A T AND S INDIA PRIVATE LIMITED,NANJANGUD,MYSORE vs. PRINCIPAL COMMISSIONER OF INCOME TAX,KOLKATA-2, KOLKATA

The common issue raised in all the grounds is against the invalid exercise of revisionary jurisdiction by PCIT u/s 263 of the Act thereby set aside and revising the order passed u/s 143(3) read with section 144C of the Act on the ground that the same is erroneous and so far as prejudicial to the interest of the Revenue.

The facts in brief are that the assessee filed the return of income for the instant assessment year on 29.11.2018, declaring total income of ₹32,25,51,500/-. The case of the assessee was selected for scrutiny

The ld. AR therefore, finally submitted that the claim of the assessee qua the brought forward of unabsorbed depreciation and losses is in accordance with the above said orders passed by the d AO giving appeal effect to the order of the appellate authorities and therefore, the order passed by the ld. AO allowing the set off of unabsorbed losses and depreciation is correct and the jurisdiction u/s 263 of the Act is not available to the PCIT. The ld. AR stated that before exercising the revisionary jurisdiction u/s 263 of the Act, the twin conditions have been set satisfied concurrently i.e. the order has to be erroneous as well as prejudicial to the interest of the Revenue. In the present case, as has been submitted hereinabove on both the counts, the order passed by the ld. AO is correct and as per the provisions of the Act and therefore, cannot be said to be erroneous and prejudicial to the interest of the Revenue. In this case none of the conditions as envisaged in section 263 of the Act were satisfied and therefore, the jurisdiction u/s 263 of the Act is not available to the ld.

We have heard the rival conventions and perused the materials available on record. We observed that in the impugned case, the assessment was framed by the ld. AO u/s 143(3) read with section 144C(3) read with section 144B of the Act vide order dated 15.11.2001 copy of which is available in the paper book at page no.15 to 18. The ld. PCIT revised the said order on two grounds namely one the assessee debiting and charging an amount of ₹2,42,60,000/- on account of provisions for warranty in the profit and loss account which according to the ld. PCIT is not allowable expenditure and the second excessive claim of brought forward of unabsorbed losses / depreciation to the tune of ₹22,11,90,246/- against the current year

We note that the figures of unabsorbed loss/ depreciation were appearing in the assessment orders passed by the ld. AO which were before giving appeal effect to the appellate orders. We have fully examined these orders as these are available in the paper book and find that even the claim of assessee is in accordance with the orders Assessed unabsorbed Assessed unabsorbed SL depreciation as per the Assessment Yer deprecation by the ld. no. notice under section AO (Rs.) 263 of the Act (Rs.) 1. 2010-11 9,61,42,010 9,61,42,010 2. 2011-12 4,78,76,170 28,27,50,738 3. 2012-13 46,60,37,416 34,59,69,899 4. 2013-14 Nil 13,07,05,208 Total 61,00,55,596 85,55,67,855 09. We note that the figures of brought forward losses/ deprecation picked up by the tax auditor from A.Y. 2010-11 to 2012-13, are on the basis of orders passed u/s 143(3) against which the appeals were already filed and decided as well. Even the AO passed orders giving appeal effect. Therefore, the assessment order was very much in accordance with the law. In our opinion, the order passed by ld. AO is neither erroneous nor prejudicial to the interest of the Revenue. In our considered view , before invoking the jurisdiction u/s 263 of the Act, the PCIT has to satisfy the twin conditions as envisaged in Section 263 of the Act concurrently which in our opinion is not satisfied at all and therefore, the jurisdiction has been resorted to invalidly. The case of the assessee is squarely covered by the decision of Hon'ble Apex court in the case of Malabar Industrial Co. Ltd. (supra), wherein the Hon'ble Court has held as under:-

Further where two views are possible and AO has taken one view with which the ld. PCIT does not agree , even then the assessment framed by the AO cannot be treated as erroneous and prejudicial to the interest of the revenue. In the present case the AO has accepted the claim of the assessee qua provisions for warranty on sale of PCBs of Rs. 2,42,60,000/- based on the fact that the same were allowed by the revenue in the preceding and succeeding assessment years and the claim was based upon the technical estimate and past experience. Even the case if the assessee is squarely covered by the Hon’ble Apex Court decision in the case of Rotork Controls India Pvt. Ltd. (supra). Therefore, the view taken by the AO cannot be said to be not in accordance with law or not sustainable in law. Again, the case of the

Considering these facts and circumstances and the ratio laid down by the Hon'ble Courts as discussed above, we are inclined to quash the revisionary proceedings as well as consequent order by the ld. PCIT.

In the result, the appeal of the assessee is allowed.