TaxTMI 
TaxTMI 
2015 (10) TMI 2013
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....) on 30.3.2013. After going through the record, the ld.Commissioner has formed an opinion that action under section 263 deserves to be taken against the assessee. Accordingly, he issued a show cause notice on 16.3.2015. A copy of the show cause notice is available at page no.1 of the paper book, which reads as under: "No.CIT-1/ABD/263/25/AWL/2014-15 Dated : 16.3.2015 To The Director/Principal Officer M/s.Adani Wilmar ltd. Fortune House Nr.Adani House Nr.Mithakali Six Roads Ahmedabad. (PAN - AABCA8056D) Sub: Initiation of proceedings u/s.263 of the I.T.At I.T.Act - Adani Wilmar Ltd. A.Y.2009-10 - Regarding. ******* The undersigned called for and examined the assessment order for A.Y.2009-10. The assessment in this case was completed under section 143(3) of the I.T.At, 1961 on 30.3.2013 determining total income at Rs. 72,83,77,916/-. 1. It is seen that the assessee has claimed depreciation @60% on computer equipments, UPS and SAP instead of depreciation @15% on computer equipments & UPS and 25% on SAP license. It appears that the AO has completed the assessment without appreciating the provisions of section 32 of the Act. 2. It is further seen that the ass....
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....of contention, he appraised us the scope of section 263 and when the ld.Commissioner can take action against the assessee. The AO has issued a show cause notice under section 142(1) and specifically inquired on this issue. The ld.counsel for the assessee drew our attention towards page no.21 of the paper book, wherein copy of the notice dated 9.12.2012 is placed on record. At Sr.No.5, the AO has called following details: "5. Pl. provide the details of fixed assets acquired during the year: Sr.No. Name of Asset Amount (Rs.) Block Date of purchase Date of put to use Invoice No." According to the ld.counsel for the assessee, the ld.AO has called for the details and the assessee has duly replied the show cause notice. The ld.AO has taken one of the possible views which cannot be interfered by the ld.commissioner. On the strength of the following decisions, he contended that the deprecation on computer and computer peripherals is admissible at the rate of 60%. "2. In present case, the assessee has capitalized software expenses, UPS and claimed depreciation @ 60% as same are integral part of computer and cannot run independently and/or installed to work efficiently a....
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....n'ble Gujarat High Court in the case of CIT Vs. Diamines & Chemicals, (2014) 42 taxmann.com 193 (Guj). He pointed out that in order to claim additional depreciation, the only requirement is that the assessee should be in the business of manufacture and production of any article or thing, and it should acquire the asset within the time frame provided in section 32(1). The assessee fulfilled those conditions. It is engaged in the manufacturing. It was not necessary for the assessee to use those particular assets actively in the manufacturing activity. 9. We have duly considered the rival contentions and gone through the record carefully. Section 263 has a direct bearing on the controversy, therefore, it is pertinent to take note of this section. It reads as under:- "263(1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interest of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the cir....
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.... section 263 to the learned Commissioner have four compartments. In the first place, the learned Commissioner may call for and examine the records of any proceedings under this Act. For calling of the record and examination, the learned Commissioner was not required to show any reason. It is a part of his administrative control to call for the records and examine them. The second feature would come when he will judge an order passed by an Assessing Officer on culmination of any proceedings or during the pendency of those proceedings. On an analysis of the record and of the order passed by the Assessing Officer, he formed an opinion that such an order is erroneous in so far as it is prejudicial to the interests of the Revenue. By this stage the learned Commissioner was not required the assistance of the assessee. Thereafter the third stage would come. The learned Commissioner would issue a show cause notice pointing out the reasons for the formation of his belief that action u/s 263 is required on a particular order of the Assessing Officer. At this stage the opportunity to the assessee would be given. The learned Commissioner has to conduct an inquiry as he may deem fit. After hear....
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....sustainable under law (vi) If while making the assessment, the AO examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determine the income, the CIT, while exercising his power under s 263 is not permitted to substitute his estimate of income in place of the income estimated by the AO. (vii) The AO exercises quasi-judicial power vested in his and if he exercises such power in accordance with law and arrive at a conclusion, such conclusion cannot be termed to be erroneous simply because the CIT does not fee stratified with the conclusion. (viii) The CIT, before exercising his jurisdiction under s. 263 must have material on record to arrive at a satisfaction. (ix) If the AO has made enquiries during the course of assessment proceedings on the relevant issues and the assessee has given detailed explanation by a letter in writing and the AO allows the claim on being satisfied with the explanation of the assessee, the decision of the AO cannot be held to be erroneous simply because in his order he does not make an elaborate discussion in that regard. 11. Apart from the above principles, we deem it appropriate to make reference to t....
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....l read as under:- "... it is not necessary for the Commissioner to make further inquiries before cancelling the assessment order of the Income-tax Officer. The Commissioner can regard the order as erroneous on the ground that in the circumstances of the case the Income-tax Officer should have made further inquiries before accepting the statements made by the assessee in his return. The reason is obvious. The position and function of the Income-tax Officer is very diffident from that of a civil court. The statement made in a pleading proved by the minimum amount of evidence may be adopted by a civil court in the absence of any rebuttal. The civil court is neutral. It simply gives decision on the basis of the pleading and evidence which comes before it. The Income-tax Officer is not only on adjudicator but also an investigator. He cannot remain passive in the face of the return which is apparently in order but called for further inquiry. It is his duty to ascertain the truth of the facts stated in the return when the circumstances of the case are such as to provoke an inquiry... It is because it is incumbent on the Income-tax Officer to further investigate the facts stated in the....
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....he assessment order cannot be branded as an erroneous order on this issue. As far as third part is concerned, we find this aspect is squarely covered by the decision of the Hon'ble Gujarat High Court. The observation of the Hon'ble Court I para-3 and 4 read as under: "3. Heard Shri K.M. Parikh, learned Counsel appearing on behalf of the revenue and perused the impugned judgment and order passed by the ITAT. At the outset, it is required to be noted that the assessee claimed the deduction under Section 32(1)(iia) of the Income-tax Act with respect to the cost incurred by it for installation of the Wind Electric Generator. The Assessing Officer disallowed the same and made the addition of Rs. 1,17,98,030/- by observing that as the assessee is not in the business of generation and distribution of power, the assessee shall not be entitled to deduction under Section 32(1)(iia) of the Income-tax Act of Rs. 1,17,98,030/-. The said addition has been deleted by the CIT(A) relying upon the decisions of the Madras High Court in the case of VTM Ltd (Supra) and in the case of Hi Tech Arai Ltd. (Supra). In both the aforesaid decisions, the Madras High Court had an occasion to consider ....