BSCPL AURANG TOLLWAY LIMITED,HYDERABAD vs. DCIT., CIRCLE-1(1), HYDERABAD

Facts

The assessee company, BSCPL Aurang Tollway Limited, filed its return of income for FY 2018-19, declaring a loss. The assessment order was completed under Section 143(3) accepting the returned loss. The Principal Commissioner of Income Tax (PCIT) invoked Section 263, viewing the assessment order as erroneous and prejudicial to the revenue. The PCIT's order was challenged by the assessee before the Income Tax Appellate Tribunal (ITAT).

Held

The ITAT held that the Assessing Officer (AO) failed to conduct proper inquiries and verify the issue of capitalization of cost incurred for developing the toll road and the depreciation claimed thereon, in light of CBDT Circular No. 9 of 2014. The AO's order was considered erroneous and prejudicial to the interest of the revenue. The Tribunal upheld the PCIT's order.

Key Issues

Whether the Assessing Officer's assessment order allowing depreciation on the cost of toll road as an intangible asset was erroneous and prejudicial to the interest of the revenue, thus warranting revision under Section 263, especially in light of CBDT Circular No. 9 of 2014.