ASCENDAS IT PARK (CHENNAI) LIMITED,CHENNAI vs. PCIT 1, CHENNAI

This appeal by the assessee is arising out of the Revision order passed by the Principal ITBA/REV/F/REV5/2022-23/1051515676(1) dated 28.03.2023. The assessment was framed by the Income Tax Officer, National e-Assessment Centre, Delhi for the assessment year 2018-19 u/s.143(3) r.w.s. 143(3A) & 143(3B) of the Income Tax Act, 1961 (hereinafter the ‘Act’) vide order dated 31.01.2021.

The only issue in this appeal of assessee is as regards to the order of PCIT passed u/s.263 of the Act revising the assessment framed by the AO u/s.143(3) of the Act dated 31.01.2021. The PCIT has revised the assessment in regard to following two issues:- (i) Loss on Sale of fixed assets at Rs.11,02,001/- (ii) Provision for doubtful debts at Rs.31,46,538/-

Brief facts are that the assessee company has developed an Information Technology park in Taramani, Chennai and deriving revenue through lease of developed area to enterprises engaged in Information Technology & Information Technology enabled services sector. The assessee’s case was selected for complete scrutiny assessment under e-assessment scheme 2019 on the following issues:- i. Claim of any other amount allowable as deduction in Schedule BP ii. Deduction claimed for industrial undertaking u/s.80IA/80IAB/80IAC/IB/IC/IBA/80ID/89IE/10A/10AA iii. ICDS Compliance and Adjustment iv. Income from House Property and assessment was completed u/s.143(3) r.w.s. 143(3A) & 143(3B) of the Act vide order dated 31.01.20121 accepting the returned income. Subsequently, the PCIT, Chennai issued show-cause notice u/s.263 of the Act as to why the assessee’s assessment be not revised on account of disallowance of loss on sale of fixed assets at - 3 - Rs.11,02,001/- and provision for doubtful debts at Rs.31,46,538/- i.e., total disallowance to be made at Rs.42,48,539/-. The PCIT noted that the AO framed assessment u/s.143(3) of the Act that there is no proper examination of issues and no necessary enquiries and verification was carried out. The assessee before PCIT filed complete details but PCIT was of the view that these details needed verification by the AO. For this, he recorded the following finding in para 6 of revision order as under:- “6. The submissions filed by the assessee company and the material available on record were duly examined. The assessee has submitted relevant ledger extracts for both the issues involved viz., Short disallowance of loss on sale fixed assets and Provision of doubtful debts. The verification of this issue along with the ledger extracts and the relevant material on record needs to be carried out by the concerned Assessing Officer.”

We have heard rival contentions and gone through facts and circumstances of the case. Before us, the ld.counsel for the assessee relied on the paper-book filed consisting of pages 1 to 266 and she drew our attention to show-cause notice initiating revision proceedings u/s.263 of the Act dated 09.03.2023 and submissions made by assessee dated 16.03.2023 filed before PCIT. The ld.counsel for the assessee explained with regard to disallowance of loss on sale of fixed assets that the same has been considered by - 4 - Rs.11,02,000/- was credited to the Profit & Loss account and form part of the head ‘miscellaneous income’. She explained the details that as per computation of income of the company for the relevant assessment year, only a sum of Rs.43,12,475/- has been disallowed towards loss on sale of fixed assets because the company has incurred a net loss on sale of fixed assets amounting to Rs.43,12,475/- only, which has been appropriately considered in the computation of income. She explained that the total book value of the assets which were sold during the financial year relevant to assessment year amounting to Rs.54,14,476/- and the aforesaid gross amount was debited to the profit & loss account under the head ‘other expenses’ of the financial statements for the year ending 31.03.2018. The balance amount of Rs.11,02,000/- was credited to the Profit & Loss account and formed part of the head ‘miscellaneous income’ and also extracted in the computation of income. Hence, there is no indiscrepancy.

When this was pointed out to ld.CIT-DR, he only contended that the PCIT only set aside the assessment and referred the matter back to the file of the AO for verification purpose only and AO can very well verify the same.

As regards to other issue, provision for doubtful debts. The ld.counsel for the assessee explained that as per computation of income of the company for relevant assessment year, a sum of Rs.2,52,241/- has been disallowed towards provisions for doubtful debts and the expenses under the head ‘provisions for doubtful debts’ as enclosed in the audited financial statements aggregating to Rs.33,98,779/- comprised of two ledgers. The relevant break-up of the two figures was explained before us as under:- Sl.No. Particulars Amount (INR) 1 Provisions for doubtful debts 2,52,241 2 Bad debts written off 31,46,538 Total 33,98,779 The ld.counsel explained that the provision for doubtful debts created during the year amounted only to Rs.2,52,241/- and the said provision has rightly been disallowed by the company while determining the total taxable income in the computation of income. Hence according to her, nothing survives and everything is explained. She also argued that there is no error pointed out by the PCIT in his order or any prejudice caused to Revenue due to this claim, because it is a legal claim. On this, the ld.CIT-DR repeated the same argument.

In the result, the appeal filed by the assessee is allowed.