Adani Port & Special Economic Zone Ltd., Ahmedabad V. The Addl. CIT, Range-1, Ahmedabad

ITA 1362/AHD/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94668 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 14-10-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 15-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R I PATEL
• Assessee Lawyers: S N SOPARKAR
• Keywords: Business income; Depreciation; Opportunity of being heard; Principle of natural justice; Prejudicial to interest
• Section: 143(3); 14A; 80IB; 263; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH (BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER & SHRI S.S. GODARA, JUDICIAL MEMBER) ITA NO: 1362/AHD/2015 (ASSESSMENT YEAR: 2010-11) ADANI PORT & SPECIAL ECONOMIC ZONE LTD., ADANI HOUSE, NR. MITHAKHALI SIX ROAD, NAVRANGPURA, AHMEDABAD-380009 V/S ADDL C.I.T RANGE-1, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AAACG 7917K APPELLANT BY : SHRI S.N. SOPARKAR, AR RESPONDENT BY : SHRI R.I. PATEL, CIT/ D.R. ( )/ ORDER DATE OF HEARING : 14-10-2015 DATE OF PRONOUNCEMENT : 29 -10-2015 PER ANIL CHATURVEDI, ACCOUNTANT MEMBER 1. THIS APPEAL FILED BY THE ASSESSEE IS AGAINST ORDER OF LD. CIT DATED 31.03.2015 FOR A.Y. 2010-11 PASSED U/S.263 OF THE I NCOME-TAX ACT, 1961. ITA NO 1362/ AHD/2015 . A.Y. 2010-2 011 2 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN THE D EVELOPMENT AND OPERATION AND MAINTENANCE OF PORTS AND SPECIAL ECON OMIC ZONE AT MUNDHRA. ASSESSEE ELECTRONICALLY FILED ITS RETURN OF INCOME FOR A.Y. 2010-11 ON 24.09.2010 DECLARING TOTAL INCOME AT RS. 1,46,39,97 0/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED UNDER SECTION 143(3) VIDE ORDER DATED 28.03.2013 AND THE TOTAL IN COME WAS DETERMINED AT RS. 27,74,59,380/-. SUBSEQUENTLY ON EXAMINATION OF THE CASE RECORD OF ASSESSMENT, LD. CIT NOTICED THAT (I) RS. 17.08 CROR E WAS REQUIRED TO BE DISALLOWED U/S. 14A READ WITH RULE 8D OF THE ACT BU T ONLY AN AMOUNT OF RS. 6.12 CRORE WAS DISALLOWED BY THE A.O. (II) ASSESSEE HAD CLAIMED DEDUCTION OF RS. 3,75,48,727/- ON ACCOUNT OF AMORTIZATION VAL UE OF LEASE HOLD LAND WHICH WAS NOT ALLOWABLE AS ACCORDING TO HIM A.O HAD COMPLETED THE ASSESSMENT WITHOUT CONSIDERING THE PROVISIONS OF SE CTION 35D. (III) ASSESSEE HAD CLAIMED DEPRECIATION AT 15% INSTEAD OF 10% ON O FFICE EQUIPMENTS AND (IV) ASSESSEE HAD CLAIMED DEDUCTION OF RS. 14,74,33 6/- U/S. 35D WHICH ACCORDING TO LD. CIT WAS NOT ALLOWABLE AS ASSESSEE WAS IN THE BUSINESS OF PROVIDING SERVICES AND THAT THE EXPENSES WERE INCUR RED PRIOR TO 1.04.2009. HE ACCORDINGLY ISSUED A NOTICE DATED 16.03.2015 CAL LING UPON THE ASSESSEE TO SHOW CAUSE AS TO WHY APPROPRIATE ORDER U/S. 263 BE NOT PASSED AND IN RESPONSE TO WHICH ASSESSEE INTERALIA OBJECTED TO TH E INITIATION OF PROCEEDINGS U/S. 263 AND SUBMITTED THAT THE NOTICE WAS WITHOUT JURISDICTION. ON MERITS, ON THE ISSUE OF DISALLOWANCE OF DISALLOWANCE U/S. 1 4A IT WAS