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2022 (1) TMI 344 - AT - Income TaxRevision u/s 263 by CIT - allowability of depreciation of Intangible Asset-USA asset - as per CIT AO not examined the allowability of depreciation of intangible asset - HELD THAT - As in the present case the AO has not made any enquiry examination or verification of allowability of claim of depreciation of Intangible Asset. Therefore it is a clear case of no enquiry and thus when the AO has not made any opinion by way of proper and sufficient enquiry then the allegation of change of opinion cannot be held as sustainable - there is no deliberation by the AO on this issue while passing the assessment order. We reach to a logical conclusion that Pr. CIT was right in holding that the assessment order is erroneous and prejudicial to the interest of the Revenue being passed without making any verification/examination on the issue of allowability of depreciation of Intangible Asset-USA asset which was acquired by the assessee company on merger of its subsidiary situated at USA. Therefore we are compelled to hold that ld Pr. CIT was correct justified and reasonable in directing the AO to redo the assessment after thorough examination of the issue of claim of depreciation on Intangible asset-USA asset after giving an opportunity to the assessee. Appeal of the assessee is dismissed.
Issues:
1. Condonation of delay in filing appeal. 2. Allowability of depreciation on intangible asset. 3. Correctness of assessment order u/s. 263. Issue 1: Condonation of delay in filing appeal: The appeal was filed 244 days late, and the assessee submitted a condonation petition citing reasons for the delay, including misplacement of the order and the Managing Director being out of station. The AR argued for condonation, while the CIT DR opposed it. The Tribunal, after considering the petition and hearing both parties, condoned the delay and admitted the appeal for adjudication. Issue 2: Allowability of depreciation on intangible asset: The Pr. CIT found the assessment order for the year 2014-15 erroneous as the AO did not properly examine the claim of depreciation on an intangible asset. The Pr. CIT noted discrepancies in the claim and disallowance of depreciation for the year 2015-16. The AR argued that the asset was used for business purposes, and the AO was satisfied with the explanation. However, the CIT DR contended that the AO's enquiry was inadequate, leading to the Pr. CIT's revisionary order under section 263. The Tribunal observed that the AO's enquiry was insufficient, and the claim lacked proper verification, supporting the Pr. CIT's decision to direct a reassessment. Issue 3: Correctness of assessment order u/s. 263: The AR argued that the AO had considered the issue, and the Pr. CIT's directive was a change of opinion. However, the Tribunal found that the AO had not conducted a proper enquiry into the depreciation claim, making it a case of no enquiry. Relying on case laws, the Tribunal upheld the Pr. CIT's decision that the assessment order was erroneous and prejudicial to the revenue's interest. Consequently, the appeal was dismissed. In conclusion, the Tribunal upheld the Pr. CIT's decision under section 263, finding the assessment order erroneous due to inadequate enquiry into the claim of depreciation on an intangible asset. The delay in filing the appeal was condoned, and the appeal was dismissed based on the issues discussed and analyzed during the proceedings.
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