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TMI Blog2024 (6) TMI 524X X X X Extracts X X X X X X X X Extracts X X X X ..... of the argument, which has both factual and legal aspects to it, the same ought to have been, on inquiry, made before the AO, and not before either the revisionary authority or before us in further appeal. It s furnishing before us, inasmuch as it addresses the fundamental issue arising in the instant case, itself defeats the assessee s case, proving non-application of mind, i.e., that of the Revenue. There has been thus no enquiry on the pertinent issues by the AO during the assessment proceedings, much less responded to, on which the AO is therefore required to apply his mind, either accepting or rejecting the assessee s claim upon due verification and enquiry, i.e., as deemed proper under the given facts and circumstances, including the law in the matter, passing a speaking order. CIT, accordingly, set aside the matter for a de novo consideration. He has, further, in our view, rightly not expressed any view in the matter - His stating that there has been an incorrect application of law by the AO is in our view consequential to his finding of an incorrect presumption of facts by the AO as well as non-application of mind, inasmuch as the law could only be applied on proper determi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crore. Deducting this amount from Rs. 314.57 crore, on which deduction u/s.32AC is to be claimed, reduces the new assets acquired and installed during the relevant year to Rs. 88.06 crore, i.e., below Rs. 100 crore. The Assessing Officer (AO) had completely failed to notice these aspects of the assessee s case in framing the assessment. The assessment was accordingly set aside by him for a de novo consideration of the claim for deduction u/s.32AC. 3. The assessee, in revisionary proceedings, explained that it was only on the installation and successful test check of the plant and machinery, could the assessee be in law said to have acquired plant and machinery. There was, thus, no scope for excluding the assets purchased during the preceding year, but under installation prior to 01.04.2013, in computing the deduction exigible u/s. 32AC.That apart, the law stands subsequently amended, extending the period of installation up to 31.03.2017, so that the provision is to be interpreted liberally. The short point, however, in the view of the ld. Pr.CIT, was that there had been no application of mind in the matter by the AO, who had made the assessment assuming incorrect facts, without ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Del), again with reference to judicial precedents, that the order of the AO becomes erroneous on a failure to make enquiry where the circumstances call for it. This is not because there is anything wrong in the order if all the facts stated therein are assumed to be correct. However, the AO is not only an adjudicator but also an investigator and, therefore, cannot remain passive in the face of a return which is apparently in order but calls for further enquiry. It is his duty to ascertain the truth of the facts stated in the return when the circumstances of the case are such as to provoke an enquiry. In CIT v. Toyota Motor Corporation[2008] 306 ITR 49 (Del), since confirmed in the decision reported at [2008] 306 ITR 52 (SC), it was explained that the Tribunal could not have substituted it s own reasons which were required to be recorded by the AO, and ought to have remanded the matter to the latter. 5.2 Section 32AC of the Act, applicability of which was up for consideration, reads as under: Investment in new plant or machinery. 32AC. (1) Where an assessee, being a company, engaged in the business of manufacture or production of any article or thing, acquires and installs new ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear in which such new asset is sold or otherwise transferred, in addition to taxability of gains, arising on account of transfer of such new asset. (3) Where the new asset is sold or otherwise transferred in connection with the amalgamation or demerger within a period of five years from the date of its installation, the provisions of sub-section (2) shall apply to the amalgamated company or the resulting company, as the case may be, as they would have applied to the amalgamating company or the demerged company. (4) For the purposes of this section, new asset means any new plant or machinery (other than ship or aircraft) but does not include (i) any plant or machinery which before its installation by the assessee was used either within or outside India by any other person; (ii) any plant or machinery installed in any office premises or any residential accommodation, including accommodation in the nature of a guest house; (iii) any office appliances including computers or computer software; (iv) any vehicle; or (v) any plant or machinery, the whole of the actual cost of which is allowed as deduction (whether by way of depreciation or otherwise) in computing the income chargeable unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication test (Rs.314.58 crore), that arise in the matter, and are required to be met. And, further, ought to have been inquired into and called for and verified in view of the audit report. The assessee s reply dated 12.12.2017 (copy on record), which reads as under; does not answer the same: 3. Working of deduction claimed u/s 32AC of Rs. 471,865,123 In this regard, we would like to mention the provisions of section 32AC of the Act, which reads as under (1) Where an assessee, being a company, engaged in the business of manufacture or production of any article or thing, acquires and installs new asset after the 31st day of March, 2013 but before the 1st day of April, 2015 and the aggregate amount of actual cost of such new assets exceeds one hundred crore rupees, then, there shall be allowed a deduction. (a) for the assessment year commencing on the 1st day of April, 2014, of a sum equal to fifteen percent of the actual cost of new assets acquired and installed after the 31st day of March, 2013 but before the 1st day of April, 2014, if the aggregate amount of actual cost of such new assets exceeds one hundred crore rupees; and (b) ..... During the year under consideration the compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and circumstances, including the law in the matter, passing a speaking order. 5.8 The ld. Pr.CIT, accordingly, set aside the matter for a de novo consideration. He has, further, in our view, rightly not expressed any view in the matter (refer para 6.2 of his order). His stating that there has been an incorrect application of law by the AO is in our view consequential to his finding of an incorrect presumption of facts by the AO as well as non-application of mind, inasmuch as the law could only be applied on proper determination of facts. Further, the same therefore could have been avoided. At best, the assessee citing the decisions, as in the case of IDMC Ltd. [2017] 78 taxamann.com 285, which is in the context of sec.32(1)(iia), the language of which is different, a direction to the AO to examine if the ratio of the said decision is applicable to the facts of the case, with specific reference to the assessee s plea. Subject to these observations, we do not find much merit in the assessee s case challenging revision, even as we emphasize it to be an open set aside. 5.9 We may before parting state that a preliminary rule of interpretation is that due weight and meaning is to given t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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