SUBMITTED THAT THE ISSUE WAS SUBJECT MATTER OF APPEAL BEFORE LD. C IT(A) AND WAS CONSIDERED ITA NO 1362/ AHD/2015 . A.Y. 2010-2 011 3 AND DECIDED BY HIM IN APPEAL AND THEREFORE LD. CIT DID NOT HAVE JURISDICTION IN TERMS OF CLAUSE C OF EXPLANATION BELOW SUB-SECTI ON (I) OF SECTION 263. WITH RESPECT TO THE AMORTIZED VALUE OF LEASE HOLD L AND, IT WAS SUBMITTED THAT THOUGH IN THE RETURN OF INCOME, THE DEDUCTION WAS C LAIMED AS AMORTIZATION BUT THE CLAIM REPRESENTS DEPRECIATION AND IT WAS AS SESSEES PRACTICE TO CLAIM 10% OF THE OPENING WDV PLUS ADDITIONS AND THE SAME HAS BEEN ALLOWED IN EARLIER YEARS AND THAT SECTION 35D HAD NO ROLE TO P LAY WITH RESPECT TO THE DEDUCTION. WITH RESPECT TO THE DEPRECIATION ON OFFI CE EQUIPMENTS THAT WAS CLAIMED AT 15%, IT WAS SUBMITTED THAT OFFICE EQUIPM ENTS WERE IN THE NATURE OF PLANT AND WAS COVERED WITHIN THE BLOCK OF ASSE T NAMELY MACHINERY AND PLANT AND THEREFORE ASSESSEE HAS RIGHTLY CLAIMED A ND HAD BEEN ALLOWED THE DEPRECIATION. WITH RESPECT TO THE DEDUCTION CLAIMED AND ALLOWED U/S. 35D, IT WAS SUBMITTED THAT THE PRELIMINARY EXPENSES WERE IN CURRED BEFORE THE COMMENCEMENT OF BUSINESS AND WERE DEDUCTIBLE UNDER CLAUSE 1 OF SECTION 35D (1) AND THE SAME WERE ALLOWABLE EVEN TO BUSINES S WHICH WERE NOT INDUSTRIAL UNDERTAKING OR UNITS. LD. CIT AFTER CONS IDERING THE SUBMISSIONS OF ASSESSEE AGREED WITH THE SUBMISSION OF ASSESSEE ONL Y WITH RESPECT TO THE DISALLOWANCE MADE U/S. 14A BUT ON THE OTHER 3 ISSUE S, THE SUBMISSIONS OF THE ASSESSEE WERE NOT FOUND ACCEPTABLE. HE ACCORDINGLY VIDE ORDER DATED 31 ST MARCH, 2015, HELD THE ORDER PASSED BY THE A.O DATED 28.03.2013 TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E AS ACCORDING TO HIM THE ASSESSEE WAS ALLOWED INADMISSIBLE DEDUCTIONS. HE AC CORDINGLY CANCELLED THE ORDER DATED 28.03.2013 FRAMED U/S. 143(3) OF THE AC T AND DIRECTED THE A.O TO MAKE FRESH ASSESSMENT OF THE TOTAL INCOME OF THE AS SESSEE. AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT, ASSESSEE IS NOW IN APP EAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS:- ITA NO 1362/ AHD/2015 . A.Y. 2010-2 011 4 1. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE IMPUGNED ORDER IS VOID AND DESERVES TO BE CANCELLED FOR THE REASON THAT IT HAS BEEN PASSED WITHOUT JURISDICTION. THE LEARNED CIT OUGHT TO HAVE APPRECIATED, INTER ALIA,: (A) THAT SINCE IT WAS THE ADMITTED POSITION THAT THE APPELLANT'S ENTIRE BUSINESS INCOME WAS EXEMPT U/S. 80-IAB AND SINCE ALL THE ISSUE SOUG HT TO BE RAISED VIDE HIS NOTICE U/S. 263 CONCERNED COMPUTATION OF BUSINESS INCO ME, EVEN IF IT WERE ASSUMED, FOR THE SAKE OF ARGUMENT ONLY, THAT THE ASSESSMENT ORDER FOR THE PRESENT ASSESSMEN T YEAR WAS ERRONEOUS, IT COULD NOT BE REGARD AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE AS DECISIONS ON THOSE ISSUES, EVEN IF THEY WERE ADVERS E TO THE APPELLANT, COULD ONLY RESULT INTO ENHANCEMENT OF ONLY SUCH BUSINESS INCOME OF TH E