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

Per Rajesh Kumar, AM:

This is an appeal preferred by the assessee against the order of the Pr. Commissioner of Income Tax, Kolkata-2 (hereinafter referred to as the “Ld. PCIT)”] dated 28.03.2024 for the AY 2017-18. 02. The only issue raised in various grounds of appeal is against the invalid exercise of revisionary juri iction 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.
Star Paper Mills Limited; A.Y. 2017-18

year as a whole at the rate of 50%. The said submission of the assessee did not find favour with the ld. PCIT and he revised the assessment order on this issue. Secondly, the assessee submitted before the ld. PCIT that the claim of brought forward unabsorbed losses/ depreciation was correctly made as per the orders passed by the ld. AO giving the appeal effect to the appellate orders. The ld.
PCIT by rejecting the reply of the assessee revised the assessment order by directing the ld. AO to pass a fresh assessment order denovo after carrying out the detailed verification of these two issues after affording reasonable opportunity of hearing to the assessee.
04. 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
Star Paper Mills Limited; A.Y. 2017-18

para 18 of the Paper Book, wherein the claim was made at 80% at the normal rate and 20% u/s 32(1)(iia) of the Act. The ld. AR submitted that so far as the first issue of depreciation is concerned, the assessment framed by the ld. AO is neither erroneous nor prejudicial to the interest of the Revenue and therefore the exercise of juri iction u/s 263 of the Act to this extent is invalid and may be quashed. So far as the revisionary juri iction is exercised u/s 263 of the Act on the second issue, the ld. AR submitted that even on that account also there is no mistake in the claim in respect of brought forward, unabsorbed losses/depreciation against the current year income as the same is as per the orders passed by the ld. AO giving appeal effect to various appellate orders. The ld. AR submitted that in fact the ld. PCIT has wrongly taken the figures as per the assessment orders whereas as the matter of fact these unabsorbed losses and depreciation were finally determined by the ld. AO giving appeal effect to various appeal orders. The ld. AR however submitted that if at all any verification is required the issue may be directed to be examined by the ld. AO and allow the correct amounts as per the orders passed by the ld. AO while giving appeal effect to the appellate orders.
05. 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.
06. After hearing the rival contentions and perusing the materials available on record, we find that the revisionary juri iction was exercised on two issues namely (i) excess claim of depreciation on Star Paper Mills Limited; A.Y. 2017-18

plant and machinery and (ii) excess claim of brought forward unabsorbed losses/ depreciation. So far as the first issue is concerned, we note that the assessee has made addition to the plant and machinery in the preceding assessment year which was put to use for less than 180 days. The said item of addition was eligible for depreciation at the rate of 80% under the normal rate beside additional depreciation @ 20% u/s 32(1)(iia) of the Act. Since, the assessee has claimed only 50% of the normal rate in the preceding assessment year, therefore the remaining claim was made to the tune of 50% (40% normal rate +10% additional rate) in the current year. In other words, the assessee again claimed depreciation at the rate of 80% under the normal provision and 20% under section 32(1)(iia) of the Act. Therefore, we do not find any anomaly or mistake in the claim of the assessee. Accordingly, the order passed by the ld. Assessing Officer is neither erroneous nor prejudicial to the interest of the Revenue on this count. Therefore, the revisionary juri iction on the said issue in not-sustainable under the law and is accordingly, quashed.
07. 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 Star Paper Mills Limited; A.Y. 2017-18

verify the amount of brought forward unabsorbed loss/ depreciation and allow the same.
08. In the result, the appeal of the assessee is partly allowed.
Order pronounced in the open court on 15.01.2025. (PRADIP KUMAR CHOUBEY)
(RAJESH KUMAR)
(JUDICIAL MEMBER)
(ACCOUNTANT MEMBER)

Kolkata, Dated: 15.01.2025
Sudip Sarkar, Sr.PS
Copy of the Order forwarded to :

Sr. Private Secretary/ Asst.