Revision under Section 263 denied where depreciation properly claimed and CBDT instruction inapplicable; no substantial question of law

HC held that the Tribunal correctly found the assessment order not to be erroneous or prejudicial to Revenue, having concluded depreciation was claimed in accordance with the Act and that the AO had carried out appropriate scrutiny. The HC agreed the CBDT instruction relied upon by the PCIT was inapplicable as the case did not involve brought forward losses or unabsorbed depreciation. Accordingly, revision under section 263 was not warranted and no substantial question of law arose.

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Issues Involved:
The issues involved in this case are:
1. Whether the Appellate Tribunal was right in allowing the appeal for the assessee despite the AO not considering instruction No. 9/2007 dated 11.09.2007Rs.
2. Whether the Appellate Tribunal was right in allowing the appeal for the assessee despite the assessment being for complete scrutiny and not limited scrutinyRs.
3. Whether the Appellate Tribunal was right in quashing the order u/s 263 of the Act even though the order was erroneous and prejudicial to the interest of RevenueRs.

Issue 1:
The assessee, a limited company, filed its income return for AY 2018-19, declaring total income. The Assessment Order was passed under Section 143(3) of the Income Tax Act, 1961, accepting the returned income. Subsequently, the Principal Commissioner of Income Tax initiated proceedings under Section 263, directing a de-novo assessment due to lack of proper verification of new asset purchase and claimed depreciation by the Assessing Officer.

Issue 2:
The Tribunal found that although the Assessing Officer conducted limited scrutiny, the case was selected for complete scrutiny. The Tribunal examined the depreciation issue and noted that the Assessing Officer had considered the matter based on available reports. The Tribunal concluded that the Assessing Officer's order was not erroneous or prejudicial to Revenue's interest, citing relevant legal precedents.

Issue 3:
Upon reviewing the Tribunal's findings, it was determined that the Assessment Order was not erroneous or prejudicial to Revenue's interest. The Tribunal found that the CBDT Instruction No. 9 of 2007, cited by the Principal Commissioner of Income Tax, did not apply to the case as there were no issues related to brought forward losses or unabsorbed depreciation for the assessee. Consequently, the appeal was dismissed based on the Tribunal's conclusions.

This judgment highlights the importance of proper scrutiny in assessments, adherence to legal instructions, and the necessity for Assessing Officers to consider all relevant aspects before making decisions that could impact Revenue's interests.

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