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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI KUL BHARAT & SHRI MANISH BORAD
आदेश / O R D E R PER KUL BHARAT, J.M: This appeal by the assessee is directed against order of the Principal CIT-1, Bhopal dated 6.3.2018 pertaining to
[ITA No.273/Ind/2018] [M/s. M.P. Rajya Van Vikas Nigam Ltd., Bhopal] the assessment year 2013-14. The assessee has raised following grounds of appeal:
That the impugned order passed u/s 263 of the Act by Pr. CIT is bad in law and deserves to be cancelled.
That the Ld. Pr. CIT erred in holding that the order of assessment passed by A.O. was erroneous in so far as it was prejudicial to the interest of revenue. 3. That Pr. CIT erred in passing the order u/s 263 cancelling the order of assessment passed by the A.O. particularly when the order of assessment has merged in the order of appellate authority and Tribunal. 2. Briefly stated facts are that the assessment u/s 143(3)
of the Income Tax Act, 1961 (hereinafter called as ‘the Act’) was framed vide order dated 25.2.2016. While framing the assessment, the A.O. made addition in the declared income of Rs.63,44,21,181/- and Rs.2,69,08,343/- in respect of disallowance of lease rent and disallowance of corporate expenses. However, the Ld. Pr. CIT revised this order by invoking provisions of section 263 of the Act on the basis that since the assessee had debited depreciation of Rs.62,66,000/- same was required to be added back in the [ITA No.273/Ind/2018] [M/s. M.P. Rajya Van Vikas Nigam Ltd., Bhopal] computation of income. Further, the assessee deposited EPF of employees’ contribution amounting to Rs.1,02,13,075/- belatedly. After considering the submissions of the assessee, the Ld. Pr. CIT cancelled the assessment order and directed the A.O. to reframe the assessment after examining the issues, which are referred in the impugned order. Aggrieved against this, the assessee has preferred the present appeal.
The only effective ground in this appeal is against the invoking provisions of section 263 of the Act.
Ld. Counsel for the assessee reiterated the submissions as made in the written submissions and submitted that the issues which are on the basis of which the Ld. Pr. CIT sought to revise the assessment order are directly covered in favour of the assessee. Therefore, there was no prejudice caused to the revenue. The written submissions of the assessee are reproduced as under:
[ITA No.273/Ind/2018] [M/s. M.P. Rajya Van Vikas Nigam Ltd., Bhopal] [ITA No.273/Ind/2018] [M/s. M.P. Rajya Van Vikas Nigam Ltd., Bhopal] [ITA No.273/Ind/2018] [M/s. M.P. Rajya Van Vikas Nigam Ltd., Bhopal]
Ld. CIT(DR) placed reliance on the impugned order and vehemently opposed these submissions. Ld. CIT(DR) submitted that the A.O. grossly failed to examine these issues and proceeded to make assessment without making due consideration of these issues. It is submitted that [ITA No.273/Ind/2018] [M/s. M.P. Rajya Van Vikas Nigam Ltd., Bhopal] there was no application of mind by the Assessing Officer on these issues. Therefore, Ld. Pr. CIT has rightly invoked the provisions of section 263 of the Act.
We have heard the rival submissions, perused the materials available on record and gone through the orders of the authorities below. There is no dispute with regard to the position of law that the Ld. Pr. CIT is empowered to revise the assessment order if it is found that the assessment sought to be revised is erroneous so far as it is prejudicial to the interest of the revenue. Therefore, law is well settled that twin conditions are required to be satisfied for assuming jurisdiction u/s 263 of the Act i.e. the order sought to be revised should be erroneous and prejudicial to the interest of the revenue. Thus, two conditions are to be read in conjunction and the absence of any one of the conditions would render invoking of jurisdiction u/s 263 of the Act as illegal and contrary to the settled law.
[ITA No.273/Ind/2018] [M/s. M.P. Rajya Van Vikas Nigam Ltd., Bhopal]
In the present case, the Ld. Pr. CIT has revised the assessment order on the ground that the assessing officer did not examine the issue related to the depreciation and the late deposit of the EPF in respect of employees’ contribution. It is contended by the Ld. Counsel for the assessee that assessee had charged depreciation of Rs.62,60,000/- in profit & loss account who at the same time reversed major part of the amount of Rs.53,06,647/- in credit side of the profit & loss account as other income.
Thus, the assessee has claimed only book depreciation of Rs.9,59,353/- which has been added back in computation of income causing no revenue loss. In support of this contention, the Ld. Counsel for the assessee has drawn our attention to profit & loss account. The fact that the assessee has disclosed the depreciation as other income is not controverted by the revenue nor the Ld. Pr. CIT has brought any contrary material on record. Therefore, in our
[ITA No.273/Ind/2018] [M/s. M.P. Rajya Van Vikas Nigam Ltd., Bhopal] considered view, the Ld. Pr. CIT was not justified in revising the assessment order on this ground. The other ground of the revising assessment order is in respect of late deposit of EPF of employees’ contribution. It is stated by the assessee that all the amounts have been paid in EPF account before the due date of filing and filing of return of income. It is submitted that the said expenditure is allowable in view of the judgement of the Hon'ble Supreme 319 ITR 306, judgement of the Hon'ble Rajasthan High Court rendered in the case of CIT Vs. State Bank of Bikaner & Jaipur 363 ITR 70 and also judgement of the Hon'ble Rajasthan High Court in the case of DCIT Vs. Jaipur Vidyut Vitaran Nigam 363 ITR 307 it is contended that the special leave petitions filed by the revenue against these judgements have been dismissed by the Hon'ble Supreme Court. Therefore, it is contended that the Ld. Pr.
[ITA No.273/Ind/2018] [M/s. M.P. Rajya Van Vikas Nigam Ltd., Bhopal] CIT was not justified in revising the order on this Ground.
We find merit into the contention of the assessee as the law is settled by the judicial pronouncements that if assessee has deposited EPF, which is before the due date of filing of return, there should not be any disallowance. Hence, there is no prejudice caused to the revenue in this respect as well. Therefore, on both the issues invoking of provisions u/s 263 of the Act is not justified. We therefore, quash the impugned order being contrary to the settled principle of law.
In the result, the appeal filed by the assessee is allowed.
Order was pronounced in the open court on 21 .11.2019.