TaxTMI 
TaxTMI 
TaxTMI 
2017 (8) TMI 1132
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....t by ld. CIT setting aside the order of the AO to make assessment denovo vide order dated 15.3.2017. 3. The facts of the case are that the assessment was completed under section 144 r.w.section 144C of the Act by the AO vide order dated 29.2.2016 assessing the total income at Rs. 7,10,57,884/- against the returned income of Rs. 6,90,42,520/-. The Principal Commissioner of Income Tax (PCIT) by exercising the jurisdiction u/s 263 Explanation -2 of the Act by issuing set aside the assessment on the basis that AO has framed the assessment without inquiry resulting the assessment being erroneous and prejudicial to the interest of the revenue after issuing notice dated 11.2.2016 u/s 263 of the Act which is reproduced below: To, Custom Capsu....
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.... to assets added in second half of the financial year 2010-11, is not allowable in A.Y. 2012-13. 5. A perusal of the records and the assessment order shows that the AO has not made the disallowance of depreciation to the extent of Rs. 2,16,941/- being the additional depreciation claimed in respect of additions in assets made during the second half of the financial year 2010-11 relevant to A. Y. 2011-12. 6. In view of the above, it is clear that there is a failure on the part of the assessing officer to examine the issue of claim of additional depreciation in terms of provisions of section 32(1), which has rendered the impugned assessment order passed vi] s.143(3) of the I.T. Act erroneous, in so far as it is prejudicial to the interes....
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....10-11 is not allowable in A. Y. 2012-13, we submit as under: "the assessee has claimed Rs. 1,82,948/ - as additional depreciation pertaining to depreciation at 10% u/s. 32(1)(iia) in respect of additions made to eligible assets during the year ended March 2011 and used in that year for less than 180 days on which such additional depreciation was claimed at 10% only. During the course of assessment proceedings the assessee' had filed the tax audit report issued to it as per the provisions of section 44AB of the Act which has disclosed the basis on which depreciation has been claimed u/s 32 of the Act." 1.2) Section 32(1)(iia} was introduced into the Act by Finance Act, 2002 w.e.f.01-04-2003. It was introduced as an incentive for fr....
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....l judicial pronouncements, has claimed additional depreciation u/ s.32(1)(iia) This view is neither erroneous nor prejudicial to the Revenue and therefore provisions of section 263 cannot be invoked." After having considered the various contentions and explanation of the assessee, the PCIT invoked provisions of section 263-explantion -2 of the Act which provides that the order passed without making inquiries or verification by the AO, which should have been made or the order is passed allowing any relief without inquiring into the claim, the order shall be deemed to be erroneous and prejudicial to the interest of revenue on account of addition claim of depreciation to the extent of Rs. 1,82,948/-. The assessee made the addition in the sec....
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.... ld.AR also contended that merely because the issue has not been discussed by the AO in the assessment order could not be taken as that there was lack of inquiry rendering the assessment erroneous as well as prejudicial to the interest of revenue. In support of his submissions the ld.AR also relied on the decision of the Hon'ble Jurisdictional High Court in the case of CIT V/s Gabriel India Ltd. (1993) 203 ITR 108 Bom; and the decision of co-ordinate bench of the Tribunal in the case of Small Wonder Industries V/s CIT in ITA No.2464/Mum/2013 (AY-2009-10) dated 24.2.2017. Even on merits, the ld. AR submitted that there is no bar on the assessee to carry forward the additional depreciation u/s 32(1) (iia) of the Act to claim the same in the s....
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....of the normal rate of depreciation as the assets was put to use for less than 182 days. The second aspect is that the assessee claimed depreciation at the rate of 50% of the normal depreciation and carried forward the remaining 50% to the subsequent year 2012-13 and claimed the same in that year which is current year assessment year 2012-13 under the clause (iia) of the section 32 of the Act. We also find that even during the course of assessment proceedings, the assessee specifically submitted all the details and schedule of depreciation along with the bills and vouchers in support of the said claim before the AO and the AO thereafter framed the assessment u/s 143(3) of the Act. In our opinion, the twin conditions are to be satisfied befor....