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TMI Blog2024 (12) TMI 1215X X X X Extracts X X X X X X X X Extracts X X X X ..... to the amortized value of the assets - PCIT notes in his order that the assessee had contended that this depreciation had been claimed on new assets created by it and the circular no. CBDT Circular No. 9 of 2014 dated 23-01-20214 did not apply. Without dealing with the contentions of the assessee, the ld. PCIT holds the assessment order erroneous on this count simply by noting the impugned assets ought to have amortized and depreciation ought not to have been allowed to the assessee. Thus, the impugned order passed by the ld. PCIT is in gross violation of the principles of natural justice, passed without considering the contentions of the assessee before him and a completely non-speaking order. Assessee appeal allowed. - Ms. Annapurna Gupta, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member For the Assessee : Shri Ronak Doshi, A.R. For the Revenue : Shri Prathvi Raj Meena, CIT-D.R. ORDER PER : ANNAPURNA GUPTA, ACCOUNTANT MEMBER:- The present appeal has been filed by the assessee against order passed by the Ld. Principal Commissioner of Income Tax, PCIT, Ahmedabad-1,(in short PCIT ) in revisionary proceedings u/s. 263 of the Income Tax Act, 1961(hereinafter referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irected to allow depreciation as claimed by the Appellant. WITHOUT PREJUDICE TO GROUND NO. 1 GROUND NO. III: DIRECTION TO AO TO VERIFY ALLOWABILITY OF APPELLANT'S CONTRIBUTION TO PROVIDENT FUND AND OTHER FUNDS WITH REGARD TO RULE 87 OF THE INCOME TAX RULES, 1962 ( the Rules ) AMOUNTING TO Rs. 5,71,810/- 1. On the facts and circumstances of the case and in law, Pr. CIT erred in directing AO to verify the allowability of the Appellant's contribution to the Provident Fund and other funds with regard to Rule 87 of the Rules amounting to Rs. 5,71, 810/- 2. The Appellant prays that the aforesaid direction of Pr. CIT be deleted and AO be directed to allow the Appellant's contributions made to the Provident Fund and other funds. GENERAL: The Appellant craves leave to add, amend, modify, rescind, supplement or alter any of the Grounds stated hereinabove, either before or at the time of hearing of this appeal. 3. We have gone through the order of ld. PCIT, heard both the parties and have also taken note of the documents referred to before us filed in the form of paper book, as also the case laws relied upon by both the sides. 3.1 On considering of all the above, we hold that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess claim of deduction of contribution to staff provident fund and other fund. That in response to the same, the assessee had filed its reply dated 03-03-2021(P.B 57-63) pointing out that employers contribution made by the assessee was in line with the Provident Fund Act and that two employees had opted for voluntary provident fund scheme therefore employees contribution towards provident fund was higher than 12%. It was further pointed out that another notice was issued by the Assessing Officer dated 15-12-2020(P.B 53-56) regarding the excess contribution to provident fund asking the assessee to submit details regarding the employees whose PF was deducted and the calculation sheet for calculating the percentage contribution by the employer to the provident fund and superannuation fund. That in response to the same, the assessee filed reply dated 03-03-2021 (P.B 57-63) submitting all the details . 6.1 Thus, Ld. Counsel for the assessee contended that the assessee had demonstrated to the Ld. PCIT that the specific issue of claim of excess contribution to PF was duly examined by the AO during assessment proceedings and the assessee had explained that no such excess claim had been mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... naire agreement entered into with Vishakhapatnam Port Trust was furnished to the Assessing Officer wherein it was categorically mentioned that the new assets created by the assessee were to be treated as the assessee s own assets. The ld. counsel for the assessee therefore pointed out that in view of the same considering all these facts that the new assets of the assessee were its own assets, depreciation on the same was allowable in terms of the section 32 of the Act and the AO therefore had rightly allowed the same. Submissions made before PCIT on the issue of depreciation on new assets as opposed to amortization of the same. 9. Ld. Counsel for the assessee pointed out that during revisionary proceedings, it was clarified to the ld. PCIT that the ratio applied for amortizing the assets which were acquired by the assessee from Vishakhapatnam Port Trust was not applicable to the assets which were created by the assessee since there was a difference in the fact situation of both the assets. It was pointed out to the ld. PCIT that there is no reason at all for the Assessing Officer to have followed the same proposition as followed in the case of acquired assets to the assets created ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of deprecation of Rs. 35.73 crores and (ii) with respect to the assessee s contribution to PF the Assessing Officer has allowed claim despite the contribution being in excess to the limit as prescribed under Rule 87 of the IT Rules. 12. The findings of the ld. PCIT in this regard are noted at para 5.2 of his order is as under:- 5.2 Hon'ble Supreme Court have ruled out in recent past that if A.O. did not go into whole amount on the issue, there is error. The reliance is placed on the judgment in the case of BSES Rajdhani Power Ltd vs Pr. CIT [2023] 152 taxmann.com 139 (SC), the head note of the judgment reads as under: Section 32, read with section 263, of the Income-tax Act, 1961 Depreciation - Allowance/Rate of (Revision) - Assessment year 2010-11 - High Court by impugned order held that non-consideration of larger claim for Rs. 298.93 crores as depreciation and consideration of only a part of it (Rs. 644,81,091) by Assessing Officer, who did not go into issue with respect to whole amount, was an error, that could be corrected under section 263 - Whether SLP filed against impugned order of High Court was to be dismissed - Held, yes [Para 2] [In favour of revenue] Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of Contribution of Provident Fund with respect of Rule 87 of Income-tax Rules, 1962. 7.1 In view of the fact of the case and ruling of Hon'ble Supreme court, it is clear that the assessment order is passed by the A.O., without making proper examination of the issues mentioned above. The Assessing Officer has failed to make addition in accordance with the provisions of the Act. The error in the assessment order has resulted into loss of revenue. The order passed by the Assessing Officer is, thus, erroneous and prejudicial to the interest of the Revenue. Therefore, provisions of section 263 of the Act are applicable in this case. 14. Thereafter, the ld. PCIT at para 8 of his order sets aside the assessment order directing the Assessing Officer to pass fresh order in accordance with law after duly examining the facts of the case on the extant issues. 15. Thus, the finding of error by the ld. PCIT is confined to para 5.2 and para 7.1 of his order and a perusal of the same reveal that the finding is clearly without any application of mind or consideration of the submissions of the assessee before him. 16. Regarding his finding that the AO had not conducted proper inquiry on the i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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