2019 (8) TMI 550 - AT - Income Tax

Revision u/s 263 - assessee claimed depreciation on windmills @ 80% and AO allowed the same without passing speaking order - HELD THAT - On perusal of the assessment order, we find that the assessment order is very cryptic. It may be evident that the windmills were transferred in the name of the assessee on 25.05.2012. In this case, the Assessing Officer has not examined/determined the WDV of old windmills against which huge amount of depreciation was allowed against the claim of the assessee. What was the actual cost of the windmill was not brought on record and otherwise also, after claiming depreciation for 6-7 years old windmills, where there is possibility of obsolete technology, would fetch such a higher cost. Hence we are of the considered opinion that the assessment order passed under section 143(3) of the Act is erroneous and prejudicial to the interest of Revenue. Under these facts and circumstances, the ld. PCIT has rightly invoked the provisions of section 263 of the Act and directed the Assessing Officer to re-do the assessment afresh after verification of the issues and we find no reason to interfere with the order passed by the ld. PCIT. Thus, the ground raised by the assessee stands dismissed.

Summary

Issues:
1. Revision under section 263 of the Income Tax Act due to an erroneous and prejudicial assessment order.
2. Claim of depreciation on windmills at 80% without proper verification of facts.
3. Ownership and putting to use conditions for claiming depreciation.
4. Assessment order passed under section 143(3) without proper inquiry.

Analysis:
1. The appeal was against the order of the Commissioner of Income Tax proposing revision under section 263 of the Income Tax Act for the assessment year 2013-14. The Assessing Officer had allowed a significant amount of depreciation without proper verification, leading to the revision proposal.

2. The assessee claimed 80% depreciation on windmills without a detailed assessment. The ld. PCIT emphasized the necessity for the asset to be acquired and put to use by the assessee for claiming depreciation. The claim based on the windmills being previously used by another entity was deemed invalid and lacking merit.

3. The judgment highlighted the importance of ownership and utilization as simultaneous conditions for claiming depreciation. The assessment order's lack of verification and inquiry into the claim of depreciation on windmills led to the conclusion that the order was erroneous and prejudicial to revenue interests.

4. The assessment order was deemed cryptic and lacking in thorough examination. The Assessing Officer did not determine the written down value of old windmills or the actual cost, raising concerns about the validity of the depreciation claim. The order's deficiency in addressing these critical aspects justified the revision under section 263 and the directive to re-do the assessment.

5. The Tribunal upheld the ld. PCIT's decision, emphasizing the need for proper verification and inquiry in assessing depreciation claims. The appeal was dismissed, affirming the revision under section 263 and the directive to re-assess the depreciation claim on windmills.

This comprehensive analysis of the judgment delves into the issues raised, the arguments presented, and the Tribunal's decision, providing a detailed understanding of the legal intricacies involved in the case.