APPELLANT WHICH WAS FULLY EXEMPT U/S. 80-IAB; (B) THAT IT WAS NOT OPEN TO HIM TO ASSUME JURISDICT ION U/S. 263 UNLESS THE ASSESSMENT ORDER WAS BOTH ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE R EVENUE; (C) THAT FURTHER, AS ELABORATELY EXPLAINED IN THE A PPELLANTS WRITTEN SUBMISSION DATED 23.3.2015 ADDRESSED TO HIM, THE ASSESSMENT ORDER FO R THE PRESENT ASSESSMENT YEAR COULD NOT BE REGARDED AS ERRONEOUS IN RESPECT OF ANY OF T HE ISSUES THAT HE HAD SOUGHT TO RAISE VIDE HIS NOTICE U/S. 263 2. WITHOUT PREJUDICE TO THE FOREGOING GROUND NO. 1 , IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE IMPUGNED ORDER IS VOID AND DESERVES TO BE CANCELLED ALSO FOR THE REASON THAT VIDE HIS IMPUGNED ORDER, THE LEARNED CIT HAD CANCELLED THE ASSESSMENT AND DIRECTED THE LEARNED ASSESSING OFFICER TO MAKE FRESH ASSESSMENT OF THE APPELLANT'S TOTAL INCOME FOR THE PRESENT ASSESSMENT YEAR WHICH IT WAS NOT OPEN TO HIM TO ORDER, INTER ALIA, FOR THE FOLLO WING REASONS: (A) FOR THE REASON THAT, AS HE HAD HIMSELF NOTED IN THE IMPUGNED ORDER ITSEL F, THE ASSESSMENT ORDER FOR THE PRESENT ASSESSMENT YEAR HA D ALREADY BEEN THE SUBJECT MATTER OF APPEAL WHICH HAD BEEN DECIDED BY THE LEARNED CIT(A) -VI, AHMEDABAD, VIDE APPELLATE ORDER DATED 17.10.2014 PASSED IN APPEAL NO. CIT(A)- VI/ADDL./R.1/160/13/14; (B) FOR THE REASON THAT WHEN HIS NOTICE U/S. 263 HAD RA ISED ONLY FOUR SPECIFIC ISSUES [(1) DISALLOWANCE U/S. 14A READ WITH RULE 8D, (2) DEDUCT ION BY WAY OF AMORTIZATION OF LEASEHOLD LANDS, (3) RATE OF DEPRECIATION ON OFFICE EQUIPMENT AND (4) CLAIM FOR DEDUCTION U/S. 35D] OUT OF WHICH ONLY THREE HAD SURVIVED EVEN ON HIS OW N UNTENABLE STAND (HE ITA NO 1362/ AHD/2015 . A.Y. 2010-2 011 5 HAVING BEEN SATISFIED ABOUT HIS LACK OF JURISDICTIO N OVER THE FIRST ISSUE WHICH HAD BEEN DEALT WITH IN THE FIRST APPELLATE ORDER), IT CANNOT BE OPEN TO HIM TO ORDER FOR THE CANCELLATION OF THE ENTIRE ASSESSMENT AND TO DIRECT THE ASSESSING OFFICER TO MAKE ASSESSMENT OF THE APPELLANT'S TOTAL INCOME AFRESH; (C) FOR THE REASON THAT LAW WAS VERY WELL SETTLED THAT PROVISIONS STIPULATING LIMITATION FOR THE TIME WITHIN WHICH ASSESSMENT FOR A PARTICULAR A SSESSMENT YEAR MUST BE COMPLETED HAD THEIR OWN SANCTITY WHICH CANNOT BE VIOLATED IN THE MANNER HE HAD SOUGHT TO DO BY ORDERING CANCELLATION OF THE APPELLANT'S ASSESSMENT AND BY DIRECTING THE APPELLANT'S TOTAL INCOME TO BE COMPUTED AFRESH. 3. WITHOUT PREJUDICE TO THE FOREGOING GROUNDS NO. 1 AND 2, IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE IMPUGNED ORDER IS VOID AND DESERVES TO BE CANCELLED ALSO BECAUSE, AS ONLY A BARE READING THEREOF SHOWS, IT HAS BEEN P ASSED WITHOUT EVEN CONSIDERING THE APPELLANT'S VITAL WRITTEN SUBMISSIONS IN THEIR ENTIRETY. 