TaxTMI 
TaxTMI 
2016 (1) TMI 778
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....nd selling of starch and its derivatives. Assessee filed its return of income for A.Y. 2010-11 on 28.09.2010 declaring total loss at Rs. 1,73,86,661/-. The case was selected for scrutiny and thereafter the assessment was framed under section 143(3) vide order dated 4.02.2013 and the total loss was determined at Rs. 1,21,57,250/-. Subsequently, on examining the records of assessment proceedings, CIT noticed that Assessee has claimed additional depreciation of Rs. 38,86,967/- in respect of Bio-gas power generating engine plant. He was of the view that additional depreciation was admissible only to Assessee's engaged in the production or manufacture of articles or things and since generation of power does not result into "production or manufac....
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....ding that the order passed by the Assessing officer (AO) under section 143(3) of the Income Tax Act (Act) was erroneous and prejudicial to the interest of the revenue and thereby setting aside the order and directing the AO to reframe the assessment. It is submitted it be so held now. 1.2 The CIT erred in holding that the AO has failed to enquire & examine the claim for additional depreciation on Bio-gas power Generating Engine when in fact the details of additions to fixed assets & depreciation were filed in regular proceedings. It is submitted it be so held now. 1.3 The CIT failed to appreciate that the view taken by the AO was in consonance with the provisions of the Act and was duly supported by judicial precedents and hence the p....
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....e not satisfied and therefore the proceedings u/s. 263 lacks jurisdiction and are bad in law. He further submitted that ld. CIT can revise an order passed by the A.O only on the satisfaction of twin conditions namely (i) the order is erroneous and (ii) it is prejudicial to the interest of Revenue. He further submitted that the error envisaged to Section 263 is not one which depends on possibility or guesswork but it should have an actual error either or facts of or law and further the order of A.O cannot be considered as erroneous order prejudicial to the interest of Revenue unless the view taken by the A.O is unsustainable in law and for the aforesaid proposition he relied on the decision of Hon'ble Apex Court in the case of Malabar Indust....
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.... specific query on the issue of claim of depreciation was raised by the A.O vide notice u/s. 142(1) dated 27.07.2012 but there was no reply of the Assessee. He pointed to page 29 & 30 of the paper book and pointed to point no. 12 wherein the Assessee was specifically asked to explain the claim u/s. 32(1)(iia) and furnish the complete details and the justification of claim. He submitted that the query of the A.O was not replied by the Assessee and therefore he submitted that when A.O, without obtaining the necessary explanation proceeded to allow the claim of the Assessee, it cannot be said that A.O has applied his mind on the issue and therefore ld. CIT was right in his observation that the issue was not examined by A.O. On the issue of mer....
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....fter making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment." 8. The reading of the above provisions makes it very clear that the power of suo motu revision u/s 263(1) is in the nature of supervisory jurisdiction and the same can be exercised only if the circumstances specified therein exist. Two circumstances must exist to enable the Commissioner to exercise power of revision u/s 263, namely (i) the order is erroneous (ii) by virtue of being erroneous prejudice has been caused to the interests of the Revenue. 9. Interpretation of Section 263 ha....
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....bility. From the copy of the communication dated 27.07.2012 issue by the DCIT to Assessee whereby various details were called u/s. 142(1) it is seen that A.O had specifically asked the Assessee to furnish the details of addition made to fixed assets and other details and justification of claim of deduction u/s. 32(1)(iia). The exact details called for by the A.O is reproduced under for ready reference. 10.Complete details of additions made to fixed assets, including work in progress during the financial year 2009-10, relevant to assessment year 2010-11, along with the copies of bills/vouchers exceeding Rs. 10 lakhs for such additions. 11.Complete details of all the deletions made to fixed assets, treatment given in the books of account....