TaxTMI 
TaxTMI 
2025 (1) TMI 1390
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....0,12,96,106/-. Thereafter, the AO issued notice u/s. 148 of the Act conveying his desire to re-open the assessment u/s. 147 of the Act on the following reasons: The company is engaged in the business of generation and supply of power to Tamilnadu Electricity Board. It e-filed its return of income for the A.Y. 2014-15 admitting total income of Rs. 9,59,71,300/- after claiming deduction u/s. 801A of Rs. 41,21,30,275/-. Subsequently, the case was assessed u/s. 143(3) and assessed Income was Rs. 10,12,96,106/-. The company generates power by using major raw material as 'Low Sulphur Heavy Stock (LSHS) / Low Sulphur Furnace Oil. The power is generated by using it's Thermal Power Plant located at Madurai. The assessee owns and operates a 106MW fuel oil fired electric power plant and generates the power. As per New Appendix-1, item No. 8 clause (ix) A (d) of Schedule-III Part A of Rule 5 of Income Tax Rules, 1962 states that Energy Saving devices being high efficiency boilers (Thermal efficiency higher than 75% in case of coal fired and 80% in case of oil/gas fired boiler) are eligible for depreciation allowance of 80% of written down value. However, the assessee has claimed only....
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....ion) which resulted in excess claim of deduction u/s. 80IA of the Act by order dated 29.03.2022 u/s. 147 r.w.s.144B of the Act. 4. The aforesaid action of the AO dated 29.03.2022 passed u/s. 147/143(3) of the Act has been interfered by the Ld.PCIT u/s. 263 of the Act holding it to be erroneous as well as prejudicial to the interest of the Revenue on the following reasons: 02. Subsequent to the original assessment, from the examination of the records it was observed that the assessee has claimed depreciation @ 15% on high efficiency boilers as against the eligible claim @ 80%. It was also observed that the assessee claimed depreciation @5% on building as against the eligible claim @10%. Since the assessee is eligible to claim deduction u/s. 80IA for a period of 10 years, it was apparent that the assessee was claiming higher profits for the period for which it is eligible to claim deduction u/s. 80IA by reducing its claim of depreciation so that in the years when this claim of deduction u/s. 80IA is no longer available, it can reduce its taxable profits by claiming higher depreciation. Since this action of the assessee has an effect of reducing its taxable profits for the subseque....
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....diction on this issue. However, the Ld. PCIT didn't agree with the aforesaid submissions of the assessee and held that the assessee by claiming depreciation at a lower rate in the relevant year [when it was eligible to claim higher depreciation of 80%] was claiming higher deduction u/s. 80IA of the Act and in that process was trying to reduce its future tax liabilities; and that after expiry of the eligible period u/s. 80IA of the Act, it would claim higher depreciation on the said assets. Therefore, according to the Ld. PCIT, the AO's order passed u/s. 147/143(3) dated 29.03.2022 is erroneous as well as prejudicial to the interest of the Revenue and therefore, he partly set aside the re-assessment order with a direction to the AO to make necessary enquiries and pass a fresh order after providing an opportunity to the assessee of being heard. This action of the Ld. PCIT has been challenged before us. 6. We have heard both the parties and since assessee has raised legal issue, challenging the jurisdiction of the Ld.PCIT to invoke his revisional jurisdiction, let us first examine the scope of revisional jurisdiction u/s. 263 of the Act. For that, let us take the guidance of judicial....
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.... the revenue unless the view taken by the Assessing Officer is unsustainable in law. 7. Here in this case, the Ld. PCIT has interfered with the reassessment order passed by the AO dated 29.03.2022 u/s. 147 of the Act, wherein, the Ld. PCIT find fault with the action of the AO while framing the Re-Assessment Order accepted the claim of on the issue of depreciation @15% on plant & machinery which according to the Ld.PCIT ought to have been @80% since the boilers used was energy saving device. In this regard, we note that the assessee which is in the business of running power plant had filed its RoI on 26.11.2014 for AY 2014-15 declaring total income of Rs. 9,59,71,300/- [after claiming deduction u/s. 80IA of the Act to the tune of Rs. 41,21,30,275/-] which RoI was selected for scrutiny and the Assessment Order was framed by the AO u/s. 143(3) on 10.05.2016 computing total income at Rs. 10,12,96,106/- which assessment was re-opened, inter-alia, on two issues including the issue which is the bone of contention raised by the Ld.PCIT in the impugned order viz., less depreciation claimed by assessee @15% on Plant & Machinery when assessee could have claimed depreciation on boiler @80% (r....
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....had issued show cause notice dated 12-3-2015 under section 263 of the Act. In the show cause notice, the Commissioner states that the figures mentioned by the assessee were culled out from the records, thus there was no other independent material which formed the basis of the show cause notice. The CIT while issuing the show cause notice did not rely upon any independent material nor on any interpretation of law but on perusal of the records was of the view that the expenditure cannot be allowed as deduction. Along with the filled in questionnaire, the assessee had filed the copy of the last will and testament of his father, sale deed of the Bangalore property and the legal opinion given by the learned counsel for the assessee. After perusal of the same, the Assessing Officer has taken a stand and passed the order. Therefore, it cannot be stated that the Assessing Officer did not apply his mind to the issue, after all the Assessing Officer cannot be expected to write a judgment. Admittedly there was an inquiry conducted by the Assessing Officer and it is not the case of the CIT that there was a lack of inquiry or inadequate inquiry. 6. In the case of CIT v. Gabriel India Ltd. [19....
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....e Act. For all the above reasons, the Substantial Questions of Law 1 and 4 are answered in favour of the assessee. 13. The Substantial Question of law No.3 is with regard to the expenditure claimed by the assessee. The assessee had produced documents before the Assessing Officer who had scrutinized the same and accepted the genuinity of the claim and granted the benefit. The CIT disallowed the expenses on the ground that the Assessing Officer did not make an in depth inquiry. A similar finding was tested for its correctness by the High Court of Delhi in the case of CIT v. Sunbeam Auto Ltd. [2011] 332 ITR 167 and it was held that one has to keep in mind the distinction between "lack of inquiry" and "inadequate inquiry". If there was an inquiry, even adequate that would not by itself give occasion to the Commissioner to pass orders under section 263 of the Act merely because he has a different opinion in the matter and it is only in cases of lack of inquiry that such a course of action would be open. As mentioned by us in the preceding paragraphs, the assessee has responded to the notice issued under section 142 of the Act and produced documents and records including their statemen....
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....shable on facts, as in paragraph 9 of the judgment, the Assessing Officer after issuing a questionnaire to the assessee, on considering the reply filed by the assessee and after recording that the reply was not satisfactory, did not proceed further in the matter. Therefore, the decision cannot be applied to the facts before us. 32. Reliance was also placed on the decision in CIT v. Modi Brother [2007] 164 Taxman 331 (MP). The question of law, which was framed for consideration, was whether the Tribunal was justified in considering the documents, which were not on record before the Assessing Officer while passing the order impugned in the said appeal. The Court had remanded the matter without expressing any opinion on the question framed and therefore, the decision cannot be relied on as a precedent. 33. In the light of the above discussions, we are of the clear view that the Tribunal committed an error in not interfering with the order passed by the PCIT. 9. In the light of the aforesaid discussion, we find that the AO while passing the re-assessment order dated 29.03.2022 u/s. 147 of the Act did apply his mind to the issue [less depreciation claimed by assessee @15% on Plant ....