4. WITHOUT PREJUDICE TO THE FOREGOING GROUNDS, IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LEARNED CIT HAS GROSSLY ERRED IN DIRECTING THE ASSESSING OFFICER TO MOVE AN APPLICATION U/S. 154 B EFORE THE LEARNED CIT(A) (WHO HAD ALREADY DECIDED THE APPELLANT'S APPEAL AGAINST THE ASSESSMENT ORDER FOR THE PRESENT ASSESSMENT YEAR) RAISING THE ISSUE OF QUANTUM OF DI SALLOWANCE U/S. 14A READ WITH RULE 8D. HE OUGHT TO HAVE APPRECIATED, INTER ALIA, THAT SECTION 263 DID NOT EMPOWER HIM TO ISSUE ANY SUCH DIRECTION WHICH WAS THEREFORE WITHOU T JURISDICTION AND DESERVED TO BE CANCELLED. 5. WITHOUT PREJUDICE TO THE FOREGOING GROUNDS NO. 1, 2 AND 3, IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LEAR NED CIT HAS GROSSLY ERRED IN FAILING TO APPRECIATE THAT AS EXPLAINED IN THE APPELLANT'S WRI TTEN SUBMISSION, IN TRUTH AND SUBSTANCE, THE APPELLANT'S CLAIM DESCRIBED AS 'AMORTIZED VALUE OF LEASEHOLD LAND' WAS FOR DEPRECIATION IN RESPECT OF LEASEHOLD LANDS AND THAT IT HAD NOTHING TO DO WHATSOEVER WITH SECTION 35D AS ASSUMED BY HIM AND FURTHER, THAT SINCE LEASEHOLD LAND WAS AN INTANGIBLE ASSET, IT WAS ELIGIBLE TO DEDUCTION FOR DEPRECIATION @ 25% AS AGAINST @10% CLAIMED BY THE APPELLANT AND THAT IT COULD JUST NOT BE OPEN TO HIM TO REGARD THE ASSESSMENT ORDER AS EITHER ERRONEOUS OR PREJUDICIAL TO THE INTERESTS OF THE REVENUE INASMUCH AS IT GRANTED THE APPELLANT'S CLAIM OF DED UCTION @10%. ITA NO 1362/ AHD/2015 . A.Y. 2010-2 011 6 6. WITHOUT PREJUDICE TO THE FOREGOING GROUNDS NO. 1, 2 AND 3, IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LEAR NED CIT HAS GROSSLY ERRED IN HOLDING THAT THE LEARNED ASSESSING OFFICER'S ACTION OF GRAN TING THE APPELLANT'S CLAIM FOR DEPRECIATION ON OFFICE EQUIPMENT @15% APPLICABLE TO MACHINERY AND PLANT IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE R EVENUE ON THE GROUND THAT OFFICE EQUIPMENT COULD NOT BE REGARDED AS 'MACHINERY AND P LANT' AND THAT IT WAS COVERED BY THE BLOCK OF ASSETS 'FURNITURE AND FITTINGS' ELIGIB LE TO DEPRECIATION @ 10%. HE OUGHT TO HAVE APPRECIATED THAT FOR THE REASONS ELABORATELY E XPLAINED IN THE APPELLANT'S WRITTEN SUBMISSIONS TO HIM, IT WAS ONLY AXIOMATIC THAT OFFICE EQUIPMENT FELL IN THE BLOCK OF ASSETS 'MACHINERY AND PLANT' AND THAT BY NO STRETCH OF THE IMAGINATION, IT COULD BE REGARDED AS COVERED BY THE BLOCK OF ASSETS 'FURNITURE AND FITTI NGS'. 7. WITHOUT PREJUDICE TO THE FOREGOING GROUNDS NO. 1 , 2 AND 3, IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LEAR NED CIT HAS GROSSLY ERRED IN HOLDING THAT THE ACTION OF THE LEARNED ASSESSING OFFICER OF GRANTING THE APPELLANT'S CLAIM OF DEDUCTION OF RS. 14,74,336 U/S. 35D WAS ERRONEOUS A ND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. HE OUGHT TO HAVE APPRECIATED THAT FOR THE REASONS ELABORATELY EXPLAINED IN THE APPELLANT'S WRITTEN SUBMISSIONS TO HIM, THE APPELLA NT'S CLAIM WAS ABSOLUTELY LEGITIMATE AND IMPECCABLE AND HAD BEEN RIGHTLY GRANTED BY THE ASSESSING OFFICER. 