TaxTMI 
TaxTMI 
2025 (6) TMI 1144
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....ed under Section 263 of the Income Tax Act, 1961 ('IT Act' in short) vide order dated 17.03.2014 for the AY: 2008-09. 3. The facts to be noted for the purpose of this order are, the appellant is a Private Limited Company incorporated on 08.10.1998, which is engaged in the business of manufacturing through contract manufacturers and distributing the Advanced Weight Management, Inner and Outer Nutritional Products and trading of Cosmetic Products, which it operates through direct selling net work. The appellant, for the AY: 2008-09, filed its return of income on 13.09.2008 declaring a total loss of Rs. 3,03,76,816/-. The said return was subsequently revised and the appellant filed a revised return on 31.03.2010 declaring a total loss of Rs.3,67,17,524/-. According to the appellant, during the impugned Assessment Year it carried-out the following Leasehold Improvements at its leasehold office premises at Bengaluru, Kolkata, Mumbai and Guwahati. Particulars Location Total Interior and other related works Bangalore 1,50,68,567 Herbalife Logo & Letters Re-fabrication on Wall surface Kolkata 11,17,125 Interior and other related works (including partitions, false ceilings, s....
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....oceedings under Section 263 of the IT Act by issuing a show-cause notice dated 26.02.2014. The Respondent No. 1 was of the opinion that the appellant's claim for 100% depreciation of Leasehold Improvements being allowed by the Assessing Officer, was erroneous and prejudicial to the interest of the Revenue as in his opinion, the appellant was entitled to depreciation thereon at 10% as per the Rules. The appellant filed its reply to the show-cause notice and objected to the proposal made by the Respondent No. 1 and claimed that the Assessing Officer had examined the issue and applied his mind to allow the claim of the appellant of depreciation @100% on leasehold improvements. 5. The Respondent No. 1 passed a revisionary order dated 17.03.2014 under Section 263 of the IT Act and held that the order of assessment for the subject AY-2008-09 was erroneous and prejudicial to the interest of the Revenue. The Respondent No. 1 therefore, directed the Assessing Officer to re-do the assessment afresh and in case the depreciation of Leasehold Improvements was to be restricted, the excess depreciation claimed may be disallowed. 6. Aggrieved by the order of Respondent No. 1, the appellant prefe....
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....re has been no elaborate discussion on the issue by the Assessing Officer, that cannot by itself lead to conclusion that, there is no application of mind by the Assessing Officer concerned. He placed reliance on the decision of the Bengaluru Bench of the Tribunal in IBM India Private Limited (ITA No. 598/Bang/2011) in this regard. 10. It was also his submission that the Tribunal erred in disregarding the favourable order of the Commissioner of Income Tax (Appeals)-12, Bengaluru, in the appellant's own case for the AY:2002-03 on the matter pertaining to Leasehold Improvements. That apart, it was his submission that the Tribunal erred in upholding the revision proceedings initiated by the Respondent No. 1 under Section 263 of the IT Act on the basis of an objection raised by the Audit Department and without application of mind by the Respondent No. 1 himself. He contested the revisional proceedings by stating that the same were without appreciating that, the order of the Assessing Officer was neither erroneous nor prejudicial to the interest of the Revenue. That apart, without prejudice it was his submission that the Tribunal erred in not considering the rectification proceedings in....
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....e letter dated 15.07.2011 in the course of assessment proceedings, on the basis of the details/documents called for by the Assessing Officer would go to show that, neither the details were called for by the Assessing Officer in respect to the issue of the assessee's claim for 100% depreciation nor there was even a whisper of this issue in the order of assessment for the AY:2008-09 dated 29.10.2012. In other words, it is his submission that in the order dated 29.10.2012, various other issues were considered, such as capitalization of 25% of royalty paid to Herbalife International Inc., Transfer Pricing Adjustment of ALP, Doubtful Debts Written Off, Administrative Fees. According to him, no enquiry in the matter of Assessee's claim for 100% depreciation on leasehold improvements was conducted by the Assessing Officer is established by the admission of the AR of the Assessee before the learned CIT on 13.12.2014 in the course of revisionary proceedings. 14. According to Mr. Raviraj, it was held that, no enquiry whatsoever was conducted by the Assessing Officer on this issue and therefore since the learned CIT had correctly invoked the revisionary proceedings, the impugned order under ....
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....diwala. This we say so in view of the appellant's own case through its authorized representative, which has been noted by the CIT (Appeals), wherein the CIT (Appeals) has in unequivocal terms stated that, wherein the authorized representative of the assessee in the course of reviosional proceedings before the CIT (Appeals), vide order sheet dated 13.03.1994 admitted that, no enquiry was conducted by the Assessing Officer in the Assessment Proceedings in respect of the issue of depreciation on leasehold improvements. In fact, such a submission was not controverted by the Appellant-Assessee before the Tribunal also. So, the issue is, when the issue of depreciation at 100% was a non-issue before the Assessing Officer, which means, the Assessing Officer has not examined nor applied his mind in respect of the available rate of depreciation on leasehold improvements and granting the same in terms of the order of assessment for AY:2008-09 dated 29.10.2012 is erroneous prejudicial to the interest of the Revenue. 18. Though Mr. Pardiwala has sought to challenge the revisional proceedings, the fact that the Assessing Officer has considered an aspect which was a non-issue, any determination ....
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....and carefully considered the material on record; including the judicial pronouncements cited. The CIT, Bangalore-I, on an examination of the order of assessment passed under Section 143(3) r.w.s. 144C of the Act dt.29.12.2012 and records of assessment, was of the view that the Assessing Officer, while passing the order of assessment, neither made any enquiry nor applied his mind while allowing the assessee's claim for 100% depreciation on leasehold improvements thereby resulting in the order passed being erroneous and prejudicial to the interests of Revenue. Further, we also observe that the statement of the Id. CIT, that the AR of the assessee in the course of revisionary proceedings before him vide order sheet noting on 13.3.2014 admitted that no enquiry was conducted by the Assessing Officer in assessment proceedings in respect of the issue of depreciation on leasehold improvements, has not been controverted before us. 6.2. In the above context, it would be relevant to extract hereunder the letter dt.15.7.2011 filed by the assessee before the Assessing Officer, to show the details filed in response to the Assessing Officer; requirements during scrutiny proceedings:-. "Ju....
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....expense of Rs.1,29,540 on account of exercise of ESOPs by the employee. The said amount has been cross charged by the parent company to the company. We are in the process of collating the balance information / details sought by your goodself and would submit the same in the next hearing. We request your goodself to grant us two weeks time to furnish the same. Should your goodself require any further information/documents, we shall be glad to provide the same upon hearing from you. Yours faithfully, For Herbalife International India Private Limited. Sd/- Authrised Signatory Enclosure: As above." 6.3 A perusal of the assessee's letter dt.15.7.2011 to the Assessing Officer (supra) establishes that the assessee filed reply / details in respect of the 7 issues listed therein. It is also apparent from a perusal thereof that the seven items on which details were admittedly called for were certainly not with respect to an examination on enquiry with regard to the assessee's claim for 100% depreciation on leasehold improvements. We find that the order of assessment for Assessment Year 2008-09 dt.29.10.2012 is also completely silent on this issue. Therefore, in our considered....