DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1, AURANGABAD, AURANGABAD vs. ENDURANCE TECHNOLOGIES LIMITED , AURANGABAD

Subsequently, the PCIT noticed that the assessee company received incentive from the Government of Maharashtra under the Package Scheme Incentives-2007 amounting to Rs.4,80,18,000/-. The assessee company has not given effect of the same as per provisions of section 43(1) Explanation 10 of the Act i.e. the assessee has shown the subsidy amount in financial statement under the head ‘Incomes’ and in computation of income made deduction. Therefore, the PCIT invoked juri iction u/s 263 of the Act on the ground that the assessee has claimed excess depreciation on prorata basis. The Assessing Officer in the order passed u/s 143(3) r.w.s. 263 of the Act made addition of Rs.72,02,700/- by observing as under: “5. The explanation of the assessee as mentioned hereinabove is duly considered in the light of relevant provisions of the Act and judicial pronouncements, etc. However not acceptable. Perusal of case records, etc. it is seen that the assessee company has received the incentives from the Government of Maharashtra under the Package Scheme Incentives, 2007. The Directorate of Industries, Government of Maharashtra has issued an Eligibility Certificate for Industrial Promotional subsidy No. 95 dtd. 13th May, 2011. Perusal of IPS-2007, it is seen the subsidy in question was exclusively for Fixed capital assets, indirectly under the PSI Scheme, Incentive is given for establishing unit in backward region and establishment of unit is nothing but a fixed asset structure primarily. In present case, the assessee has recognized the incentive so received i.e. Rs.4,80,18,000/- in its book under the head of other incomes as per companies Act, 2013. However it has reduced the same amount from computation of income for tax purpose. As the incentive was only for fixed assets and hence the assessee was required to reduce the same from the cost of assets for the purpose of calculating depreciation in the light of provisions of section 43(1). However it had not done so. Considering the facts and circumstances of the case, the assessee has excess claimed depreciation on P&M by Rs.72,02,700/- and the same is hereby disallowed and made to the total income of the assessee. As the assessee has not shown particulars of income correctly in its return for the year under consideration, reasons as mentioned hereinabove,

In appeal, the Ld. CIT(A) / NFAC deleted the addition on the ground that the Tribunal has quashed the re-assessment proceedings. The relevant part of the Ld. CIT(A) / NFAC at para 5 of the order reads as under:

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

Aggrieved with such order of the Ld. CIT(A) / NFAC, the Revenue is in appeal before the Tribunal by raising the following grounds:

On the facts and in the circumstances of the case, the CIT(A), NFAC, Delhi has erred in allowing the claim of depreciation of Rs.72,02,700/- [Rs.4,80,18,000/- 15%] without considering that the assessee had recognized the incentive of Rs.4,80,18,000/- from Government of Maharashtra under the Package Scheme Incentive-2007, and has not reduced the same amount from the cost of assets or from the opening WDV as per provisions of explanation 10 to sub section of section 43(1) of the Income Tax Act, 1961. 3. The order of the Assessing Officer may be restored and that of the CIT(A), NFAC, Delhi be vacated.

The appellant craves leave to add, amend or alter all or any of the grounds of appeal.

After hearing both sides, we do not find any infirmity in the order of the Ld. CIT(A) / NFAC on this issue. Admittedly the Tribunal vide ITA Nos.857 & 858/PUN/2019 order dated 04.01.2023 for assessment years 2013-14 & 2014-15 has quashed the revision proceedings invoked by the PCIT u/s 263 by observing as under: “11. We heard the rival submissions and perused the material on record. The issue in the present appeal relates to the validity of assumption of juri iction u/s 263 by the ld. PCIT. The Parliament had conferred the power of revision on the Commissioner of Income Tax u/s 263 of the Act in case the assessment order passed is erroneous and prejudicial to the interests of revenue. In order to invoke the power of revision, the above two conditions are required to be satisfied cumulatively. References in this regard can be made to the decision of the Hon’ble (SC) and in the case of CIT vs. Max India Ltd., 295 ITR 282 (SC). The error in the assessment order should be one that it is not debatable or plausible view. In a case where the Assessing Officer examined the claim took one of the plausible views, the assessment order cannot be termed as an “erroneous”.

In the present case, the ld. AR had demonstrated before us the issue sought to be revised by the ld. PCIT in exercise the power vested with him u/s 263, was examined by the Assessing Officer and took a plausible view during the course of assessment proceedings. No doubt the assessment order is silent on this point. But,

Since the Tribunal has quashed the revision proceedings, therefore, in absence of any contrary material brought to our notice by Ld. DR the order of the Ld. CIT(A) / NFAC deleting the addition made by the Assessing Officer passed u/s 143(3) r.w.s. 263 of the Act is upheld. The grounds raised by the Revenue are accordingly dismissed.

In the result, the appeal filed by the Revenue is dismissed.

अपीलार्थी / The Appellant; 2. प्रत्यर्थी / The Respondent

4. The concerned Pr.CIT, Pune DR, ITAT, ‘A’ Bench, Pune 5. गार्ड फाईल / Guard file.