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Facts
The assessee, a Kerala PSU, originally filed a NIL income return for AY 2018-19, accepted Under Section 143(3). Subsequently, the PCIT initiated revisional proceedings Under Section 263, deeming the assessment erroneous for not verifying depreciation Under Section 32 on intangible assets and rental income. A consequential assessment was passed disallowing depreciation on 'Right to Collect Toll' and taxing rental income as 'income from house property', which the CIT(A) upheld.
Held
The Tribunal found that its earlier order in ITA No. 443/Coch/2023 had already quashed the foundational revisional order of the PCIT Under Section 263. Consequently, the assessment order, being consequential to the quashed revisional order, also failed and was thus quashed by the Tribunal.
Key Issues
Validity of the consequential assessment order when the underlying revisional order of the PCIT Under Section 263 has been previously quashed by the Tribunal.
Sections Cited
143(3), 263, 32
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM
O R D E R Per: Inturi Rama Rao, AM This appeal filed by the assessee is directed against the order of the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (in short “CIT(A)”), dated 11/11/2024 for Assessment Year (AY) 2018- 19.
Briefly the facts of the case are that the appellant is a wholly owned Public Sector Undertaking of Government of Kerala. It is formed with the objective of support and finance the Transport Service as NBFC and to build up commercially viable infrastructure like bus stations, commercial complexes etc., under BOT Model. The Return of Income for the AY 2018-19 was filed on 05/10/2018 declaring NIL income and the same was revised on 29/03/2019 disclosing NIL income. The assessment against the said return of income was completed by the AO vide order dated 23/03/2021 passed U/s. 143(3) of the Act accepting the returned loss. Subsequently, on the scrutiny of the assessment order, the Ld. Principal Commissioner of Income Tax (in short “Ld. PCIT”) was of the opinion that the assessment order is erroneous and prejudicial to the interest of the Revenue for the failure of the AO to verify the claim for allowance of depreciation U/s. 32 of the Act on intangible asset of Rs. 33,50,45,372/-. Accordingly, the Ld. PCIT set-aside the assessment order with a direction to re-do the assessment. Thereafter, consequential order to the order passed U/s. 263 of the Act was passed by the AO ie., Assistant Commissioner of Income Tax, Circle-1(1), Trivandrum vide order dated 12/03/2024 passed U/s. 143(3) r.w.s 263 of the Act at a total income of Rs. 18,02,12,607/-. While doing so, the AO disallowed the claim for depreciation on the “Right to Collect Toll” of Rs. 33,50,45,372/- and also treated the rental income of Rs.3,10,28,960/- under the head ‘income from house property’.
Being aggrieved by the assessment order, an appeal was filed before the CIT(A), who vide the impugned order dismissed the appeal.
Being aggrieved, the appellant is in appeal before us in the present appeal.
At the outset, we find that the order passed by the Ld. PCIT U/s. 263 fo the Act was quashed by us in (AY 2018-19), for the reasons stated therein and therefore, the consequential assessment order also fails. Thus, the assessment order, dated 12/03/2024, impugned before us is herey quashed.
In the result, appeal filed by the assessee stands allowed.
Order pronounced in the open court on 15th July, 2025.