KOSI BRIDGE INFRASTRUCTURE COMPANY PVT LTD.,MUMBAI vs. PR CIT -6, MUMBAI

The facts relevant for disposal of this appeal are, the assessee is a resident company and is engaged in the activity of developing various infrastructure projects. While carrying on such activity, the assessee had constructed a part of National Highway No.57, being a bridge over river Kosi in the state of Bihar on build, operate and transfer (BOT) basis under the Annuity Scheme. For the assessment year 2012-13, the assessee filed its return of income, originally on 26- 09-2012 declaring loss of Rs.61,99,84,578/-. Subsequently, assessee filed a revised return on 29-03-2014 revising loss to Rs.62,53,59,860/- after claiming depreciation on the BOT project constructed by it. Originally, assessment was completed under section 143(3) of the Act vide order dated 11-03-2016 accepting the income/loss returned by the assessee, after allowing the claim of depreciation. Subsequently, the assessment was reopened under section 147 of the Act on the reasoning that the assessee not being the owner of the bridge constructed, is ineligible to claim depreciation. Ultimately, the assessing officer concluded the assessment under section 143(3) r.w.s. 147 of the Act vide order dated 18-1-2017 disallowing assessee’s claim of depreciation on the BOT project.

Against the re-assessment order passed disallowing claim of depreciation, assessee filed appeal before learned Commissioner of Income-tax (Appeals). In the meanwhile, on an application filed by the assessee making an alternative claim of amortization of expenditure incurred in the BOT project, the assessing officer passed an order under section 154 of the Act on 14-03-2019 allowing assessee’s claim of amortization in terms of CBDT circular No.9 of 2014. 4. When the matter stood thus, learned PCIT, in exercise of his power under section 263 of the Act called for the assessment records of the assessee. After perusing the records, he was of the view that while completing the re-

We have heard Shri Rakesh Joshi, learned Authorised Representative of the assessee and Shri Vinay Sinha, learned Departmental Representative.

As could be seen from the facts emerging from record and briefly discussed earlier, the major dispute is with regard to assessee’s claim of depreciation on the I.T.A. Nos.3471 & 3578/Mum/2019 4 BOT project. In the re-assessment order, the assessing officer had disallowed the depreciation claimed. However, in an order passed under section 154 of the Act, the assessing officer allowed amortization of the expenditure in terms of CBDT circular referred to above. Learned PCIT, while exercising his power under section 263 of the Act has set aside the re-assessment order as well as the order passed under section 154 of the Act, as referred to above, by directing the assessing officer to verify the genuineness of expenditure claimed by the assessee and thereafter allow amortization. Whereas, while deciding assessee’s appeal against disallowance of depreciation on BOT project, learned Commissioner (Appeals) has directed the assessing officer to allow the claim of depreciation. It is observed, in the fresh assessment order passed under section 143(3) r.w.s. 263 of the Act the assessing officer, after verifying the details, has recorded a categorical finding that the expenditures claimed by the assessee on the BOT project are genuine. Further, the assessing officer has also given effect to the directions of learned Commissioner (Appeals) by allowing depreciation on the BOT project. Thus, it is apparent, the assessing officer has carried out the directions of, both, learned PCIT and learned Commissioner (Appeals) in letter and spirit. As far as validity of assumption of jurisdiction under section 263 of the Act is concerned, in principle, we agree with the learned Counsel for the assessee that the reassessment order cannot be held as either erroneous or prejudicial to the interest of revenue, as, the assessment was reopened only for the purpose of disallowing assessee’s claim of depreciation. In the reassessment proceeding the assessing officer was not required to examine the genuineness of expenditure capitalized as it was a subject matter of original assessment proceeding. Be that as it may, in the fresh assessment order the assessing officer has verified the details of expenditure

In the result, appeal is dismissed. – (Assessment Year- 2014-15) 8. The facts in this appeal are more or less identical to 143(3) of the Act, the assessing officer, though, disallowed assessee’s claim of depreciation on the BOT project; however, he allowed amortization of expenditure incurred on the BOT project. Whereas, learned PCIT, in the order passed under section 263 of the Act has set aside the assessment order with a direction to verify the genuineness of expenditure claimed and thereafter allow amortization. Like in the Assessment Year 2012-13, learned Commissioner (Appeals) allowed assessee’s claim of depreciation on the BOT project. In the fresh assessment order passed under section 143(3) r.w.s 263 of the Act the assessing officer has verified the expenditure capitalized and found them to be genuine and thereafter has allowed depreciation on the BOT project. In view of the aforesaid, our decision inITA No.3471/Mum/2019, supra, would apply mutatis mutandis to this appeal also. Accordingly, the appeal having become infructuous is dismissed.

In the result, both the appeals are dismissed.