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TMI Blog2023 (10) TMI 775X X X X Extracts X X X X X X X X Extracts X X X X ..... aimed the expenses after reducing the 100% GST Credit on such expenses. As per the Section 17(4) of the CGST Act 2017, the assesses bank has availed 50% of total GST Credit in its GST Return, and 50% have been debited to the Profit and Loss Account and claimed as expenses of the current year which is allowable expense because it is reduced from expenses and now once again debited in Profit and Loss Account as per section 17(4) of The GST Act, 2017. The said GST Credit lapse is not a provision made by the assessee bank. If said credit is not taken then also it will allowable expense as a part and parcel of respective expense. At the time of the assessment proceeding, the learned AO has opined that the GST Credit lapse is an eligible expense and hence he has allowed the same and had not made further inquiry because it is apparent and obvious that the GST Credit lapse is an allowable expense. Disallowance u/s 43B of the Act, the assessee bank has already disallowed the said amount in its return of income filed. During the assessment proceeding the A.O. has asked for the computation of income and the assessee bank has already submitted the copy of computation of income in which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s 143(3) r.w.s. 143(3A) and 143(3B) of the Act was framed by assessing officer, on 17.03.2021, by accepting the returned income. 4. Later on, Learned Principal Commissioner of Income Tax, Surat-1 [in short the Ld. PCIT ], exercised his jurisdiction under section 263 of the Income Tax Act, 1961. On verification of Audited Balance Sheet and Tax Audit Report of the assessee, it was observed by ld PCIT that the assessee has purchased fixed asset and claimed depreciation and additional depreciation during the year under consideration as under: During the course of assessment proceedings, neither the assessing officer has inquired nor the assessee has furnished any explanation in respect of depreciation claimed on the new assets purchased by the assessee, which is mandatory in view of the Instruction No.9/2007 dated 11.09.2007 of CBDT, New Delhi. 5. Further on verification of Audited Profit and Loss Account and details of other expenditure, it was noticed by ld PCIT that the assessee has claimed Rs. 64,68,703/- as GST input credit lapse for the year under consideration. On perusal of computation of total income submitted during the course of assessment proceedings, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und of non-verification of depreciation and additional depreciation by the Assessing Officer at the time of assessment proceeding which is mandatory in view of the Instruction No.9/2007 dated 11.09.2007 of CBDT, New Delhi. Your honour, please note that the assessee bank has not claimed additional depreciation on the new asset purchased during the year under consideration. The copy of 3CD report, computation of income was already on records at the time of the assessment proceedings. Your honour further note that during the assessment proceeding the assessee bank has already given explanation regarding question asked by the learned A. O. for the profit on sale of assets on depreciable asset. Assessee Bank is a co-operative bank and is engaged in the business of banking and therefore, the asset held by the assessee are for its business purpose and depreciation is also claimed on same. Therefore, the learned A.O. has the knowledge on the basis of information available at the time of assessment proceeding for the depreciation claimed by the assessee bank. The A.O. had on the basis of above information has asked for the explanation for the profit on sale of assets on depre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion regarding the claim of GST Credit lapse. At the time of the assessment proceeding, the learned A.O. has opined that the GST Credit lapse is an eligible expense and hence he has allowed the same and had not made further inquiry because it is apparent and obvious that the GST Credit lapse is an allowable expense. Therefore, your honour is saying that it is not an allowable expense is a change of opinion only. It seems that your honour proposing to set aside the assessment order for further inquiry in this matter to find out whether there is any erroneous claim of GST Credit tapes has been made or not? There is nothing found from the Records of the assessment proceeding that the GST Credit lapes claim is not in accordance with the law. Therefore, to further verify the GST Credit laps claim is correct or not without pointing out any error in the said claim will not become a ground to set aside the assessment order. 3. In para 5 of your above said notice Your honour had proposed to set aside the assessment order u/s . 143 (3) of the Income Tax Act, 1961 on the ground of disallowance of Rs. 1,16,06,075/- u/s 43B Your honour in this regard please note that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent order passed u/s 143(3) r.w.s. 143(3A) 143(3B) of the Act, dated 17.03.2021 is deemed to be erroneous in so far as it is prejudicial to the interest of Revenue. Accordingly, the assessment order passed u/s 143(3) r.w.s. 143(3A) 143(3B) of the Act, dated 17.03.2021, in assessee`s was set aside with a direction to the Assessing Officer to pass fresh assessment. 10. Aggrieved by the order of the Ld. PCIT, the assessee is in appeal before us. 11. Learned Counsel for the assessee argued that assessing officer has made enquiry and verified the issue of depreciation on the purchase of new assets amounting to Rs. 3,11,73,124/- with supporting cogent documents like bills/vouchers/ etc. and their date of put to use. The assessing officer has also examined the fact that GST Credit lapse is an eligible expense. As regards the reconciliation of figures of amount, reported in Form 3CD of Rs. 2,35,31,575/- as not allowable u/s 43B(f) of the Act, the assessee has not claimed in the computation of total income. The ld Counsel also stated that though the Assessing Officer has passed the order in brief, however the Assessing Officer has issued the notice under section 142(1) of the Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the findings of the ld. PCIT and other material brought on record. We note that assessee submitted before us following documents and evidences, viz: (i) Computation of Income and Income Tax Return for AY.2018-19 (vide PB. 1 to 3), (ii) Tax Audit Report for AY.2018-19 (vide PB. 4 to 16), (iii) Letter submitted dated 08.02.2021 with various annexures (vide PB.17 to 39), (iv) Letter submitted before AO dated 27.02.2021 with various annexures (vide PB.40 to 62), (v) Letter submitted before Income Tax Authorities dated 04.03.2021 (vide PB.63 to 65). We have gone through the above documents and noted that regarding first issue of depreciation, we note that Assessing Officer had the knowledge on the basis of information available at the time of assessment proceeding for the depreciation claimed by the assessee bank. The AO had on the basis of above information has asked for the explanation for the profit on sale of assets on depreciable asset. Therefore, it cannot be said that the AO has not made inquiry, or the assessee has not furnished any explanation in respect of depreciation claimed on the new asset purchased by the assessee. About GST credit, we note that these amounts of GST cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der, that is (i) if the Assessing Officer s order was passed on incorrect assumption of fact; or (ii) incorrect application of law; or (iii)Assessing Officer s order is in violation of the principle of natural justice; or (iv) if the order is passed by the Assessing Officer without application of mind; (v) if the AO has not investigated the issue before him; then the order passed by the Assessing Officer can be termed as erroneous order. Coming next to the second limb, which is required to be examined as to whether the actions of the AO can be termed as prejudicial to the interest of Revenue. When this aspect is examined one has to understand what is prejudicial to the interest of the revenue. The Hon ble Supreme Court in the case of Malabar Industries (supra) held that this phrase i.e. prejudicial to the interest of the revenue has to be read in conjunction with an erroneous order passed by the Assessing Officer. Their Lordship held that it has to be remembered that every loss of revenue as a consequence of an order of Assessing Officer cannot be treated as prejudicial to the interest of the revenue. When the Assessing Officer adopted one of the courses permissible in law and i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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