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TMI Blog2016 (10) TMI 587X X X X Extracts X X X X X X X X Extracts X X X X ..... rtionate depreciation of ₹ 73,34,650/- was adjusted against the grant value shown in the balance sheet and the balance depreciation of ₹ 2,68,76,124/- proportionate to the net value of fixed assets was debited in the profit & loss account. The assessee accordingly has added the depreciation of ₹ 2,68,76,124/- in the statement of income and reduced the depreciation by the amount as worked out as per written down value of the assets under the income tax Act for an amount of ₹ 1,84,61,661/-. We also find that the depreciation under the income tax act was calculated at the WDV which was brought forward from the earlier years. The WDV was duly accepted by the lower authorities. In the year under consideration no grant was received by the assessee in relation to any capital assets. The ld. DR failed to bring anything contrary to the arguments made by the ld. AR at the time of hearing. In view of above, we opined that the depreciation claimed by the assessee under the Companies Act and Income Tax Act is representing the correct figure. Similarly for the amount credited to the depreciation account during the year for the assets disposed, the ld CIT in his impugne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1961 (the Act ) is illegal, invalid, not sustainable in law and liable to struck down. 2. For that the Learned Commissioner of Income Tax, erred in law in holding that the assessment order under section 143(3) is erroneous and prejudicial to the interest of the revenue in respect of depreciation allowable under the provisions of the Act, without appreciating that there was no error in such calculation. 3. For that the learned Commissioner of Income Tax was not justified in setting aside the order of the Assessing officer passed u/s 143(3) of the Act since the claim of depreciation had been computed in accordance with section 32 of the Act. 4. For that the learned Commissioner of Income Tax was not justified in setting aside the impugned assessment order on a mere presumption that the written down value of assets of the appellant (which has been duly accepted by the Revenue over the years) was arrived after non-adjustment of grants. 5. Without prejudice to the above, the learned Commissioner of Income Tax was not justified in assuming jurisdiction u/s 263 of the Act on the assessment order for the AY 2008-09, in respect of an adjustment relating to AY ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- as per the income tax act was claimed as deduction in the computation of income. The depreciation under the income tax act was calculated on the written down value of assets as appearing in the immediate preceding previous year. The assessee also explained that such a written down value was arrived at after reducing the amount of grant received from the value of the assets. The assessee received the last grant in relation to the capital assets in the AY 2002-03 and the same was adjusted with the value of the capital assets so as to arrive at the WDV of the block of assets for the purpose of charging the depreciation. For the amount of ₹ 29,83,023/- credited in the depreciation account, the assessee submitted that this relates to the accumulated depreciation on the assets disposed during the year. This amount was adjusted in the financial account and it has no impact on the amount of depreciation as per income tax Act. The sale proceeds of disposed assets were duly adjusted with the balance of written down value of the relevant block of assets. However, the ld. CIT disregarded the plea of the assessee with regard to the first dispute of adjustment of grant by holding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome Tax Act as the written down value of the block of assets has been reduced by the amount of the sale proceeds. Accordingly the depreciation charged under the Companies Act and Income Tax Act is depicting the correct figure and he prayed before the Bench to confirm the order of AO. 6. On the other hand the ld. DR submitted that no paper book was submitted at the time proceedings under section 263 of the Act. The ld. DR vehemently supported the order of the CIT. 7. We have heard the rival contentions of both the parties and perused the materials available on record. The ld. CIT in the instant case held the order of the AO erroneous and prejudicial to the interest of Revenue on two counts. Firstly the AO has not carried out the proper verification whether the WDV of the block of assets has been adjusted with the amount of grant received on the capital assets being the part of the block of assets. Secondly the amount of accumulated depreciation pertaining to the fixed assets disposed during the year was credited to the depreciation account and this aspect was not verified by the AO at the time of assessment. Now, from the aforesaid discussion we find that the ld. CIT trea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt was written off against the grant value shown in the balance sheet and the balance depreciation pertaining to the net value of the fixed assets was charged in the profit loss account. The assessee for the year under consideration has calculated the depreciation in the books of accounts for ₹ 3,42,10,774/- out of which proportionate depreciation of ₹ 73,34,650/- was adjusted against the grant value shown in the balance sheet and the balance depreciation of ₹ 2,68,76,124/- proportionate to the net value of fixed assets was debited in the profit loss account. The assessee accordingly has added the depreciation of ₹ 2,68,76,124/- in the statement of income and reduced the depreciation by the amount as worked out as per written down value of the assets under the income tax Act for an amount of ₹ 1,84,61,661/-. We also find that the depreciation under the income tax act was calculated at the WDV which was brought forward from the earlier years. The WDV was duly accepted by the lower authorities. In the year under consideration no grant was received by the assessee in relation to any capital assets. The ld. DR failed to bring anything contrary to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on had been computed in accordance with section 32 of the Act. 4. For that the Ld CIT was not justified in setting aside the impugned assessment order on a mere presumption that the written down value of assets of the appellant (which has been duly accepted by the Revenue over the years) was arrived after non-adjustment of grants. 5. Without prejudice to the above, the Ld CIT was not justified in assuming jurisdiction u/s 263 of the Act on the assessment order for the AY 2009-10, in respect of an adjustment relating to AY 2002-03. 6. For that the order passed by the Ld CIT u/s 263 of the Act is against the settled principle of law that an order of Assessing officer should be both erroneous and prejudicial to the interest of the revenue, and such tests being not satisfied in the instant case, the order u/s 263 is liable to be quashed. 10. At the outset we find that issue involved in this appeal is the same as elaborated in ITA no. 729/kol/2014 and both the parties agreed that whatever view will be taken in the above stated appeal shall also be applicable for this appeal . Hence this appeal of assessee is also allowed. 11. In the result, both appeals of ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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