Pune Tribunal in the case of Ashoka Infrastructure (supra) has been set aside / overturned by higher judicial forum. Further, in view of the aforesaid facts, we are of the view that the view /opinion of the AO of holding the right to collect toll as an intangible asset, and therefore eligible for depreciation and allowing the claim of depreciation to the assessee was a possible view. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts in the year under consideration due to which the claim of deduction u/s 80IA(4) could be denied to the assessee. Before us, Revenue has not brought any material on record to demonstrate that the view taken by the AO was an impermissible view or was contrary to law or was upon erroneous application of legal principles necessitating the exercising of Revisionary powers u/s 263 - Decided in favour of assessee. - ITA No.633/PUN/2017 - - - Dated:- 23-2-2018 - SHRI ANIL CHATURVEDI, AM AND SHRI VIKAS AWASTHY, JM Assessee by : Shri Nikhil Pathak. Revenue by : Shri Rajeev Kumar, CIT. ORDER PER ANIL CHATURVEDI, AM : 1. This appeal filed by the assessee is emanating out of the order of Pr.Commissioner of Income Tax 2, Pune dt.02.02.2017 u/s 263 of the Act for the assessment year 2012-13. 2. The relevant facts as culled out from the material on record are as under : Assessee is a partnership firm stated to be engaged in execution of Infrastructure contracts / projects. Assessee electronically filed its return of income for A.Y. 2012-13 on 17.09.2012 declaring total income of Rs.Nil. The case was selected for scrutiny and thereafter the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are registered as Companies under the Companies Act 1956, are partners with stipulated profit sharing ratio and the partnership is also a consortium and therefore AO had rightly allowed claim of deduction. On the issue of claim of depreciation on the project cost, it was inter-alia submitted that as per the concession agreements that the assessee has entered into with State Government, assessee has been given right of collecting toll for defined concession period and retaining it towards the cost of construction and maintenance of infrastructure. It was submitted that permission to collect toll was a licence and intangible asset and therefore the assessee had rightly claimed the deprecation and for which reliance was also placed on the Pune ITAT decision in the case of Ashoka Infrastructure Pvt. Ltd (ITA No. 898/PUN/2010). The submissions of the assessee were not found acceptable to the Ld PCIT. He was of the view that there was non- application of mind by the AO with respect to the details filed by the assessee, there was no inquiry by the AO and that there was no evidence to show that the return of income was objectively examined by the AO. He was therefore of the view that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l to the revenue. 3. Before us, at the outset, Ld.A.R. submitted that though the assessee has raised various grounds but the sole controversy is with respect to invocation of powers by Ld. PCIT u/s 263 of the Act. 4. Before us, the ld. A.R. submitted that in the present case the pre-requisite conditions specified u/s 263 of the Act were not satisfied and therefore the proceedings initiated u/s 263 of the Act lacks jurisdiction and are bad in law. He submitted that u/s 263 of the Act, the Ld. PCIT can revise an order passed by the AO only on the satisfaction of twin conditions namely (i) the order is erroneous and (ii) it is prejudicial to the interest of Revenue. If one of them is absent i.e. if either the order of the Revenue is erroneous but is not prejudicial to the interest of the Revenue or if it is not erroneous but is prejudicial to the interest of Revenue recourse cannot be had to Sec.263(1). He further submitted that the error envisaged by Sec.263 is not one which depends on possibility or guesswork but it should be an actual error either of facts or of law. He further submitted that when two views are possible and the AO has taken one view with which the Ld. PCIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction u/s 80IA(4) has been allowed to the assessee in AY 2004-05 and AY 2005-06 but in these two years, the assessment was framed u/s 143(1) of the Act. For AY 2008-09 and 2009-10, he submitted that the assessments were framed u/s 143(3) and the claim of deduction was allowed by the AO. He submitted that the claim for deduction u/s 80IA(4) was denied to assessee in AY 2006-07 and AY 2010-11 but the denial of deduction was not for the reason that the assessee was a firm but was denied for a different reason namely that the profits earned by the assessee from the work of widening of roads undertaken by the assessee cannot be considered to be a new infrastructural facility for being eligible for deduction u/s 80IA(4) of the Act and therefore assessee was not eligible for deduction on such profits earned from such work u/s 801A(4) of the Act. He submitted that against the order of AO and which was confirmed by Ld CIT(A), assessee carried the matter in appeal before Hon ble ITAT. The Hon ble ITAT vide order dated 05.04.2013 (ITA No 1214/PUN/2010 for AY 2006-07) and vide order dated 10.03.2017 (ITA No 1920/PUN/2014 for AY 2010-11) has decided the issue in favour of the Assessee. He p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... placed reliance on the decision dated 28.04.2011 rendered by Hon ble Madhya Pradesh High Court in the case of Org Informatics Ltd Vs. M.P.State Electronics Dev. Corp. (WP 9183/2008). He also placed on record a copy of the aforesaid decision. He submitted that in the present case, the partnership firm is akin to a consortium of companies more so because the 3 partners of the