2014 (2) TMI 556 - AT - Income Tax

Revision u/s 263 of the Act challenged Deletion made by the CIT(A) - Held that - The decision in Gujarat Road and Infrastructure Co. Ltd. Versus Commissioner of Income Tax 2010 (2) TMI 756 - ITAT, Ahmedabad followed - Revenue could not point out any specific error in the order of the CIT(A) - The CIT(A) has vacated the disallowance by following the order of the Tribunal for Assessment Year 2004-05 - assessee has submitted that the assets are the very same assets on which depreciation was disallowed in the Assessment Year 2004-05 Decided against Revenue.

Summary

Issues:
- Appeal filed by Revenue against CIT(A) orders for Assessment Years 2004-05 and 2007-08.
- Disallowance of depreciation amounts in both Assessment Years.
- CIT(A) deleting the disallowance.
- Tribunal's role in quashing the order passed by CIT.
- Dispute over road overlay and renewal expenses.
- CIT's power of verification under section 263 of the Income Tax Act.

Analysis:
1. Disallowed Depreciation in Assessment Year 2004-05:
- The Assessing Officer disallowed depreciation on toll roads, leading to a total disallowance of Rs 20,59,42,943.
- CIT(A) deleted the disallowance citing the Tribunal's order quashing the CIT's earlier order under section 263.
- The Tribunal affirmed that the Assessing Officer's order did not survive due to the Tribunal's decision on the CIT's order.

2. Disallowed Depreciation in Assessment Year 2007-08:
- The Assessing Officer disallowed depreciation on toll roads, totaling Rs 30,65,94,229.
- CIT(A) vacated the disallowance based on the Tribunal's decision in a previous year's case.
- The Tribunal upheld the CIT(A)'s decision, noting that the assets were the same as in the previous year, and no material showed variation in the Tribunal's earlier order.

3. Dispute over Road Overlay and Renewal Expenses:
- The CIT(A) vacated the disallowance by following the Tribunal's order in a previous case related to road overlay and renewal expenses.
- The Tribunal found that the CIT's requirement for verification under section 263 was unwarranted as the expenses were not claimed in the relevant year.
- The Tribunal ruled in favor of the assessee, allowing the appeal against the CIT's order.

4. CIT's Power of Verification under Section 263:
- The Tribunal questioned the CIT's power of verification under section 263 concerning road overlay and renewal expenses.
- The Tribunal concluded that the CIT's revision order in such circumstances was unwarranted, and the assessee succeeded on this issue.

In conclusion, the Tribunal dismissed the Revenue's appeals for both Assessment Years 2004-05 and 2007-08, upholding the decisions of the CIT(A) based on the Tribunal's previous orders and findings related to the disallowance of depreciation and the dispute over road overlay and renewal expenses. The Tribunal also highlighted the limitations on the CIT's power of verification under section 263, emphasizing the need for proper grounds for revision orders.