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Income Tax Appellate Tribunal, “ B ” BENCH, AHMEDABAD
Before: SHRI PRADIP KUMAR KEDIA & SHRI MAHAVIR PRASAD
आदेश / O R D E R
PER PRADIP KUMAR KEDIA - AM: The captioned appeal by the Assessee is directed against the order of the Pr.Commissioner of Income Tax-2, Ahmedabad [Pr.CIT in short] passed under s.263 of the Income Tax Act, 1961 (hereinafter referred to as "the Act") dated 23/02/2017 for the Assessment Year (AY) 2011-12.
ITA No.825/Ahd/2017 Mundra International Container vs. The Pr.CIT Asst.Year – 2011-12 - 2 - 2. The assessee in the present appeal has challenged the revisional jurisdiction of the Pr.CIT invoked under s.263 of the Act whereby order of the Assessing Officer (AO) under s.143(3) r.w.s.144C of the Act dated 27/02/2015 is sought to be set aside by the Pr.CIT primarily on grounds of lack of enquiry.
Briefly stated, the assessee is engaged in the business of operating container handling terminal and container freight station operations. The return of income for AY 2011-12 filed by the assessee was subjected to scrutiny assessment and the assessment under s.143(3) r.w.s. 144C was finalized on 27/02/2015. After the completion of the assessment, the Pr.Commissioner, on review of the assessment records, found that assessment order passed by the AO is erroneous and prejudicial to the interests of the revenue. The Pr.CIT accordingly invoked revisional jurisdiction conferred under s.263 of the Act to show cause the assessee on the infirmity in the assessment order which is broadly narrated by the Pr.CIT in para No.2 of his order reproduced hereunder:- "You have claimed the depredation of Rs.13,50,97,959/- on Infrastructure Usage facility @ 25% on W.D.V. of Rs.54,03,91,835/- treating the same as intangible asset. The Assessing Officer allowed the same. You have been using infrastructure facility developed by Mundra Port and Economic Zone. The expenditure incurred by you for usage of infrastructure facility was capital in nature and deriving enduring benefits out of it. The right of usage of same is not similar to know-how, patents, copyrights, trade mark, licence or any other business or
ITA No.825/Ahd/2017 Mundra International Container vs. The Pr.CIT Asst.Year – 2011-12 - 3 - commercial rights where the assets are acquired and the payee becomes the owner. You have been allowed to use the infrastructure facility not in the capacity of the owner as the owner is Mundra Port and Special Economic Zone, who are claiming depreciation on the same (Marine structures, Dredging - CT, Plant and Machinery etc.) at the prescribed rate which are lesser than that the rates claimed by you. In view of the above facts, wrong depreciation allowed on "Infrastructure Usage facility was required to be disallowed, which resulted in underassessment of Rs.13,50,97,959/-."
The Pr.CIT in essence alleged that the order of the AO in accepting the claim of depreciation allowances on ‘Infrastructure Usage Facility’ as an intangible asset is legally incorrect and unsustainable in law. Secondly, the order of the AO suffers from non-application of mind while concluding in favour of assessee. Thirdly, in the absence of ownership of impugned intangible asset, it does not qualify for depreciation as per section 32(1)(ii) of the Act. Fourthly, depreciation cannot be claimed by two persons simultaneously i.e. the owner (Mundra Port and Special Economic Zone) and the user (Assessee). The Pr.CIT accordingly concluded that the assessment order has been passed without carrying out any worthwhile enquiries on the alleged claim of depreciation allowances. It was thus concluded that the assessment order passed under s.143(3) r.w.s.144C is erroneous in so far as prejudicial to the interests of the revenue. Consequently, the Pr.CIT set aside the
ITA No.825/Ahd/2017 Mundra International Container vs. The Pr.CIT Asst.Year – 2011-12 - 4 - assessment order and directed the AO to frame the assessment after conducting the necessary enquiry on the issue involved.
Aggrieved, the assessee is in appeal before the Tribunal.
