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TMI Blog2025 (1) TMI 451X X X X Extracts X X X X X X X X Extracts X X X X ..... et in details and office note of the National E-Assessment Centre, the Regional Assessing Officer of the Assessment Unit has admitted the fact that the assessment order passed in the case of the assessee is not sustainable being passed against the non-existing entity. The impugned order passed by the learned Pr. CIT u/s 263 is based on incorrect facts is not sustainable in law and liable to be quashed.Appeal filed by the assessee is allowed. - Shri Vijay Pal Rao, Vice-President AND Shri Madhusudan Sawdia, Accountant Member For the Assessee : Advocate Tanmayee Rajkumar For the Revenue : Shri Kumar Pranav, CIT(DR) ORDER PER VIJAY PAL RAO, VICE PRESIDENT This appeal by the assessee is directed against the revision order dated 30/03/2024 of the learned Pr.CIT Hyderabad-2, u/s 263 of the I.T. Act, 1961 for the A.Y.2017-18. 2. The assessee M/s. Flagship Developers (P) Ltd is a company and engaged in the business of developing and operating information technology/information technology enables services (IT/ITES) Parks in Special Economic Zones. The assessee filed its original return of income for the year under consideration on 18/01/2017 declaring loss of Rs. 50,54,26,119/- under the h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the issue of excess claim of depreciation. 3. Aggrieved by the impugned order, the assessee filed the present appeal. 4. The learned AR of the assessee submitted that the only issue taken by the learned Pr. CIT in the show cause notice is regarding an excess claim of depreciation. It has been duly replied by the assessee and also explained that there is no discrepancy in the claim of depreciation. The learned AR has pointed out that the assessee has shown the book depreciation of Rs. 24,04,18,433/- which was claimed as deduction in computation of book profit u/s 115JB of the Act. The said claim is in consonance with the depreciation debited in the audited book profit loss account of the Flagship Developers (P) Ltd (FDPL). The learned AR has further submitted that initially, the accounts were prepared for the financial year 1/4/2016 to 31/03/.2017. However, subsequently, after the approval of the scheme of amalgamation, the revised post-merger audited profit loss account was prepared and also a revised return of income was filed for the period 1/4/2016 to 1/02/2017 showing the book depreciation of Rs. 20,63,39,415/- which was also claimed as deduction in computation of book profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in the case of Pr. CIT vs. Maruti Suzuki India Ltd (2019) 107 Taxmann.com 375 (S.C). 6. On the other hand, the learned DR has submitted that the order of the Assessing Officer is completely silent on the issue of claim of depreciation and therefore, there is a lack of inquiry as well as non-application of mind on the part of the Assessing Officer while passing the assessment order and allowing the claim of depreciation while computing the book profit. He has relied upon the impugned order of the learned Pr. CIT and contended that the case was selected for scrutiny under CASS and one of the issue was large claim of refund. Thus, the Assessing Officer ought to have examined the excess claim of depreciation on the part of the assessee and failure to conduct an inquiry on the part of the Assessing Officer renders the assessment order erroneous in so far as it is prejudicial to the interest of the Revenue. 7. In the rejoinder, the learned AR has submitted that the special purpose financial statements were prepared on 23/11/2018 placed at page 173 to 176 of the paper book and the amount of depreciation in those special purpose financial statements also shown at Rs. 20,63,39,415/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as against the depreciation as per the books amounting to Rs. 12,71,86,377/-. The assessee filed its reply dated 13/03/2024 explaining all the facts relating to the merger of the assessee with VITP (P) Ltd as per the scheme of amalgamation approved by the NCLT Hyderabad vide order dated 17/07/2018 w.e.f. 3/2/2017. The assessee has specifically pointed out the facts regarding the claim of depreciation in para 2 of the reply as under: 2. Our Submission: Issue: During the scrutiny of annual account and profit and loss account for the year ended 31.03.2017, it was seen that there is depreciation as per book amounting to Rs 12,71,86,377/- but it was claimed in the ITR as Rs 17,60,01.521/-, Hence there was claim of Depreciation of Rs 4,88,15,144 (Rs 176001521-127186377) as per books and any other reason if found. In this regard, we wish to submit that in the Return of income filed u/s 139(1) of the Act in the case of FDPL under PAN: AAACF9235B. book depreciation of INR 24,04,18,433 was claimed as deduction in the computation of book profit u/s 115JB of the Act (refer page 8 and 53 of Annexure 2) which is in consonance with depreciation debited in the audited profit and loss account of F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee has brought to the notice of the learned Pr. CIT that initially the book depreciation of Rs. 24,04,18,433/- was claimed as deduction on the computation of book profit u/s 115JB which is in consonance with the depreciation debited in the P L Account. Since there was a merger of the assessee with VITP (P) Ltd, therefore, a revised return of income was filed by the assessee for the period from 1/4/2016 to 1/2/2017 wherein the book depreciation of Rs. 20,63,39,415/- was claimed as deduction for the computation of book profit u/s 115JB of the I.T. Act, 1961. All these facts are also reflected in the return of income filed by the assessee u/s 139(1) of the Act and placed at Page No.355 onwards of the paper book and as per the entry No.44 of the return of income, the depreciation was claimed at Rs. 24,04,18,433/-. For ready reference, the relevant part of the return of income is reproduced as under: 11. Thereafter, the assessee has filed the revised return of income placed at page No.470 of the paper book and relevant entry No.44 is showing the claim of depreciation as under: 12. Thus, in the original return of income as well as in the revised return of income, the claim of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment order passed in the case of the assessee is not sustainable being passed against the non-existing entity. The office note dated 23/06/2021 is reproduced as under: Notings/Remarks: OFFICE NOTE: The assessment has been Completed keeping in mind the repeated directions from NeAC, the CBDT through webinars and minutes of meetings and higher authorities, wherein it has been stated that in view of the Covid-19 pandemic and the data driven assessment scheme of the Faceless Assessment Scheme, 2019, the assessment has to be 1imited to the discrepancies as red flagged for enquiry and investigation through CASS and to legacy issues. The assessee company is engaged in the business of developing and operating Information Technology/Information Technology Enabled Services ( IT/ITES ) parks in Special Economic Zone ( SEZ ) land. This company has got amalgamated into the resulting company after the NCLT amalgamation order. Details: My assessee: Flagship developers Pvt Ltd (Non-Existent) PAN of merged company: AAACF9235B NAME and PAN Of resulting company: VITP PVT Ltd:- AACCV2672G The assessee got merged into the resulting company on 3rd February 2017. The intimation for the same was provide ..... X X X X Extracts X X X X X X X X Extracts X X X X
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