DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1, AURANGABAD, AURANGABAD V. ENDURANCE TECHNOLOGIES LIMITED , AURANGABAD

ITA 1682/PUN/2024

AI Insights

The case involves the Revenue's appeal against the order of the Ld. CIT(A) / NFAC, which had deleted an addition of Rs.72,02,700 made by the Assessing Officer. This addition was initially made due to an alleged excess claim of depreciation by the assessee, Endurance Technologies Limited, on assets for which they received a government subsidy under the Package Scheme Incentives-2007. The primary legal contention was whether the subsidy amount should have been deducted from the cost of the assets for depreciation purposes as per section 43(1) Explanation 10 of the Income Tax Act, 1961. The Tribunal referenced a previous ITAT decision which had quashed the revision proceedings under section 263, supporting the CIT(A)'s decision to delete the addition.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 713329 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Assessment Year: 2013-2014
• Other Referred Cases: Malabar Industrial Co. Ltd. Vs. CIT, 243 ITR 83(SC), CIT Vs. Max India Ltd., 295 ITR 282(SC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S AMOL KHAIRNAR
• Assessee Lawyers: S NIKHIL PATHAK
• Keywords: Capital asset; Revised return; Depreciation; Revision of order
• Section: 143(3); 154; 263; 271(1)(c); 14A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI R. K. PANDA, VICE PRESIDENT AND MS. ASTHA CHANDRA, JUDICIAL MEMBER ITA No.1682/PUN/2024 Assessment year : 2013-14 DCIT, Circle-1, Aurangabad Vs. Endurance Technologies Limited (earlier High Technology Transmission Systems India Pvt. Ltd.) E 92, Waluj, Ranjangaon (S), Bajaj Nagar, MIDC, Waluj SO, Aurangabad - 431136 PAN: AAACF7066P (Appellant) (Respondent) Assessee by : S/Shri Nikhil Pathak and Abhay Avachat Department by : S/Shri Amol Khairnar, CIT-DR and Ramnath P Murkunde Date of hearing : 28-07-2025 Date of pronouncement : 31-07-2025 O R D E R PER R.K. PANDA, V.P: This appeal filed by the Revenue is directed against the order dated 10.06.2024 of the Ld. CIT(A) / NFAC, Delhi relating to assessment year 2013-14. 2. Facts of the case, in brief, are that the assesse filed its revised return of income on 31.03.2015 declaring total income of Rs.1,20,54,68,920/-. The Assessing Officer completed the assessment u/s 143(3) of the Act determining the total income at Rs.122,32,40,620/- by making disallowance of Rs.1,05,69,000/- u/s Printed from counselvise.com 2 ITA No.1682/PUN/2024 14A r.w.s. 8D of the IT Rules. Subsequently, the Assessing Officer passed an order u/s 154 of the Act on account of mismatch in prepaid taxes and interest. 3. Subsequently, the PCIT noticed that the assessee company received incentive from the Government of Maharashtra under the Package Scheme Incentives-2007 amounting to Rs.4,80,18,000/-. The assessee company has not given effect of the same as per provisions of section 43(1) Explanation 10 of the Act i.e. the assessee has shown the subsidy amount in financial statement under the head ‘Incomes’ and in computation of income made deduction. Therefore, the PCIT invoked jurisdiction u/s 263 of the Act on the ground that the assessee has claimed excess depreciation on prorata basis. The Assessing Officer in the order passed u/s 143(3) r.w.s. 263 of the Act made addition of Rs.72,02,700/- by observing as under: “5. The explanation of the assessee as mentioned hereinabove is duly considered in the light of relevant provisions of the Act and judicial pronouncements, etc. However not acceptable. Perusal of case records, etc. it is seen that the assessee company has received the incentives from the Government of Maharashtra under the Package Scheme Incentives, 2007. The Directorate of Industries, Government of Maharashtra has issued an Eligibility Certificate for Industrial Promotional subsidy No. 95 dtd. 13th May, 2011. Perusal of IPS-2007, it is seen the subsidy in question was exclusively for Fixed capital assets, indirectly under the PSI Scheme, Incentive is given for establishing unit in backward region and establishment of unit is nothing but a fixed asset structure primarily. In present case, the assessee has recognized the incentive so received i.e. Rs.4,80,18,000/- in its book under the head of other incomes as per companies Act, 2013. However it has reduced the same amount from computation of income for tax purpose. As the incentive was only for fixed assets and hence the assessee was required to reduce the same from the cost of assets for the purpose of calculating depreciation in the light of provisions of section 43(1). However it had not done so. Considering the facts and circumstances of the case, the assessee has excess claimed depreciation on P&M by Rs.72,02,700/- and the same is hereby disallowed and made to the total income of the assessee. As the assessee has not shown particulars of income correctly in its return for the year under consideration, reasons as mentioned hereinabove, Printed from counselvise.com 3 ITA No.1682/PUN/2024 penalty proceedings is being initiated u/s. 271(1)(c) of the Act for furnishing of inaccurate particulars of income. [Addition: Rs.72,02,700/-]” 4. In appeal, the Ld. CIT(A) / NFAC deleted the addition on the ground that the Tribunal has quashed the re-assessment proceedings. The relevant part of the Ld. CIT(A) / NFAC at para 5 of the order reads as under: “5. Decision I have carefully gone through the facts of the case, assessment order, ITAT Order, ground of appeals and materials on record. Judgements and decisions of relevant judicial authorities relied on by the appellant have also been referred to. PCIT-I, Aurangabad in this case had ordered re-assessment u/s 263 of IT Act, 1961, consequent to a finding that the Assessing Officer had failed to consider the taxability of subsidy while assessing the Appellant's return. The appellant, aggrieved by the revision order, had preferred