TMI Blog2022 (12) TMI 695X X X X Extracts X X X X X X X X Extracts X X X X ..... 27-03-2015 is hereby quashed and the grounds of appeal raised by the Assessee are hereby allowed. - ITA No. 1472/Ahd/2015 And ITA No. 219/Ahd/2017 - - - Dated:- 14-12-2022 - Ms. Annapurna Gupta, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member For the Appellant : Shri Yogesh Shah, A.R. For the Respondent : Shri Alok Kumar, CIT/D.R. And Shri Atul Pandey, Sr. D.R. ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER: - These two appeals are filed by the Assessee are against the order dated 27.03.2015 passed under section 263 of the Income Tax Act, 1961 (hereinafter referred to as the Act ) by the Ld. Principal Commissioner of Income Tax, Vadodara-1, and another order dated 13.10.2016 passed by the Commissioner of Income Tax (Appeals)-1, Vadodara giving effect to the revision order both relating to the same Assessment Year (A.Y) 2010-11. 2. The brief facts of the case is that the assessee is engaged in the business of manufacturing of various specialty chemicals particularly ethylene amine range of products. For the Assessment Year 2010-11, the assessee filed its Return of Income on 14.10.2010 declaring an income of Rs. 12,66,54,590/-. A Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the financial year. The details of the same as mentioned by the Ld. PCIT in the form of Annexure to his notice u/s. 263, this Annexure page itself shows the additions made to Plant Machinery for EDC project and the Ld. PCIT has granted normal depreciation on the above addition, which signifies the fact that the assessee acquired and installed during the financial year and hence eligible for additional depreciation also as all other conditions of section 32(1)(iia) are satisfied. Thus the basic show cause notice issued by the Ld. CIT itself is misplaced and does not identify any such error in the Assessment order. 2.3. As far as capital work in progress and pre-operative expenses are concerned, the same were also in respect of the new EDC Project which were capitalized on its commissioning and hence became part of block of assets by way of addition to Plant Machinery during the financial years, which are shown at Page No. 141 of the Paper Book along with the detailed break-up at Page No. 142 143. Since the pre-operative expenses and capital work in progress are to be capitalized, so as to form part of actual cost following the Hon ble Supreme Court decision in Chellapalli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. The order passed by the learned CIT under section 263 of the Act is bad in law as the order of learned AO under section 143(3) was neither erroneous nor prejudicial to the interest of revenue. It is submitted that it be so held now and order passed under section 263 of the Act be quashed. 1.1 The learned CIT erred in law in applying provisions of section 263 of the Act to the claim of appellant in connection with depreciation and additional depreciation on additions made to plant machinery during the year under consideration, as was done by learned AO, as the same was a possible view taken by the learned AO, after duly making necessary inquiries and with due application of mind. It is submitted that when two views are possible and learned AO has adopted one of the views, the same cannot be considered to be erroneous or prejudicial to the interest of the revenue as has been held by the Hon'ble Supreme Court in the case of Malabar Industrial Company Ltd 243 ITR 83 and such order cannot be revised under section 263 of the Act. It is submitted that it be so held now. 2. Without prejudice to foregoing, even on merits of the case the appellant's claim of depreciati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same on the ground that assessee was not in business of generation and distribution of power Whether for claiming deduction u/s. 32(1)(iia), it is not relevant that setting up wind of mill should be for power industry Whether in order to claim additional depreciation, setting up of new machinery or plant should be acquired or installed by an assessee, who is already engaged in business of manufacture or production of any article or thing - in facts of case, additional depreciation was to be allowed on Wind Electric Generator installed by the assessee. 3.2. Thus the Ld. A.R. pleaded the view taken by the Ld. A.O. in the original assessment u/s. 143(3) allowing additional depreciation on the assets installed as well as pre-operative expenses and capital work in progress capitalized during the assessment year 2010-11 was not only a possible view, but in fact, in the respectful submission of the appellant, the only view possible and hence following the judgments of the Hon ble Supreme Court in the case of Malabar Industrial Company 243 ITR 83 as well as Max India Ltd. 295 ITR 282 are squarely applicable to the facts of the case. Therefore the Revision proceeding initiated by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vision power under section 263 for making further inquiries. The jurisdictional case law relied by the Revenue namely Mukur Corporation (cited supra) is a case where no inquiry was conducted by the A.O. while passing the Assessment Order, which facts is not applicable to the facts of the present case on hand. 5.2. We are further guided by the Jurisdictional High Court judgment in the case of CIT vs. Arvind Jewellers [2003] 259 ITR 502, wherein the Division Bench referring to the judgment of the Supreme Court in the case of Malabar Industrial Co. Ltd. observed that the provisions of Section 263 cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer, it is only when an order is erroneous that the section will be attracted and incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous . The Hon ble Supreme Court judgment has also made it clear that the phrase prejudicial to the interests of the Revenue has to be read in conjunction with an erroneous order passed by the Assessing Officer, cannot be treated as prejudicial to the interests of the Revenue. It is further em ..... X X X X Extracts X X X X X X X X Extracts X X X X
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