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TMI Blog2015 (1) TMI 191X X X X Extracts X X X X X X X X Extracts X X X X ..... es – Held that:- ITO(TDS) while examining assessee's compliance to TDS provisions issued show cause notice on 16/03/2011, specifically seeking assessee's reply on compliance to TDS provisions on payment of equipment contractual charges of ₹ 5506.46 lakhs - when AO has made enquiry in respect of compliance to TDS provisions on payment of equipment contractual charges and after considering facts and evidences brought on record has completed the assessment, the assessment order cannot be considered to be erroneous and prejudicial to the interests of revenue for non consideration of applicability of section 40(a)(ia) - as AO has considered the issue of TDS on equipment contractual charges and since the order passed u/s 201 & 201(1A) also reveals that assessee has complied to TDS provisions, direction of CIT in respect of applicability of section 40(a)(ia), is not correct and the assessment order on this issue cannot be considered to be erroneous and prejudicial to the interests of revenue - the validity of the order passed u/s 263 is upheld and the AO is directed to only examine the issue of allowability of depreciation on the two dredgers – Decided partly in favour of assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim that as a result of disallowance of depreciation on the dredgers in the assessment year 2008-09, the loss claimed by assessee would automatically get enhanced. It was, therefore, submitted that when the application u/s 154 is pending before the AO, the revisionary proceedings should be dropped. So far as issue of applicability of section 40(a)(ia) on the equipment contractual charges is concerned, it was submitted by assessee that since this issue was thoroughly enquired into by AO at the time of assessment proceeding and only thereafter AO has passed the order, it cannot be said that the assessment order passed is erroneous and prejudicial to the interests of revenue. The CIT after considering the submissions, however, was not convinced with the same and ultimately passed the impugned order u/s 263 setting aside the assessment order with the following observations: 2. In the application made u/s 154 the assessee before the AO has made an alternative plea for recomputing the total income in the back drop of disallowance of depreciation in the AY 2008-09. The contention made before the AO u/s 154 of the IT Act is also considered. All the factual position regarding the cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee's reply dated 21/03/2011, ITO(TDS) passed an order u/s 201(1) and 201(1A) on 31/03/2011 only charging interest of ₹ 5,14,043 u/s 201(1A) of the Act. In this context, learned AR also drew our attention to the details of TDS payment on equipment contractual charges, submitted in the paper book. Thus, it was submitted that when assessee has complied to TDS provisions in respect of equipment contractual charges and the matter was not only enquired by ITO(TDS), but, also in course of scrutiny assessment proceeding, the CIT was not justified in holding the assessment order to be erroneous and prejudicial to the interests of revenue for non-consideration of applicability of section 40(a)(ia) on equipment contractual charges. 5. The learned DR, on the other hand, supporting the order of the CIT submitted that as CIT has simply directed the AO to examine the issue of allowability of depreciation on the two dredgers and also applicability of section 40(a)(ia), no prejudice is caused to assessee. So far as the issue of allowability of depreciation is concerned, learned DR submitted, prima-facie, the assessment order passed is erroneous and prejudicial to the interests of r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 63 cannot be curtailed due to application filed u/s 154 of the Act as the proceedings are different. The application filed u/s 154 will be dealt with by AO independently as it is on a different issue. Therefore, in the aforesaid facts and circumstances, we are of the view that CIT was justified in revising the assessment order u/s 263 of the Act so far as the issue of allowability of depreciation claimed on the two dredgers is concerned. 8. However, so far as the second issue of applicability of provisions of section 40(a)(ia) is concerned, in our view, on this issue assessment order passed cannot be considered to be erroneous and prejudicial to the interests of revenue. As can be seen, from the facts and evidences brought on record ITO(TDS) while examining assessee's compliance to TDS provisions issued show cause notice on 16/03/2011, a copy of which is placed at page 124 of assessee's paper book, specifically seeking assessee's reply on compliance to TDS provisions on payment of equipment contractual charges of ₹ 5506.46 lakhs. In compliance to the show cause notice, assessee filed its reply on 21/03/2011 submitting the details of payment of TDS on equipment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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