9911796707
TMI Blog2022 (12) TMI 695X X X X Extracts X X X X X X X X Extracts X X X X ..... 010 declaring an income of Rs. 12,66,54,590/-. A Revised Return of Income on 31.08.2011 declaring total income of Rs. 12,64,47,550/-. Thereafter another Revised Return was filed on 11.01.2012 declaring total income of Rs. 12,78,75,870/-. The return was taken up for scrutiny assessment and assessment was completed by making disallowance u/s. 80IA of Rs. 18,87,051/- thereby determining the total income as Rs. 12,97,62,921/-. 2.1. Ld. PCIT perused the above assessment records and found that the assessee had claimed and allowed depreciation & additional depreciation at the rate of 35% (15 + 20) on several items like Work-in-progress, Pre-Operative expenses which are not eligible for depreciation and additional depreciation which are against the provisions of Section 32(1)(iia) of the Act. Therefore a show cause notice dated 06.01.2015 was issued by ld. PCIT calling for explanation from the assessee. The assesse vide its letter dated 09.02.2015 submitted the claim of additional depreciation by the assessee was fully verified by the Ld. Assessing Officer during the original assessment proceedings under section 143(3). Vide assessee's letter dated 06.12.2012 details of assets purchased d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on'ble Supreme Court decision in Chellapalli Sugar Ltd. 98 ITR 167 (SC), the objection of the Ld. PCIT in this respect also against the accepted judicial proposition. Therefore, the reasoning on which the Ld. PCIT sought to invoke provisions of Section 263 are not germane to the issue and the order of the Ld. A.O. cannot be said to be erroneous or prejudicial to the interest of the Revenue. Thus the Ld. PCIT has not demonstrated how the assessment order passed by the A.O. is erroneous or prejudicial to the interest of Revenue. For these above reasons the assessee requested to drop the Revision proceedings initiated by the Ld. PCIT. 2.4. In support of its claims the assessee also relied upon various case laws namely Malabar Industrial Company Ltd. vs. CIT (2000) 243 ITR 83 (SC), CIT vs. Arvind Jewellers (2002) 290 ITR 689 (Guj.), CIT vs. Gabriel India Ltd. (1993) 203 ITR 108 (Bom.) and CIT vs. Max India Ltd. (2007) 295 ITR 282 (SC). 2.5. The Ld. PCIT considered the above submissions of the assessee and held that the explanations submitted by the assessee is not acceptable since New Plant & Machinery acquired and installed are only eligible for additional depreciation. In the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt's claim of depreciation and additional depreciation on additions made to plant & machinery during the year under consideration is an allowable deduction under section 32(1)(iia) of the Act. 3. The learned CIT erred in law and on facts in holding that - i) AO has not examined the issue while finalizing assessment; and ii) Capital work-in-progress (WIP) and pre-operative expenses do not qualify for depreciation under section 32(1) of the Act and additional depreciation under section 32(l)(iia) of the Act, as well. It is submitted that order u/s 263 passed by learned CIT based on above incorrect observations be quashed. 4. Without prejudice to the foregoing, assuming without accepting the finding of learned CIT that the capital WIP and pre-operative expenses are not eligible for depreciation or rather not to treat the expenses as capital in nature, the same should be allowed as revenue expenditure under section 37(1) of the Act. It is submitted that it be so held now and direction be given to allow deduction of the aforesaid expenses under section 37(1) of the Act, while computing total income of the year under consideration. 5. The learned CIT failed to appreciate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. CIT is required to be quashed and allow the assessee's appeal. 4. Per contra, the Ld. D.Rs. appearing for the Revenue supported the order of the Ld. CIT and relying upon Jurisdictional High Court Judgment in the case of Addl. CIT vs. Mukur Corporation (1978) 111 ITR 0312 (Guj.) wherein is held that it is not necessary that in his order under section 263, the Ld. CIT should come to a firm conclusion that the order of the ITO was erroneous insofar as it was prejudicial to the interest of Revenue - Where the ITO allowed deduction to assessee-firm on capital gains without properly probing into the matter, the initiation of proceedings under section 263 by the Ld. CIT was proper and valid in law. 5. We have given our thoughtful consideration and perused the materials available on record including the Paper Book and the case laws filed by the assessee and submissions filed by the Revenue. Though the Original assessment order passed by the Assessing Officer is silent about the allowance the additional depreciation to the assessee. The Assessing Officer has passed a detailed order on the other disallowance namely section 80IA as against the assessee. As rightly pleaded by the Ld. Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y stated that when an Income- tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order and prejudicial to the interests of the Revenue, unless the view taken by the Income-tax Officer is unsustainable in law". 5.3. In this context of the present case, applying ratio of the above referred judgments, the scope of the Commissioner's power of revision u/s. 263 of the Act would be, when the Assessing Officer conducts no inquiry or proper inquiries or does not apply his mind to the legal issues arising out of the material on record, the Revisional powers would be available to revise an assessment order. On the other hand, if the Assessing Officer has conducted proper inquiries and come to legal conclusions which are plausible, the Ld. PCIT would not be justified in invoking Revisional jurisdiction directing further inquiries or taking a different view. In the present case, the Assessing Officer has issued a detailed notice u/s. 142(1) calling for various details from the assessee and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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