STAR PAPER MILLS LIMITED,KOLKATA vs. PCIT - 2, KOLKATA, KOLKATA

The only issue raised in various grounds of appeal is against the invalid exercise of revisionary jurisdiction u/s 263 of the Act, thereby revising the assessment order framed u/s 143(3) / 144C of the Act dated 04.06.2021 by ignoring the fact that the said order was neither erroneous nor prejudicial to the interest of the Revenue.

The ld. AR vehemently submitted before us that so far as the first issue of excess claim of depreciation at the rate of 50% by the assessee on the plant and machinery is concerned, the same was correctly claimed by the assessee. The ld. AR submitted that this addition was made in the preceding assessment year which was to use for less than 180 days. The ld. AR submitted that since normal data of depreciation is 80% on this item of addition plus 20% u/s 32(1)(iia) of the Act, therefore, 50% was claimed in preceding assessment year. The ld. AR also submitted that the facts were duly recorded in the tax audit report for A.Y. 2016-17, a copy of which is available from page no.9 to 23 of the Paper Book. The ld. AR submitted that in Para 18 of the said report under the head particulars of allowable depreciation under the income tax 1961 ,all the details were duly disclosed and the claim at the rate of 50% was allowed by the Revenue. The ld. AR further submitted that in the current year the Written-down value (WDV) of the end of last year i.e. 1,54,83,494/- was brought forward on 01.04.2016 and again the depreciation was claimed equal to 50% and the said fact was also stated in the tax audit report at page no.28

The ld. DR on the other hand, relied on the order of ld. PCIT and submitted that the assessee is not affected in any manner if these issues are examined by the ld. AO in the set aside proceedings as the assessee would be given sufficient opportunity of hearing before framing the assessment denovo.

After hearing the rival contentions and perusing the materials available on record, we find that the revisionary jurisdiction was exercised on two issues namely (i) excess claim of depreciation on

So far as the second issue is concerned which is qua the claim of excess brought forward loss/ depreciation from the earlier years against the current year income is concerned, the same were stated to be correctly claimed by the assessee in accordance with the orders passed by the ld. AO giving appeal effect to the appellate orders. However, we note that the issue was not examined by the ld. PCIT with reference to the various orders passed by the ld. AO determining the unabsorbed depreciation/ unabsorbed losses in the earlier assessment years and therefore we sustain the revisionary order passed by the ld. PCIT on this issue. Similarly, we direct the ld. AO to

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