2018 (2) TMI 595 - AT - Income Tax

Revision u/s 263 - additional depreciation on windmill allowability - Held that - this issue is covered in favour of the assessee, by Tribunal s decision in the case of ACIT vs. Power Build Ltd and vice versa (2012 (8) TMI 1122 - ITAT AHMEDABAD). We are of the considered view that the course adopted by the Assessing Officer, which is unambiguously supported by a binding judicial precedent, cannot be said to be erroneous and prejudicial to the interest of the revenue. As noted in the case of CIT vs. Malabar Industrial Co Ltd 2000 (2) TMI 10 - SUPREME Court where two views are possible and the ITO has taken one view with which CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue, unless the view taken by the ITO is not sustainable in law . A view taken in consonance with the Tribunal decision cannot be said to unsustainable in law. Clearly, therefore, the learned Commissioner was in error in invoking his revision powers under section 263 in respect of additional depreciation on windmill. As regards the Commissioner s invoking the revision powers under section 263 in respect of, what is termed as by the CIT, excess claim of ₹ 68,02,000 , we have noted that the stand of the assessee is that these expenses are duly deductable under section 37(1), that the assessee had furnished complete information, as requisitioned by the Assessing Officer, at the assessment stage copies of which are placed at pages 44 to 59 of the paper-book filed before us, and yet the Commissioner has remitted the matter to the file of the Assessing Officer for necessary verification. As a matter of fact, the learned CIT has justified the action on the ground that since the order is being set aside on other issues, this issue is also set aside and the Assessing Officer is directed to examine the nature of these payments as per law . As the things stand now, however, the order under section 263 on the other issue (i.e. additional depreciation) stands vacated. In any case, it is not even the case of the CIT that there is any error in the claim or this aspect of the matter was not examined in the original proceedings. Action of the CIT in invoking powers under section 263 cannot be justified - Decided in favour of assessee

Summary

Issues Involved:
1. Challenge to the correctness of the order passed by the Commissioner under Section 263 r.w.s. 143(3) of the Income-tax Act, 1961 for the assessment year 2009-10.

Detailed Analysis:

Issue 1: Correctness of the Commissioner's Order
The appellant challenged the Commissioner's order, contending that it did not meet the conditions laid down in Section 263 of the Act. The appellant argued that the issues involved were highly debatable, making the Commissioner's action unjust and uncalled for. The appellant also disagreed with the Commissioner's decision to set aside all issues and direct the Assessing Officer to reexamine them. Specifically, the appellant disputed the disallowance of additional depreciation claimed on Plant & Machinery for Wind Mill and the nature of certain claimed expenses. The Commissioner held that the Assessing Officer's order was erroneous and prejudicial to the revenue's interest due to the failure to consider the implications of the amendment in Section 32(1)(iia). However, the Tribunal noted that the Assessing Officer's decision was supported by a binding judicial precedent, rendering it not erroneous. The Tribunal further found no justification for the Commissioner's direction to reexamine the nature of certain expenses, especially since the order on the main issue of additional depreciation was vacated. Therefore, the Tribunal vacated the revision order on both issues, ruling in favor of the appellant.

This judgment highlights the importance of considering legal provisions, judicial precedents, and the justification for invoking revision powers under Section 263. It emphasizes the need for a thorough examination of facts and legal positions before deeming an order as erroneous and prejudicial to the revenue's interest. The Tribunal's decision underscores the significance of legal sustainability and proper justification in revising orders to ensure fair and just outcomes in tax matters.