an appeal before the Hon'ble ITAT, Pune. Perusal of the order of the Hon'ble ITAT, Pune dated 04.01.2023 clarifies that the central issue of the appeal is regarding jurisdiction of the Pr. CIT to exercise his revisionary power u/s 263 of the IT Act. The Hon'ble ITAT ultimately concluded that the revision order directing re-assessment was invalid and the original order of the AO was upheld. Para 12 of the said ITAT Order sets out the clear position of Law regarding computation of cost subsidy under the Govt. of Maharashtra under the Package Scheme Incentives-2007 referred has been made to the decision of Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. Vs. CIT, 243 ITR 83(SC) & in the case of CIT Vs. Max India Ltd., 295 ITR 282(SC) wherein it has been established that the cost subsidy is not deducted from the depreciation claimed. Since the revision order was declared as invalid, therefore, no changes must be made to the original Assessment Order passed by the AO.\" 6. In the result, appeal of the assessee is allowed.” 5. Aggrieved with such order of the Ld. CIT(A) / NFAC, the Revenue is in appeal before the Tribunal by raising the following grounds: Printed from counselvise.com 4 ITA No.1682/PUN/2024 1. On the facts and in the circumstances of the case, the CIT(A), NFAC, Delhi has erred in deleting the addition of Rs.72,02,700/- i.e. excess claim of depreciation on P&M by Rs.72,02,700/-. 2. On the facts and in the circumstances of the case, the CIT(A), NFAC, Delhi has erred in allowing the claim of depreciation of Rs.72,02,700/- [Rs.4,80,18,000/- 15%] without considering that the assessee had recognized the incentive of Rs.4,80,18,000/- from Government of Maharashtra under the Package Scheme Incentive-2007, and has not reduced the same amount from the cost of assets or from the opening WDV as per provisions of explanation 10 to sub section of section 43(1) of the Income Tax Act, 1961. 3. The order of the Assessing Officer may be restored and that of the CIT(A), NFAC, Delhi be vacated. 4. The appellant craves leave to add, amend or alter all or any of the grounds of appeal. 6. After hearing both sides, we do not find any infirmity in the order of the Ld. CIT(A) / NFAC on this issue. Admittedly the Tribunal vide ITA Nos.857 & 858/PUN/2019 order dated 04.01.2023 for assessment years 2013-14 & 2014-15 has quashed the revision proceedings invoked by the PCIT u/s 263 by observing as under: “11. We heard the rival submissions and perused the material on record. The issue in the present appeal relates to the validity of assumption of jurisdiction u/s 263 by the ld. PCIT. The Parliament had conferred the power of revision on the Commissioner of Income Tax u/s 263 of the Act in case the assessment order passed is erroneous and prejudicial to the interests of revenue. In order to invoke the power of revision, the above two conditions are required to be satisfied cumulatively. References in this regard can be made to the decision of the Hon’ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT, 243 ITR 83 (SC) and in the case of CIT vs. Max India Ltd., 295 ITR 282 (SC). The error in the assessment order should be one that it is not debatable or plausible view. In a case where the Assessing Officer examined the claim took one of the plausible views, the assessment order cannot be termed as an “erroneous”. 12. In the present case, the ld. AR had demonstrated before us the issue sought to be revised by the ld. PCIT in exercise the power vested with him u/s 263, was examined by the Assessing Officer and took a plausible view during the course of assessment proceedings. No doubt the assessment order is silent on this point. But, Printed from counselvise.com 5 ITA No.1682/PUN/2024 generally, the issues which are acceptable to the Assessing Officer do not find mention in the assessment order and it cannot be said that the Assessing Officer had not applied his mind as observed by the Hon’ble Punjab & Haryana High Court in the case of Hari Iron Trading Co. vs. CIT, 263 ITR 437 (P&H) and the Hon’ble Delhi High Court in the case of CIT vs. Eicher Ltd., 294 ITR 310 (Delhi). Therefore, it cannot be said that the Assessing Officer had failed to make an enquiry, no further enquiry is necessary and all the facts were before the Assessing Officer. Consequently, we are of the considered opinion that the proposition that the assessment order is erroneous for want of an enquiry or proper enquiry would have no application to the facts of the present appeal. Therefore, the ld. PCIT cannot invoke the jurisdiction u/s 263 of the Act in respect of this issue. Accordingly, we set-aside the order of revision u/s 263 on this point.” 7. Since the Tribunal has quashed the revision proceedings, therefore, in absence of any contrary material brought to our notice by Ld. DR the order of the Ld. CIT(A) / NFAC deleting the addition made by the Assessing Officer passed u/s 143(3) r.w.s. 263 of the Act is upheld. The grounds raised by the Revenue are accordingly dismissed. 8. In the result, the appeal filed by the Revenue is dismissed. Order pronounced in the open Court on 31st July, 2025. Sd/- Sd/- (ASTHA CHANDRA) (R. K. PANDA) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; दिन ांक Dated : 31st July, 2025 GCVSR Printed from counselvise.com 6 ITA No.1682/PUN/2024 आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपीलार्थी / The Appellant; 2. प्रत्यर्थी / The Respondent 3. 4. The concerned Pr.CIT, Pune DR, ITAT, ‘A’ Bench, Pune 5. गार्ड फाईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अधिकरण ,पुणे / ITAT, Pune S.No. Details Date Initials Designation 1 Draft dictated on 30.07.2025 Sr. PS/PS 2 Draft placed before author 31.07.2025 Sr. PS/PS 3 Draft proposed & placed before the Second Member JM/AM 4 Draft discussed/approved by Second Member AM/AM 5 Approved Draft comes to the Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R. 11 Date of Dispatch of order Printed from counselvise.com "