2016 (12) TMI 1243 - AT - Income Tax

Appeal challenging CIT(A) order for A.Y. 2011-12 on assessment issues incl. set-off of unabsorbed depreciation

The appeal was filed against the CIT(A) order for A.Y. 2011-12, encompassing issues such as additions during assessment, invocation of provisions under ... Revision u/s 263 - set off of the unabsorbed depreciation - Held that:- It is not in dispute that the assessment order passed by the Assessing Officer on 29.03.2014. Subsequently, the application u/s.154 of the Act filed in which the claim of the assessee regarding set off of the unabsorbed depreciation of ₹ 18,16,28,888/- was allowed. However, this order is erroneous and prejudicial in the interest of the revenue is not understoodable. Firstly this claim was declined by the Assessing Officer by virtue of order dated 29.03.2014. Subsequently, the same was allowed by the Assessing Officer on application u/s.154 of the Act moved by the assessee. This claim has also not been wrongly allowed by the Assessing Officer. The issue regarding set off of unabsorbed depreciation against the addition made u/s.68 of the Act has rightly been allowed by the Assessing Officer, in view of the law settled in CIT vs. Virmani Industries Pvt. Ltd. (1995 (10) TMI 1 - SUPREME Court ). Thus when the claim has been justifiably allowed by the Assessing Officer then the same cannot be treated as a ground to invoked the provision u/s.263 of the Act because the order is not erroneous and prejudicial in the interest of revenue. - Decided in favour of assessee Issues Involved:1. Appeal against order dated 26.08.2014 passed by CIT(A) for A.Y.2011-12.2. Rectification application u/s.154 of the Act.3. Invocation of provision u/s.263 of the Act.4. Condonation of delay in filing appeal.5. Set-off of unabsorbed depreciation against assessed income.6. Addition and disallowances made during assessment proceedings.7. Grounds raised by the assessee.8. Similarity with another case involving order u/s.263.Detailed Analysis:Issue 1: Appeal against CIT(A) OrderThe assessee filed appeals against the CIT(A) order dated 26.08.2014 for A.Y.2011-12 due to common questions of law and facts. The issues raised included additions and disallowances made during assessment proceedings, invoking provisions of Rule 8D r.w.s.14A(2) of the Act, interest waivers, disallowances under various sections, and unpaid dividends.Issue 2: Rectification Application u/s.154The Assessing Officer settled the issue regarding set-off of unabsorbed depreciation against assessed income after a rectification application u/s.154 was filed by the assessee. However, the CIT invoked provision u/s.263, setting aside the rectification order, deeming it erroneous and prejudicial to revenue's interest. The assessee challenged this decision.Issue 3: Invocation of Provision u/s.263The CIT invoked section 263 of the Act, directing the Assessing Officer to decide the matter afresh, considering the set-off of unabsorbed depreciation against assessed income. The assessee contended that the order was not erroneous and prejudicial to revenue's interest, citing legal precedents supporting the claim.Issue 4: Condonation of DelayThe assessee filed an application for condonation of delay in filing the appeal, citing reasons such as pending appeal against the Assessing Officer's order and delayed receipt of the CIT's order. The delay was condoned considering the substantial tax demand involved and the case's merit.Issue 5: Set-off of Unabsorbed DepreciationThe case involved the set-off of unabsorbed depreciation against assessed income, which was initially declined by the Assessing Officer but later allowed through a rectification application. Legal precedents supported this claim, and the Assessing Officer's decision was deemed justifiable.Issue 6: Addition and DisallowancesVarious additions and disallowances were made during the assessment proceedings, including under Rule 8D r.w.s.14A(2) of the Act, interest waivers, disallowances under different sections, and unpaid dividends. These formed part of the grounds for the appeals filed by the assessee.Issue 7: Grounds Raised by the AssesseeThe assessee raised specific grounds challenging the CIT's order under section 263, arguing that the order was arbitrary, bad in law, and not justified. The CIT's decision to set aside the rectification order was contested, emphasizing the legality and justifiability of the set-off of unabsorbed depreciation against assessed income.Issue 8: Similarity with Another CaseGiven the similarity with another case where the order u/s.263 was set aside, the findings of the previous case were applied, leading to the setting aside of the CIT's decision in the present case as well.This detailed analysis covers the various issues involved in the legal judgment, providing a comprehensive overview of the grounds, arguments, and decisions made in the case.