firms are Companies registered under the Companies Act 1956 and there is no other individual or a non-corporate entity as partner of the firm. 7. On the issue of claiming of depreciation at 25% on the toll rights, being intangibles, he submitted that in view of the concession agreement entered by the assessee with the State Government, assessee has been granted right to collect toll. The right to collect toll is a form of intangible asset and is therefore eligible for depreciation. He submitted that assessee considered the toll rights as intangibles and claimed depreciation on it. He submitted that on identical facts in the case of Ashoka Infrastructure Ltd, the Pune Bench of ITAT vide order dated 18.07.2013 (for AY 2007-08) has allowed the claim of depreciation on such toll rights. He placed the copy of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue was not as to whether the deduction u/s 80IA(4) is available to be partnership firm. Similarly, in the case of Ramky Infrastructure (supra) the issue involved was different namely, whether the assessee was a developer or contractor. He therefore submitted that the reliance placed by the Revenue on the decisions with respect to Sec.80IA(4) of the Act, are distinguishable on facts and are, therefore not applicable to the present facts. He therefore reiterated that in the present case the Ld PCIT had erred in invoking the revisionary proceedings u/s 263 of the Act and therefore the order of Ld PCIT be set aside. 10. We have heard the rival submissions and perused the material on record. The issue in the present case is about the invoking of provisions of Section 263 by Ld PCIT. Sec. 263(1) of the Act, the powers under which Ld PCIT has assumed power for revision reads as under: The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the ITO is erroneous in so far as it is prejudicial to the interests of the Revenue, he may, after giving the assessee an opportunity of being heard and after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the facts and circumstances of the case and determines the income either by accepting the accounts or by making some estimates himself. The Commissioner, on perusal of the records, may be of the opinion that the estimate made by the officer concerned was on the lower side and, left to the Commissioner, he would have estimated the income at a higher figure than the one determined by the ITO. That would not vest the Commissioner with power to reexamine the accounts and determine the income himself at a higher figure. It is because the ITO has exercised the quasi14 judicial power vested in him in accordance with law and arrived at a conclusion and such a conclusion cannot be termed to be erroneous simply because the Commissioner does not feel satisfied with the conclusion. It may be said in such a case that in the opinion of the Commissioner the order in question is prejudicial to the interest of the Revenue. But that by itself will not be enough to vest the Commissioner with the power of suo motu revision because the first requirement, namely, the order is erroneous, is absent. Similarly if an order is erroneous but not prejudicial to the interest of the Revenue, then also the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titled to claim depreciation on such intangible assets as provided u/s 32(1)(ii) of the Act. Before us no material has been placed by the Revenue to demonstrate that the aforesaid decision of Pune Tribunal in the case of Ashoka Infrastructure (supra) has been set aside / overturned by higher judicial forum. Further, in view of the aforesaid facts, we are of the view that the view /opinion of the AO of holding the right to collect toll as an intangible asset, and therefore eligible for depreciation and allowing the claim of depreciation to the assessee was a possible view. It is a settled law that so long as the view taken by the Assessing Officer is a possible view then the same ought not to be interfered with by the Commissioner under Section 263 of the Act merely on the ground that there is another possible view on the matter. As far as the contention of the Revenue that on the issue of depreciation, there was no whisper of having being examined by the AO in the assessment proceedings, it has been held by various authorities that the mere fact that the issue did not fall for discussion in the assessment order would not ipso facto lead to the conclusion that the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r A.Y. 2010-11. Thus, the claim of deduction u/s 80IA(4) of the Act has been allowed to the assessee in past from A.Y. 2004-05 onwards. Further, Revenue has not brought on record any new facts in the year under consideration due to which the claim of deduction u/s 80IA(4) could be denied to the assessee. Before us, Revenue has not brought any material on record to demonstrate that the view taken by the AO was an impermissible view or was contrary to law or was upon erroneous application of legal principles necessitating the exercising of Revisionary powers u/s 263 of the Act. Further, the case laws relied upon by the Revenue are distinguishable on facts and therefore cannot be applied to the facts of the present case. Considering the totality of the aforesaid facts, we are of the view that in the present case the condition precedent for assuming the jurisdiction u/s 263 of the Act did not exist and therefore the Ld. PCIT was not justified in resorting to the revisionary powers u/s 263 of the Act. We therefore set aside the orders of Ld. PCIT whereby he has set aside the assessment order passed by the AO u/s 143(3) of the Act. Thus, the grounds the of assessee are allowed. 17. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
