2023 (1) TMI 316 - AT - Income Tax

Revision u/s 263 - subsidy received - Reduction of amount from cost of asset as per provisions of explanation 10 to sub section of section 43 - HELD THAT - In the present case, the ld. AR had demonstrated before us the issue sought to be revised by the ld. PCIT in exercise the power vested with him u/s 263, was examined by the AO and took a plausible view during the course of assessment proceedings. No doubt the assessment order is silent on this point. But, generally, the issues which are acceptable to the AO do not find mention in the assessment order and it cannot be said that the AO had not applied his mind as observed in the case of Hari Iron Trading Co. 2003 (5) TMI 48 - PUNJAB AND HARYANA HIGH COURT and Eicher Ltd 2007 (5) TMI 107 - HIGH COURT , DELHI - Therefore, it cannot be said that the AO had failed to make an enquiry, no further enquiry is necessary and all the facts were before the AO. Consequently, we are of the considered opinion that the proposition that the assessment order is erroneous for want of an enquiry or proper enquiry would have no application to the facts of the present appeal. PCIT cannot invoke the jurisdiction u/s 263 of the Act in respect of this issue. Accordingly, we set-aside the order of revision u/s 263 on this point.

Summary

Issues:
- Validity of assumption of jurisdiction u/s 263 by the ld. PCIT for assessment years 2013-14 and 2014-15.
- Treatment of subsidy received from the Government of Maharashtra under the Package Scheme Incentives- 2007 for depreciation purposes.

Analysis:

*Assessment Year 2013-14:*
The appellant challenged the order under section 263 of the Income Tax Act, 1961, passed by the Principal Commissioner of Income Tax-1, Aurangabad, dated 28.03.2019. The issue revolved around the treatment of subsidy received from the Government of Maharashtra under the Package Scheme Incentives- 2007 for depreciation purposes. The ld. PCIT held that the Assessing Officer failed to enquire and verify the applicability of Explanation 10 to section 43(1) as well as discrepancies between income shown in the return of income and receipts reflected in Form 26AS. The ld. PCIT set aside the assessment order directing a de novo assessment. The appellant contended that the Assessing Officer had examined the issue during assessment proceedings and took a plausible view. The Tribunal held that the ld. PCIT cannot invoke jurisdiction u/s 263 as the Assessing Officer had applied his mind, and no further enquiry was necessary. The order of revision u/s 263 was set aside, and the appeal was partly allowed.

*Assessment Year 2014-15:*
Given the identical facts and issues in both appeals, the decision in the assessment year 2013-14 was applied mutatis mutandis to the assessment year 2014-15. The appeal for the assessment year 2014-15 was also partly allowed. In conclusion, both appeals of the assessee were partly allowed. The order was pronounced on January 4th, 2023.

Overall, the Tribunal found that the Assessing Officer had considered the relevant issues and took a plausible view during the assessment proceedings. Therefore, the ld. PCIT was not justified in exercising the power of revision under section 263 of the Act. The Tribunal set aside the orders of revision and partly allowed the appeals for both assessment years.