2017 (3) TMI 1337 - HC - Income Tax

Revision u/s 263 - additional depreciation under Section 32(1)(iia) on windmill - Held that - The aforesaid issue is now not res integra and the same is concluded by the Division Bench of this Court against the revenue in view of the decision of the Division Bench of this Court in the case of Diamines 10000 or less were debited only at the time of consumption. The learned tribunal has rightly held that the Assessing Officer is justified in accepting he claim of the assessee in debiting 92, 66, 211/- from the Profit and Loss Account. Under the circumstances the learned tribunal has observed that the order passed by the Assessing Officer cannot be said to be prejudicial to the interest of the revenue and therefore the Commissioner was not justified in interfering with the order passed by the Assessing Officer in exercise of powers under Section 263 of the Act.

Summary

Issues:
1. Whether the ITAT was right in setting aside the order of the CIT and restoring that of the AO?
2. Whether the Assessing Officer's order was erroneous in granting additional depreciation on windmills and allowing the claim of written off on obsolete spares and stores?

Analysis:
1. The appellant challenged the ITAT's decision to set aside the CIT's order under Section 263 of the Income Tax Act. The CIT had revised the assessment due to the assessee's claim of additional depreciation on windmills and written off obsolete spares. The appellant argued that the ITAT erred in disregarding the applicability of Section 263. The High Court noted that the issue of additional depreciation on windmills had been decided in favor of the assessee by a previous court ruling. Therefore, the ITAT's decision to quash the CIT's order on this ground was upheld.

2. The Assessing Officer had allowed the assessee to claim additional depreciation on windmills and write off obsolete spares. The CIT found errors in these allowances and set aside the assessment order for further examination. The High Court observed that the Assessing Officer had considered these issues in detail during the assessment proceedings. The tribunal also noted the consistent practice of the assessee in handling obsolete spares and stores. As a result, the tribunal concluded that the Assessing Officer's decision was justified and not prejudicial to the revenue's interest. Therefore, the High Court upheld the tribunal's decision to quash the CIT's order on this ground as well.

In conclusion, the High Court dismissed the appeal, agreeing with the tribunal's findings. No substantial question of law was found to arise from the case, and therefore, the appeal was dismissed.