TaxTMI 
TaxTMI 
2017 (8) TMI 1132
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.... per the provisions of section 263 of the Act 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 wh....
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.... Act, 2015 and is effective prospectively from 01.04.2016 only. Therefore, the balance 50% of the depreciation relating 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 ....
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....ive prospectively from 01.04.2016 only and therefore, the aforesaid amount of Rs. 2, 16,941/ - relating to assets added in the second half of the financial year 2010-11 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 ha....
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....n assessee as soon as he incurs cost on acquisition and installation of a new machinery or plant during the relevant previous year. 1.4) Therefore the assessee, in view of several 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 ....
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.... not made any inquiry to the issue of claim of additional depreciation resulting into assessment being erroneous and prejudicial to the interest of revenue was totally wrong and unfounded. The 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-2009-1....
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..... We find that the addition to the fixed assets in this case was made in the second half of the preceding previous year relevant to assessment year 2011-12 and the depreciation was claimed at 50% 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 wit....