9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (11) TMI 300 - AT - Income TaxRevision u/s 263 - Held that - Section 263 has been invoked on 3 grounds namely the claim of deduction on account of amortized value of lease hold land which according to CIT was not allowable, the claim of depreciation at 15% on office equipment and the deduction u/s. 35D of the Act. On the aforesaid 3 issues, it is seen that during the course of assessment proceedings, A.O had raised query on all the aforesaid 3 issues and the same were also replied by the Assessee vide letters dated 21.03.2013, 08.01.2013, 08.11.2012, the copies of which are placed in the paper book at page 37 to 79 of the paper book. Thus it is seen that on the aforesaid 3 grounds, the A.O had raised the query, the same were replied by the Assessee and it appears that the reply of the Assessee was found acceptable to the A.O because no addition on these aforesaid 3 issues were made by the A.O in the assessment order. We find that the Hon ble Apex Court in the case of CIT vs. Max India Ltd. (2007 (11) TMI 12 - Supreme Court of India) has held that where two views are possible and ITO has taken one view with which CIT does not agree, order of the A.O cannot be considered as erroneous order prejudicial to the interest of Revenue unless the view taken by the A.O is unsustainable in law. On the merits on the issue of amortization of cost of lease hold land, we find that the claim of Assessee of amortized value of lease hold land development was not u/s. 35D whereas ld. CIT in the order has held that the claim of Assessee was u/s. 35D and therefore in such a situation, A.O s order on that issue cannot be considered to be erroneous more so because there was no such claim u/s. 35D by Assessee. As far as the claim of depreciation on office equipments @ 15% is concerned, it is Assessee s submission that the claim of depreciation at 15% on the office equipment which comprises of similar items as are in the present year, has been allowed by the A.O in earlier years in the assessment order passed u/s. 143(3) and those orders have attained finality. As far as the claim of deduction u/s. 35D is concerned it is not the case of the Revenue that the expenses have been incurred in the year under consideration but on the contrary it is assessee s submission that the same have been incurred in earlier years and the deduction u/s. 35D has also been allowed in earlier years. It is also not a case of the Revenue that on the issue of deduction under 35D, deduction for earlier years has been withdrawn by Revenue. In such a situation, without disturbing the earlier years, it cannot be said that the claim of deduction u/s. 35D was not allowable to the Assessee. The aforesaid submissions of ld. A.R has also not been controverted by Revenue. Further, before us Revenue has not brought any material on record to demonstrate that the view taken by the A.O was impermissible view and was contrary to law or was upon erroneous application of legal principles initiating the exercising of revisionary powers u/s. 263. Thus CIT was not justified in resorting to revisionary powers u/s. 263 - Decided in favour of assessee.
Issues Involved:
1. Jurisdiction of CIT under Section 263. 2. Disallowance under Section 14A read with Rule 8D. 3. Amortization value of leasehold land. 4. Depreciation rate on office equipment. 5. Deduction under Section 35D. Issue-wise Detailed Analysis: 1. Jurisdiction of CIT under Section 263: The Assessee challenged the jurisdiction of the CIT to revise the assessment order under Section 263, arguing that the order was neither erroneous nor prejudicial to the interests of the Revenue. The Assessee contended that the entire business income was exempt under Section 80-IAB, and any disallowances would only enhance the exempt income, thus not prejudicing the Revenue. The Tribunal held that for the CIT to exercise revisionary powers under Section 263, the order must be both erroneous and prejudicial to the interests of the Revenue. The Tribunal concluded that the CIT was not justified in invoking Section 263 as the conditions were not satisfied. 2. Disallowance under Section 14A read with Rule 8D: The CIT initially noticed a discrepancy in the disallowance under Section 14A read with Rule 8D but later agreed with the Assessee's submission that the issue was already decided by the CIT(A) and thus, the CIT did not have jurisdiction to revise this part of the assessment order. 3. Amortization value of leasehold land: The CIT held that the Assessee's claim of Rs. 3,75,48,727 on account of amortization of leasehold land was not allowable under Section 35D. The Assessee clarified that the claim was for depreciation, not amortization under Section 35D, and had been consistently allowed in earlier years. The Tribunal found that the Assessee had not claimed the deduction under Section 35D, and thus, the CIT's assumption was incorrect. The Tribunal concluded that the AO's acceptance of the Assessee's claim was not erroneous. 4. Depreciation rate on office equipment: The Assessee claimed depreciation at 15% on office equipment, which the CIT contended should be 10%. The Assessee argued that office equipment was considered "plant and machinery" and had been consistently allowed at 15% in earlier years. The Tribunal noted that similar claims had been accepted in previous assessments, and without any change in facts, the CIT could not take a different view. The Tribunal held that the AO's decision was not erroneous. 5. Deduction under Section 35D: The CIT disallowed the Assessee's claim of Rs. 14,74,336 under Section 35D, arguing that the Assessee was not an industrial undertaking and the expenses were incurred before 1.04.2009. The Assessee countered that the expenses were incurred before the commencement of business and were deductible under Section 35D(1). The Tribunal observed that the deduction had been allowed in earlier years and could not be denied without disturbing those assessments. The Tribunal held that the AO's acceptance of the claim was not erroneous. Conclusion: The Tribunal set aside the CIT's order, holding that the CIT was not justified in invoking Section 263 as the assessment order was neither erroneous nor prejudicial to the interests of the Revenue. The appeal of the Assessee was allowed.
|
