2015 (6) TMI 668 - AT - Income Tax

Revision u/s 263 - disallowance of depreciation on on forging press as per CIT(A) - Held that - Assessing Officer has granted depreciation to assessee on being satisfied with the explanation of the assessee, supported by documents that forging press was installed and put to use on 29.03.2008 after conducting proper enquiry into matter. The Assessing Officer, after considering explanation of the assessee, partly disallowed depreciation as well, will prove that issue of depreciation was correctly examined by the Assessing Officer at assessment stage. Therefore, when the Assessing Officer adopted one of the courses permissible in law and the view taken by the Assessing Officer was permissible as per law to which the ld. Commissioner of Income Tax may not agree, would not treat the assessment order to be erroneous and prejudicial to the interest of revenue. Ld. Commissioner of Income Tax has not held that the view taken by the Assessing Officer is unsustainable in law. It, therefore, appears that the ld. Commissioner of Income Tax changed the opinion by reappraising the evidence already on record, thus it would not give revisional jurisdiction to him under section 263 of the Act to set aside the assessment order. - Decided in favour of assessee.

Summary

Issues Involved:
1. Whether the assessment order was erroneous and prejudicial to the interest of revenue under Section 263 of the Income Tax Act.
2. Whether the depreciation on the 8000 MT forging press was correctly claimed and allowed.

Issue-wise Detailed Analysis:

1. Whether the assessment order was erroneous and prejudicial to the interest of revenue under Section 263 of the Income Tax Act:

The Ld. Commissioner of Income Tax (CIT) examined the assessment order dated 21.12.2010 and found it to be erroneous and prejudicial to the interest of revenue. The CIT issued a show cause notice under Section 263 of the Income Tax Act, questioning the grant of depreciation on the 8000 MT forging press. The CIT contended that the assessment order lacked necessary inquiries and verification regarding whether the forging press was put to use, given that the building was under construction as of 31.03.2008. Despite the assessee providing detailed explanations and supporting documents, including an installation certificate from M/s ATO SPA of Italy and other relevant documents, the CIT did not accept these contentions and set aside the assessment order for reassessment by the Assessing Officer (AO).

The Tribunal, however, found that the CIT did not properly consider the explanations and documents provided by the assessee. The Tribunal noted that the CIT failed to examine the explanation that the forging press was installed in the old business premises, unrelated to the new building under construction. The Tribunal referenced several case laws, including CIT Vs Gabriel India Ltd. and CIT V Deepak Mittal, to assert that a change of opinion by reappraising evidence does not fall within the parameters of revisional jurisdiction under Section 263. The Tribunal concluded that the CIT's order was not valid as it did not consider the explanation properly and was based on a change of opinion rather than a clear error in the assessment order.

2. Whether the depreciation on the 8000 MT forging press was correctly claimed and allowed:

The assessee claimed depreciation on the 8000 MT forging press, which was installed on 29.03.2008. The AO had allowed this depreciation after examining the details and documents provided by the assessee, including the installation certificate, power bill, insurance policy, and other relevant documents. The CIT, however, questioned the validity of these documents and the actual use of the forging press within the financial year.

The Tribunal found that the AO had conducted a proper inquiry and verification of the depreciation claim. The Tribunal highlighted that the AO had issued a query letter and received detailed responses from the assessee, including itemized details of the forging press and its installation. The Tribunal noted that the AO's decision to allow depreciation was based on substantial evidence and proper verification, and thus, the CIT's disagreement with the AO's conclusion did not justify invoking Section 263.

The Tribunal also referenced the Hon'ble Supreme Court's decision in Malabar Industrial Co. Ltd. V CIT, which stated that an assessment order cannot be deemed erroneous if the AO adopted one of the permissible courses in law and the view taken was sustainable. The Tribunal concluded that the AO's decision to allow depreciation was a permissible view, and the CIT's order to set aside the assessment was unwarranted.

Conclusion:

The Tribunal set aside the CIT's order under Section 263, restoring the original assessment order dated 21.12.2010. The Tribunal held that the AO had properly inquired into and verified the depreciation claim on the forging press, and the CIT's invocation of Section 263 was not justified. The appeal of the assessee was allowed, and the original assessment order was restored.