2022 (7) TMI 891 - AT - Income Tax

ITAT allows assessee's appeals under Income Tax Act for assessment years 2015-2016 and 2017-2018

The ITAT allowed the assessee's appeals against orders passed under section 263 of the Income Tax Act for assessment years 2015-2016 and 2017-2018. The ... Revision u/s 263 - As per CIT Assessee has claimed depreciation and also claimed capital expenditure and thereby violated the provisions of Section 11(6) of the Act - As argued that the assessee has claimed depreciation on only such assets which have not been claimed as application - HELD THAT:- A perusal of the audit report along with the utilisation chart towards asset creation clearly shows that the assessee has not claimed depreciation in respect of the assets in respect of which the claim of application has been made. It is also noticed that this has categorically been mentioned in the reply filed before the CIT(E), Hyderabad CIT(E), however, did not consider the reply of the assessee nor he has done any verification but has simply proceeded to direct the AO to examine the issue afresh. As the ld. CIT(E) has not considered the explanation given by the assessee and as it is noticed that the assessee has not claimed the depreciation on the items on which the assessee has claimed application, we are of the view that there is no violation of provisions of Section 11(6) in the case of the assessee for both the assessment years under consideration. Consequently, the order passed by the ld. CIT(E) in both the appeals under consideration are hereby quashed. Appeals of the assessee are allowed. Issues:1. Appeal against order passed u/s.263 of the Act for assessment years 2015-2016 and 2017-2018.2. Condonation of delay in filing the appeal.3. Alleged violation of Section 11(6) of the Act regarding depreciation and capital expenditure.4. Consideration of audit report and application of assets.5. Amendments in Section 11(6) w.e.f. 01.04.2015.6. Examination of explanations and verification by the ld. CIT(E).Analysis:1. The ITAT considered two appeals filed by the assessee against the orders passed u/s.263 of the Act for the assessment years 2015-2016 and 2017-2018. The delay in filing one of the appeals was condoned, and both appeals were heard together due to identical facts in both years.2. The assessee sought condonation of a 32-day delay in filing one of the appeals, which was agreed upon by the ld. CIT-DR, leading to the delay being condoned, and the appeal was finally heard alongside the other appeal.3. The crux of the matter revolved around the alleged violation of Section 11(6) of the Act by the assessee concerning depreciation and capital expenditure. The ld. CIT(E) contended that the assessee had violated the provisions, while the assessee argued that there was no violation and cited relevant case law to support their claim.4. The ITAT analyzed the audit report and utilization chart provided by the assessee, which clearly demonstrated that the depreciation claimed did not overlap with the assets claimed as application. Despite the explanations and evidence presented by the assessee, the ld. CIT(E) did not consider them and directed a fresh examination by the AO.5. The ld. CIT-DR highlighted the amendments in Section 11(6) of the Act effective from 01.04.2015, which prompted the intervention of the ld. CIT(E) under section 263.6. After considering the rival submissions and examining the explanations and evidence, the ITAT concluded that there was no violation of Section 11(6) of the Act by the assessee for both assessment years. Consequently, the orders passed by the ld. CIT(E) were quashed, and both appeals of the assessee were allowed.This comprehensive analysis covers the issues raised in the legal judgment, detailing the arguments presented by both parties and the ultimate decision reached by the ITAT.