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2022 (8) TMI 902 - AT - Income TaxRevision u/s 263 by CIT - Claim made by the assessee u/s. 32AC in respect of investment made in the new plant machinery - What is prejudicial to the interest of the Revenue ? - HELD THAT - We notice that the assessee has made submissions before the AO stating that deduction u/s.32AC is allowable even for assets acquired prior to 01.04.2013 but installed during the financial year 2013-14 would be eligible for deduction by relying on various decisions rendered in the context of 32(1)(iia). Though there is no specific mention in AO s order regarding the submissions made and basis of allowing the deduction, the facts of the case is that the assessee did make the submissions and the AO has taken the view that the assessee is eligible for deduction u/s.32AC. Section 32AC is a new provision inserted by the Finance Act 2013 and there is no direct judicial precedence to interpret the words used in the section acquires and installs . There are plethora of decisions that for the purpose of 32(1)(iia), the additional depreciation is allowable even for assets acquired prior to 31/03/2005 provided the installation of such assets is after 31/03/2005. Since the wordings used in section 32(1)(iia) and 32AC are similar whether the ratio of decisions rendered in the context of 32(1)(iia) is applicable for 32AC is a debatable issue where contrary views can be taken. In assessee s case while interpreting the wordings acquires and installs in section 32AC, the AO has taken one view in allowing the deduction based on the submissions of the assessee of various judicial pronouncements rendered in the context of 32(1)(iia); whereas the CIT is not in agreement with the view based on the plain reading of section 32AC. The decision of the AO to allow deduction u/s.32AC cannot be stated as unsustainable in law as he has taken a possible view based on application of mind. The CIT has not brought any material on record to show that the view taken is contrary to law. In the light of these discussions and placing reliance on the decision of Hon ble Supreme Court cited supra, we are of the considered view that the CIT is not justified in setting aside the order of the AO. Accordingly the directions of the PCIT are quashed. Appeal by the assessee is allowed.
Issues Involved:
1. Legality of the CIT's order under Section 263 of the Income-tax Act, 1961. 2. Eligibility of deduction under Section 32AC for assets acquired before 1st April 2013 but installed during FY 2013-14. 3. Applicability of judicial precedents related to Section 32(1)(iia) to Section 32AC. 4. Interpretation of the terms "acquires and installs" in Section 32AC. 5. Whether the Assessing Officer (AO) conducted a proper enquiry before allowing the deduction. Issue-wise Detailed Analysis: 1. Legality of the CIT's Order Under Section 263: The appellant contended that the CIT's order under Section 263 is "bad in law" as it failed to quantify the alleged excess deduction and merely directed the AO to re-examine the deduction. The Tribunal noted that the CIT's action is not tenable as the AO had already conducted a thorough examination and allowed the deduction based on judicial precedents. 2. Eligibility of Deduction Under Section 32AC: The CIT argued that the deduction under Section 32AC is not allowable for assets acquired before 1st April 2013, even if installed during FY 2013-14. The Tribunal, however, observed that the AO had allowed the deduction after examining the details and considering various judicial pronouncements. The Tribunal concluded that the AO's decision was based on a possible view and thus cannot be termed erroneous or prejudicial to the interests of the revenue. 3. Applicability of Judicial Precedents Related to Section 32(1)(iia): The assessee relied on judicial precedents related to Section 32(1)(iia) to argue that the terms "acquires and installs" should be interpreted similarly in Section 32AC. The Tribunal agreed with the assessee, citing decisions that incentive provisions should be interpreted "reasonably, liberally, and purposively." The Tribunal noted that the AO had adopted this interpretation based on judicial precedents, making his decision a possible view. 4. Interpretation of the Terms "Acquires and Installs": The CIT maintained that the terms "acquires and installs" in Section 32AC should be interpreted strictly, meaning both acquisition and installation must occur in FY 2013-14. The Tribunal, however, found that the AO's interpretation, which allowed for assets acquired before but installed during FY 2013-14, was a possible view supported by judicial precedents. The Tribunal emphasized that where two views are possible, the CIT cannot revise the AO's order under Section 263. 5. Whether the AO Conducted a Proper Enquiry: The assessee argued that the AO had conducted a proper enquiry and allowed the deduction after considering detailed submissions and judicial precedents. The Tribunal agreed, noting that the AO's decision was based on a detailed examination and application of mind. The CIT failed to provide any material evidence to show that the AO's view was unsustainable in law. Conclusion: The Tribunal concluded that the CIT was not justified in setting aside the AO's order under Section 263. The AO had taken a possible view based on judicial precedents and a detailed examination of the facts. The Tribunal quashed the CIT's directions and allowed the appeal by the assessee. Result: The appeal by the assessee is allowed. The order was pronounced in the open court on 29th July 2022.
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