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TMI Blog2025 (1) TMI 451X X X X Extracts X X X X X X X X Extracts X X X X ..... s of Rs. 42,59,74,773/-. The case of the assessee was selected for scrutiny through CASS. However, in the meantime, the assessee merged with M/s. VITP (P) Ltd as per the scheme of amalgamation approved by the NCLT Hyderabad vide order dated 17/07/2018 w.e.f. 03/02/2017 as per the scheme of amalgamation. The assessment was completed u/s 143(3) r.w.s. 144C(3) of the I.T. Act, 1961 whereby the Assessing Officer has made addition on account of transfer pricing adjustment of Rs. 4,38,98,630/-. Thereafter, on examination of the record, the learned Pr. CIT observed that the depreciation as per the book was Rs. 12,71,86,377/- but the assessee claimed the same at Rs. 17,60,01,521/- in the ITR. Hence the learned Pr. CIT was of the view that an excess claim of depreciation to the extent of Rs. 4,88,15,144/- has been allowed by the Assessing Officer while framing the assessment which has resulted in short computation of the book profit. Accordingly, the learned Pr. CIT initiated proceedings u/s 263 of the Act by issuing show cause notice dated 8/3/2024 and 22/03/2024. The assessee filed its reply to the show cause notice and pointed out that the amount of depreciation as referred in the show c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the book depreciation. 4. The learned AR has further contended that this issue was examined and verified by the Assessing Officer during the assessment proceedings. He has referred to the notice issued by the Assessing Officer u/s 142(1) dated 4/3/2021 whereby the Assessing Officer inquired the claim of book depreciation with the depreciation debited to the P&L Account of FDPL. The said notice issued was duly replied by the assessee by providing the requisite details vide submissions dated 10/03/2021. The Assessing Officer after verification of the details has allowed the claim of book depreciation in case of FDPL and therefore, there is no question of lack of inquiry on the part of Assessing Officer on this issue. He has also referred to the P&L Account placed at page No.548 of the paper book as well as return of income filed u/s 139 placed at page No.355 of the paper book and referred to the entry No.44 showing the claim of depreciation while computing the book profit which is the same as debited in the P&L Account. The learned AR has referred to the revised return of income placed at page 470 of the paper book and again referred to the entry No.44 of the return of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im of depreciation and only on the satisfaction of the claim, it was allowed. 8. We have considered the rival submissions and perused the material available on record. The learned Pr. CIT has initiated the proceedings u/s 263 of the I.T. Act, 1961 only on the issue of excess claim of depreciation on the part of the assessee while computing the book profit u/s 115JB of the Act as reflected from the show cause notice dated 8/3/2024 as under: GOVERNMENT OF INDIA MINISTRY OF FINANCE INCOME TAX DEPARTMENT OFFICE OF THE PRINCIPAL COMMISSIONER OF INCOME TAX PCIT, Hyderabad-2 To. FLAGSHIP DEVELOPERS PRIVATE LIMTIED PLOT NO 17, SOFTWARE UNITS LAYOUT. MADHAPUR Hyderabad, Telangana India PAN/TAN: AAACF9235B AY: 2017-18 DIN & Notice No: ITBA/REV/F/REV1/2023-24/1062264595(1) Dated: 08/03/2024 NOTICE FOR THE HEARING M/s/Mr/Ms Subject: Notice for Hearing in respect of Revision proceedings u/s 263 of the T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f book profit u/s 115JB of the Act (refer page 8 and 53 of Annexure 2) which is in consonance with depreciation debited in the audited profit and loss account of FDPL (refer page 2 of Annexure 11) prepared for the financial year April 1, 2016 to March 31, 2017. A copy of the subject financial statements in the case of FDPL has been enclosed as Annexure 11. Further. in the revised Return of income filed in the case of FDPL for the period April 1, 2016 to February 1.2017. a book depreciation of INR 20,63,39,415 was claimed as deduction in the computation of book profit u/s 115JB of the Act (Refer page5 and 50 of Annexure 6) which is in consonance with depreciation debited in the post-merger audited profit and loss account of FDPL (refer page 2 of Annexure 7). Further, we wish to submit that there is no basis for determination of book depreciation amounting to INR 12,71,86,373 and book depreciation amounting to INR 17,60,01,521 as mentioned by your goodself in the Subject Notice (copy enclosed as Annexure 1) and accordingly your goodself has grossly erred in facts in considering a book depreciation of INR 12,71.86,373 as debited to the Profit and Loss Account of FDPL for AY 2017-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant entry No.44 is showing the claim of depreciation as under: 12. Thus, in the original return of income as well as in the revised return of income, the claim of the assessee is not as stated by the learned Pr. CIT in the show cause notice wherein the learned Pr. CIT has alleged that the assessee has claimed depreciation of Rs. 17,60,01,521/- in the ITR which is not the correct facts as emerged from the record. Since those figures, as taken by the learned Pr. CIT are part of the return of income of the VITP and not of FDPL which was subjected to revision u/s 263 of the I.T. Act, 1961. Further, we note that the P&L Account placed at page 548 of the paper book also reflects the claim of depreciation of Rs. 24.04 crores. The claim of depreciation was revised in pursuant to the merger and consequently, the revised financial statements prepared for the special purpose for the period from 1/4/.2016 to 1/2/2017 wherein the assessee has claimed the book depreciation of Rs. 20,63,39,415/- and hence, there was no discrepancy in the claim of the assessee on account of depreciation while computing the book profit. 13. We further note that in the return of income in case of VITP (P) Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ACF9235B NAME and PAN Of resulting company: VITP PVT Ltd:- AACCV2672G The assessee got merged into the resulting company on 3rd February 2017. The intimation for the same was provided to the then Assessing officer with a request that the matters pending in case of Flagship may be considered in the hands of the resulting company. DATE OF NCLT ORDER: 21/02/2018 DATE OF APPLICATION OF AMALGAMATION SECHEME: 03.02.2017. As per the Maruti Suzuki Case, the notices sent to the assessee sent after amalgamation are invalid and therefore the order if passed will be bad in law. Still this office is passing the draft order with TP addition as suggested by the TPO Only so that income does not escape assessment. This order should be considered in the name of the resulting company. The information regarding the amalgamation issue has also been sent to the JAO of both the PANs involved. The case was selected for scrutiny and following issues were taken care of: With respect to 'any other amount allowable as deduction' the following questions were asked: 3. In respect of your reply regarding "any other amount allowable as deduction" made as per Schedule BP of ITR, please furnish the follow ..... X X X X Extracts X X X X X X X X Extracts X X X X
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