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TMI Blog2024 (12) TMI 641X X X X Extracts X X X X X X X X Extracts X X X X ..... for examination under Section 263. Furthermore, we note that the issue addressed by the Ld. PCIT pertaining to depreciation on intangible assets is squarely covered by the decision of the Hon ble Supreme Court in Smif Securities Limited [ 2012 (8) TMI 713 - SUPREME COURT] as upheld the eligibility of the claimed depreciation. In the present case, the Ld. DR could not provide any contrary precedent or substantive argument against the submissions of the Ld. AR. In our considered view, for a revision under Section 263 to stand, the Ld. PCIT must satisfy two conditions: (i) the assessment order sought to be revised is erroneous, and (ii) it is prejudicial to the interest of the Revenue. In the impugned revisional order, neither of these conditions has been fulfilled. Accordingly, the revisional order passed under Section 263 is set aside and quashed. Assessee appeal allowed. - Shri. B.R. Baskaran, Accountant Member And Anikesh Banerjee, Judicial Member For the Assessee : Shri Margav Shukla Shri Shubham Shah For the Respondent : Shri R.A. Dhyani, CIT DR ORDER PER ANIKESH BANERJEE, JM: The Instant appeal of the assessee was filed against the order of the Learned Principal Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 143(3) read with Section 144B of the Act. The case was selected under the Computer-Assisted Scrutiny Selection (CASS) system to verify substantial additions or the introduction of intangible assets during the relevant financial year, as disclosed in the Income Tax Return filed by the assessee. Specifically, it was to be examined whether the assessee had reported the actual value of the intangible assets or inflated their value to claim higher depreciation. Verification of the source of investment in these intangible assets was also mandated. The assessee acquired three units through a slump sale during the impugned assessment year. Upon examination of the computation of income and the Tax Audit Report (TAR), it was noted that the assessee had claimed an excess depreciation of Rs. 7,67,69,973 on intangible assets. Despite this, the assessment order ultimately accepted the claimed depreciation. Subsequently, the Ld. PCIT, upon reviewing the assessment records, found that the claim of excess depreciation amounting to Rs. 7,67,69,973 had not been duly verified by the Ld. AO during the limited scrutiny assessment. The Ld. PCIT observed that while the Ld. AO had examined the issue o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reading of instructions issued by CBDT and particularly, the CBDT Instruction NO.20/2015 dated 29-12- 2015, sub-clause (b) of Clause (3) categorically states that questionnaire issued u's. 142(1) of the Act, in a limited scrutiny case, shall remain confine only to the specific reasons/issues for which case has been picked up for scrutiny. Further, the scope of enquiry shall be restricted to the limited scrutiny issues. Sub clause (d) of Clause-3 further reads the expansion of the scope of limited scrutiny and there are certain conditionality. The conditionality are that during the course of assessment proceedings, in a limited scrutiny case, if it comes to notice to the AO that there is a potential escapement of income exceeding Rs. 5 lakhs for normal CIT charge and for metro CIT charge, monetary limit shall be Rs. 10 lakhs requiring substantial verification on any other issue, then the case may be taken up for complete scrutiny with the prior approval of the PCIT/CCIT concerned. The another condition put forth by the CBDT is that such approval thereof accorded by the PCIT in writing after being satisfied about imports of the issues necessitating complete scrutiny in that parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ude assets acquired as a part of business acquisition process. Incidental costs incurred by the Company in relation to intangible assets like professional fees paid to obtain valuation reports, stamp duty for business transfer agreements/consultancy agreements/share subscription agreement/share certificates are also capitalized by the Company. The required supporting evidences were also furnished by the assessee, the same were examined and found to be in order. Hence no variation on this ground is proposed. Accordingly, assessment is concluded u/s 143(3) r.w.s 144B of Income Tax Act, 1961. 6. The Ld.DR vehemently argued and fully relied on the revisional order of the Ld.PCIT but was unable to rebut the submissions of the Ld.AR with any contrary judgement. 7. We have heard the submissions of both parties and carefully considered the documents available on record. We find that the assessee complied with the scrutiny assessment proceedings conducted by the Ld. AO, furnishing all supporting documents related to investments in asset additions. The value of the intangible assets and the corresponding investments was duly verified during the assessment proceedings and accepted within the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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