9911796707
TMI Blog2023 (9) TMI 253X X X X Extracts X X X X X X X X Extracts X X X X ..... to the interest of the revenue. Thus, the Order u/s. 263 of the Act is liable to be quashed. 2. On the facts and in the circumstances of the case and in law, the Ld. PCIT has erred in holding that the Assessment order has been passed without making inquiry or investigation, without appreciating that the Ld. AO has passed the assessment order after making complete enquiries/investigation/verification and proper application of mind. Thus, the Order u/s. 263 of the Act is liable to be quashed. 3. On the facts and in the circumstances of the case, the Ld. PCIT has erred in invoking the provisions of Section 263 of the Act by holding that the order of the Ld. AO is erroneous as well as prejudicial to the interest of the revenue in respect of an amount of Rs. 4,39,07.969/- by stating that the appellant company has claimed depreciation of Rs. 2,18,62,57.725/-in its return of income as against Rs. 2.14,23,49,756/- reflected in Tax Audit Report without appreciating that the appellant company is rightly eligible for claim of depreciation of Rs. 2.18,62,57,725/- as claimed in its return of income. 4. On the facts and in the circumstances of the case, the appellant has claimed correct a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alue of fixed asset resulting reduction in the written down value of the fixed assets and reduction in the claim of depreciation. In the preceding assessment years the department is treating the said receipt on account of supply valuable charges and electrification charges against new electricity connection as revenue receipt and added to the income of the assessee. Thus the assessee has started offering the said amount as revenue receipt for income tax purpose and consequently in the revised return of income the assessee has reduced total loss by considering the said receipt as revenue receipt and consequently the written down value of fixed asset is enhanced and claimed enhanced depreciation @ 15% on the differential amount Rs. 29,27,19,797/- which comes to Rs. 4,39,07,969/-. The Pr. CIT has not disputed these explanations of the assessee but set aside the impugned order on the ground that the AO has not examined the documents and conducted basic inquiry about the depreciation claimed u/s 72 of the Income Tax Act and thereby the order of the assessing officer was held as erroneous as well as prejudicial to the interest of the revenue for want of inquiry on the part of the AO. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trification charges from customers at the time of new electricity connection as revenue receipt against the claim of assessee as capital receipt. Therefore, for the year under consideration the AO was not required to conduct any inquiry on this issue as the assessee itself offered this receipt as revenue receipt in the return of income and consequently written down value of the fixed assets stood increased by equal amount resulting increase in the claim of depreciation. Since the assessee is a loss making company therefore, the depreciation which is unabsorbed for the year under consideration as well as in the preceding year has been carry forward. He has referred to the reply filed by the assessee before the Pr. CIT in response to the show cause notice u/s 263 of the Act and submitted that the assessee has explained the claim of depreciation as valid and correct claim which is allowable and therefore, this issue of increase in written down value of the fixed assets due to the offering the receipt on account of supply affording charges and electrification charges as revenue receipt and consequential claim of depreciation is a recurring issue for the last many years need not be take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 9,74,36,54,487/- and assessment for the year 2015-16 was completed on 29/12/2017 determining loss of Rs. 9,74,36,54,487/- including the carried forward business depreciation of Rs. 2,18,62,57,725/- in the assessed loss of the current year. As per point 18 and Annexure-2 of the form 3CD pertaining to the A.Y. 2015-16, particular of depreciation allowable as per the I.T. Act, 1961 for the AY was Rs. 2,14,23,49,756/- This point was not examined by the AO. 4. The AO has not examined this fact/issue and no enquiry/investigation has been made regarding allowability of provision of Section 72 of the IT Act. Therefore, the assessment order passed by the AO appears to be erroneous in so far as it is prejudicial to the interest of the revenue. You are, therefore, required to show cause why provisions of section 263 be not invoked in your case for the reasons mentioned above. MENT 5. You are, accordingly, given an opportunity to attend my office on 23.03.2020 at 01:30 P.M. and produce necessary evidences, explanation, etc. in support of your contentions and arguments. If you fail to attend the hearing, it shall be presumed that you have nothing to say in the matter and order u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Affording Charges and Electrification Charges as revenue Income in order to avoid unwanted litigation and confrontation between the two instrumentalities of the state. But till the time decision was taken the return of Income for A.Y. 2014-15 was already filed, therefore, it had been decided the for A.Y. 2014-15. Company will file revised rectum and for AY. 2015-16 the adjustment will be taken in to account while filing original return itself. Based on the above decision, while filing return of Income for A.Y. 2015-16, not deducted the receipt of Supply Affording.Charges and Electrification Charges amounting to Rs. 29,27,19,797/- from the value of Fixed Assets (Plant & Machinery) and offered the same as Revenue Income. Copy of Acknowledgment Original Return of Income filed on dated 28/11/2015 along with Computation of Income enclosed with the letter as Annexure-7. Further, for A. Y. 2014-15 company revised its return of Income to offer Supply Affording Charges and Electrification Charges amounting to Rs. 31,64,53,835/- as revenue receipt and add back the same to the value of Fixed Assets (Plant & Machinery) which was reduced while filing original return of Income treating t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Depreciation claimed 214,23,49,756 218,62,57,725 4,39,07,969 The amount of depreciation increased because of change in opening WDV of fixed assets (plant and machinery) by Rs. 29,27,19,797 Calculation Rs. 29,27,19,797 x 15%=Rs. 4,39,07,969 The above revision of return for A.Y. 2014-15 and A.Y. 2015-16 has been done after the finalization of Tax Audit report of A.Y. 2015-16 due to which there is difference in Brought Forward Business losses, Brought Forward Depreciation, Opening WDV and Depreciation as mentioned Revised Return of Income and Tax Audit Report of A. Y. 2015-16. Copy of Acknowledgment of Original Return of Income along with computation, Acknowledgment of Revised Return of Income along with Computation and Assessment Order for A.Y. 2015-16, enclosed with the letter as Annexure-7, Annexure-8 and Annexure-9 respectively. In view of above, it is submitted that the came forward depreciation for A. Y. 2015-16 amounting to Rs. 218,62,57,725/- is in accordance with the provision of section 72 of the Income Tax Act, 1961 and the difference in amount mentioned as per Tax Audit report and Revised Rectum of Income is only due the effect of change in particular of A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d claim by the AO as otherwise a correct and allowable claim cannot be held as prejudicial to the interest of the revenue. Since this issue has been a bone of contention between the assessee and the department for last many years and finally the assessee decided to offer this receipt as revenue receipt instead of capital receipt for the purpose of income tax then being a recurring issue the AO was very much familiar with and aware of this issue. Even if the AO has not conducted any inquiry owing to the fact that the assessee itself has offered supply affording charges and electrification charges as revenue receipt which was earlier capitalized and consequently the written down value of the fixed assets is increased by the said amount resulting increase of claim of depreciation. We find that for the assessment year 2015-16 the opening written down value of fixed assets as on 01.04.2014 was increased from Rs. 1291,69,06,048/- to Rs. 1320,96,25,845/- due to declaration of the charges supply of affordable charges and electrification charges as revenue receipt in the revised return of income for A.Y.2014-15 and the net increase in the written down value is Rs. 29,27,19,797/-. The Deprec ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