The Ld.AR for the assessee Mr.Mrunal Shah submitted at the outset that the depreciation has been claimed on the opening balance of Written Down Value (WDV) of the intangible asset in question. It was submitted that the depreciation was claimed earlier from 2004-05 onwards and this is not the first year such claim. The Ld.AR thereafter submitted that the action under s.263 of the Act was identically taken by the Pr.CIT against the assessee for the AY 2009-10 also. The aforesaid order passed under s.263 of the Act for AY 2009-10 was challenged before the Coordinate Bench of ITAT. The Coordinate Bench in ITA No.1253/Ahd/2016 order dated 23/01/2017 cancelled the order framed under s.263 of the Act on the same issue involved in identical facts. Therefore the case of the assessee is covered by its own precedent in the previous year. It was thereafter submitted that since AY 2004-05 till AY 2011-12, the AO in the respective assessment year has been allowing depreciation on ‘Infrastructure Usage Facility’ consciously. The Ld.AR thereafter submitted that even in AYs 2007-08, 2008-09 and 2010-11 where the case was reopened by issue of notice under s.148 of the Act, it was found by the Hon’ble Gujarat High Court that an opinion on the
ITA No.825/Ahd/2017 Mundra International Container vs. The Pr.CIT Asst.Year – 2011-12 - 5 - allowability of depreciation of ‘Infrastructure Usage Facility’ was duly formed at the assessment stage and therefore jurisdiction usurped under s.147 of the Act was found illegal and bad in law in these years. The Ld.AR submitted that in these circumstances, the order under s.263 in challenge cannot be sustained in law in departure with the earlier years.
The Ld.DR, on the other hand, relied upon the order of the Pr.CIT passed under s.263 of the Act.
We have examined the rival submissions and perused the order of the Pr.CIT passed under s.263 of the Act as well as the decisions referred to in this regard. Various allegations made by the Pr.CIT for invoking section 263 of the Act has been summarized in the preceding paras. We find that the identical challenge to the assumption of jurisdiction under s.263 of the Act for preceding assessment year 2009-10 in assessee’s own case has been decided in favour of assessee by the Coordinate Bench of the Tribunal. Therefore, we do not see any reason to depart therefrom. Thus, on this ground alone the order of the Pr.CIT passed under s.263 of the Act requires to be set aside. Notwithstanding aforesaid, we also find substance in the plea marshelled on behalf of the assessee that depreciation claim has been admitted and accepted year- after-year in the earlier years and thus the depreciation claimed in the present year is merely a continuation of the earlier year claims. This
ITA No.825/Ahd/2017 Mundra International Container vs. The Pr.CIT Asst.Year – 2011-12 - 6 - being so, we do not see any occasion for the AO to embark upon a threadbare enquiry on the issue in repetition where position of the assessee already stands accepted in the past. Hence, we do not find the assessment order passed by the AO as ‘erroneous’ per se which warrants exercise of revisional jurisdiction. We further to note that the Hon’ble Gujarat High Court in Special Civil Application No.15463 of 2015 order dated 11/01/2016 did not approve the action of AO in 147 proceedings raised on the same issue in AY 2010-11. Similar orders have been passed for other assessment years also by the Hon’ble Jurisdictional High Court in assessee’s own case. Hence we are of the view that the impugned revisional action of Pr.CIT is not befitting to the facts and circumstances of the case. Thus, we hold that action of Pr.CIT is without satisfaction of pre-requisites contemplated under s.263 of the Act. The order passed under s.263 of the Act is thus liable to be set aside and cancelled. 10. In the result, appeal of the assessee is allowed. This Order pronounced in Open Court on 29/ 09 /2017
Sd/- Sd/- (महावीर �साद) (�द�प कुमार के�डया) �या�यक सद�य लेखा सद�य ( PRADIP KUMAR KEDIA ) ( MAHAVIR PRASAD ) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 29/ 09 /2017
ITA No.825/Ahd/2017 Mundra International Container vs. The Pr.CIT Asst.Year – 2011-12 - 7 -
ट�.सी.नायर, व.�न.स./T.C. NAIR, Sr. PS आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त(अपील) / The Pr.CIT(A)-2, Ahmedabad �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 5. 6. गाड� फाईल / Guard file. p स�या�पत ��त //True Copy//
उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील�य अ�धकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation .. 26.9.17 (dictation-pad 16-pages attached at the end of this appeal-file) 2. Date on which the typed draft is placed before the Dictating Member … 26.9.17 3. Other Member… 4. Date on which the approved draft comes to the Sr.P.S./P.S…………….. 5. Date on which the fair order is placed before the Dictating Member for pronouncement…… 6. Date on which the fair order comes back to the Sr.P.S./P.S…….29.9.17 7. Date on which the file goes to the Bench Clerk…………………29.9.17 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order…………………….. 10. Date of Despatch of the Order………………