AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2024 (6) TMI 524
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....ualifying amount of Rs. 100 crore u/s.32AC; (b) the purchase invoices for assets (for value in excess of Rs. 3 crore) on record, on which deduction u/s.32AC had been claimed, were found to pertain to the period prior to 01.04.2013, at Rs. 226.51 crore. Deducting this amount from Rs. 314.57 crore, on which deduction u/s.32AC is to be claimed, reduces the new assets acquired and installed during the relevant year to Rs. 88.06 crore, i.e., below Rs. 100 crore. The Assessing Officer (AO) had completely failed to notice these aspects of the assessee's case in framing the assessment. The assessment was accordingly set aside by him for a de novo consideration of the claim for deduction u/s.32AC. 3. The assessee, in revisionary proceedings, explained that it was only on the installation and successful test check of the plant and machinery, could the assessee be in law said to have acquired plant and machinery. There was, thus, no scope for excluding the assets purchased during the preceding year, but under installation prior to 01.04.2013, in computing the deduction exigible u/s. 32AC.That apart, the law stands subsequently amended, extending the period of installation up to 31.03.2017....
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....1] 335 ITR 381 (Ker), furnishing the legal basis for revision and, in fact, stands since co-opted on the statute by way of Explanation 2(a) to s. 263(1) by Finance Act, 2015, w.e.f. 01.06.2015. As explained in Gee Vee Enterprises v. Addl. CIT [1975] 99 ITR 375 (Del), again with reference to judicial precedents, that the order of the AO becomes erroneous on a failure to make enquiry where the circumstances call for it. This is not because there is anything wrong in the order if all the facts stated therein are assumed to be correct. However, the AO is not only an adjudicator but also an investigator and, therefore, cannot remain passive in the face of a return which is apparently in order but calls for further enquiry. 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 enquiry. In CIT v. Toyota Motor Corporation[2008] 306 ITR 49 (Del), since confirmed in the decision reported at [2008] 306 ITR 52 (SC), it was explained that the Tribunal could not have substituted it's own reasons which were required to be recorded by the AO, and ought to have remanded the matter to the latter. 5.2 Section 32AC of the ....
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.... years from the date of its installation, the amount of deduction allowed under sub-section (1) or sub-section (1A) in respect of such new asset shall be deemed to be the income of the assessee chargeable under the head "Profits and gains of business or profession" of the previous year in which such new asset is sold or otherwise transferred, in addition to taxability of gains, arising on account of transfer of such new asset. (3) Where the new asset is sold or otherwise transferred in connection with the amalgamation or demerger within a period of five years from the date of its installation, the provisions of sub-section (2) shall apply to the amalgamated company or the resulting company, as the case may be, as they would have applied to the amalgamating company or the demerged company. (4) For the purposes of this section, "new asset" means any new plant or machinery (other than ship or aircraft) but does not include- (i) any plant or machinery which before its installation by the assessee was used either within or outside India by any other person; (ii) any plant or machinery installed in any office premises or any residential accommodation, including accommodation in t....
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....24 crore. It is only where the assessee's working explains this difference, which itself is in fact incomplete inasmuch as the purchase invoices called for were only for items in excess of Rs. 3 crore each, could it be said to be adequate, meeting both the qualification test (Rs.100 crore) and the quantification test (Rs.314.58 crore), that arise in the matter, and are required to be met. And, further, ought to have been inquired into and called for and verified in view of the audit report. The assessee's reply dated 12.12.2017 (copy on record), which reads as under; does not answer the same: "3. Working of deduction claimed u/s 32AC of Rs. 471,865,123 In this regard, we would like to mention the provisions of section 32AC of the Act, which reads as under - "(1) Where an assessee, being a company, engaged in the business of manufacture or production of any article or thing, acquires and installs new asset after the 31st day of March, 2013 but before the 1st day of April, 2015 and the aggregate amount of actual cost of such new assets exceeds one hundred crore rupees, then, there shall be allowed a deduction. (a) for the assessment year commencing on the 1st day of April, ....
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....at of the Revenue. 5.7 There has been thus no enquiry on the pertinent issues by the AO during the assessment proceedings, much less responded to, on which the AO is therefore required to apply his mind, either accepting or rejecting the assessee's claim upon due verification and enquiry, i.e., as deemed proper under the given facts and circumstances, including the law in the matter, passing a speaking order. 5.8 The ld. Pr.CIT, accordingly, set aside the matter for a de novo consideration. He has, further, in our view, rightly not expressed any view in the matter (refer para 6.2 of his order). His stating that there has been an incorrect application of law by the AO is in our view consequential to his finding of an incorrect presumption of facts by the AO as well as non-application of mind, inasmuch as the law could only be applied on proper determination of facts. Further, the same therefore could have been avoided. At best, the assessee citing the decisions, as in the case of IDMC Ltd. [2017] 78 taxamann.com 285, which is in the context of sec.32(1)(iia), the language of which is different, a direction to the AO to examine if the ratio of the said decision is applicable to the....