AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2015 (10) TMI 2013
X X X X Extracts X X X X
X X X X Extracts X X X X
....passed the assessment order under section 143(3) 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 t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at the most, the ld.Commissioner could set aside the assessment order qua these two issues, because there are large number of other issues in the assessment order. In next fold 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%. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nery involved in manufacturing activity cannot be granted. For this purpose, she took us through section 32(1)(iia) of the Income Tax Act. The ld.counsel for the assessee, on the other hand, rebutted the contentions of the ld.CIT-DR with regard to this proposition. He has placed on record copy of the decision of the Hon'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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ting the period of limitation for the purposes of sub-section (2), the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded." 10. On a bare perusal of the sub section-1 would reveal that powers of revision granted by 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ind, such order will fall under the category of erroneous order. (v) Every loss of revenue cannot be treated as prejudicial to the interests of the Revenue and if the AO has adopted one of the courses permissible under law or where two views are possible and the AO has taken one view with which the CIT does not agree. If cannot be treated as an erroneous order, unless the view taken by the AO is unsustainable 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 p....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the Act, merely because he has different opinion in the matter. It is only in cases of "lack of inquiry", that such a course of action would be open". 12. In the case of Gee Vee Enterprise vs. Commissioner of Income Tax reported in 99 ITR page 375 , the Hon'ble court has expounded the approach of ld. Assessing Officer while passing assessment order. The observation of the Hon'ble court on pages 386 of journal 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 i....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... that the AO has investigated the issue and took an opinion that it might have not been reflected specifically in the assessment order. If the ld.Commissioner has a different opinion on this issue, then it would become a debatable one. According to the assessee, in various judgements, it has been held that the software expense is to be allowed as revenue expenditure. Considering the nature of its debatable-ness, we are of the view that the 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 ass....