4. BEFORE US, LD. A.R. SUBMITTED THAT THOUGH THE ASSES SEE HAS RAISED VARIOUS GROUNDS BUT THE ONLY EFFECTIVE GROUND WHICH NEEDS T O BE ADJUDICATED IS GROUND NO. 3 WITH RESPECT TO CHALLENGING THE REVISI ONARY ORDER PASSED BY LD. CIT U/S. 263 OF THE ACT. 5. BEFORE US, LD. A.R. SUBMITTED THAT IN THE PRESENT C ASE, THE PRE REQUISITE CONDITIONS SPECIFIED U/S. 263 OF THE ACT WERE NOT S ATISFIED AND THEREFORE THE PROCEEDINGS U/S. 263 LACKS JURISDICTION AND ARE BAD IN LAW. HE SUBMITTED THAT LD. CIT CAN REVISE AN ORDER PASSED BY THE A.O ONLY ON THE SATISFACTION OF TWIN CONDITIONS NAMELY (I) THE ORDER IS ERRONEOUS A ND (II) IT IS PREJUDICIAL TO ITA NO 1362/ AHD/2015 . A.Y. 2010-2 011 7 THE INTEREST OF REVENUE. HE FURTHER SUBMITTED THAT THE ERROR ENVISAGED TO SECTION 263 IS NOT ONE WHICH DEPENDS ON POSSIBILITY OR GUESSWORK BUT IT SHOULD HAVE AN ACTUAL ERROR EITHER OF FACTS OR OF L AW AND FURTHER THE ORDER OF A.O CANNOT BE CONSIDERED AS ERRONEOUS ORDER PREJUDI CIAL TO THE INTEREST OF REVENUE UNLESS THE VIEW TAKEN BY THE A.O IS UNSUSTA INABLE IN LAW AND FOR THE AFORESAID PROPOSITION HE RELIED ON THE DECISION OF HONBLE APEX COURT IN THE CASE OF MALABAR INDUSTRIES CO. VS. CIT (2000) 2 43 ITR 83 (SC). 6. ON THE MERITS, ON THE ISSUE WITH RESPECT TO AMORTIZ ATION OF LEASE HOLD LAND, CLAIM OF DEPRECIATION AND DEDUCTION U/S. 35D, HE SU BMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A.O HAD RAISED SP ECIFIC QUERIES ON THE AFORESAID THREE ISSUES AND IN RESPONSE TO THE QUERY RAISED BY THE A.O., ASSESSEE HAD FURNISHED THE REPLY. HE SUBMITTED THAT VIDE LETTER DATED 21.03.2013 HAD SUBMITTED THE JUSTIFICATION WITH RES PECT THE CLAIM OF DEPRECIATION OF LEASE HOLD LAND DEVELOPMENT ALONG W ITH OTHER DETAILS. WITH RESPECT TO THE CLAIM OF DEDUCTION MADE U/S. 35D, AS SESSEE VIDE LETTER DATED 08.01.2013 HAD FILED THE NECESSARY DETAILS ALONG WI TH THE CHART SHOWING DETAILS OF CLAIM MADE IN EACH OF THE PRECEDING YEAR ALONG WITH THE ORDER IN WHICH THE INITIAL CLAIM WAS MADE. WITH RESPECT TO T HE CLAIM OF DEPRECIATION, ASSESSEE VIDE LETTER DATED 08.11.2012 HAD FILED THE CHART SHOWING THE DETAILS OF FIXED ASSETS ACQUIRED DURING THE YEAR ALONG WITH THE DEPRECIATION CLAIMED THEREON. LD. A.R. POINTED TO THE COPIES OF THE LETT ERS OF THE ASSESSEE WHICH WERE ADDRESSED TO THE A.O AND THE COPIES OF WHICH W ERE PLACED AT PAGE 37 TO 63 OF THE PAPER BOOK. THE LD. A.R. THEREFORE SUBMIT TED THAT AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE AND ON BEING SATISFIED WITH THE REPLIES GIVEN BY THE ASSESSEE NO ADDITION WAS MADE BY THE A.O. HE TH EREFORE SUBMITTED THAT WHEN THE A.O HAS TAKEN ONE VIEW WITH WHICH LD. CIT DOES NOT AGREE, THE ITA NO 1362/ AHD/2015 . A.Y. 2010-2 011 8 ORDER OF A.O CANNOT BE TREATED AS ERRONEOUS ORDER P RE-JUDICIAL TO THE INTEREST OF REVENUE UNLESS THE VIEW TAKEN BY THE A.O IS UNSU STAINABLE IN LAW. WITH RESPECT TO THE AMORTIZATION OF LEASE HOLD LAND LD. A.R. FURTHER SUBMITTED THAT ASSESSEE HAD NOT CLAIMED THE DEDUCTION U/S. 35D BUT HAD AMORTIZED THE COST OF LEASE HOLD LANDS OVER A PERIOD OF 10 YEARS AND I N SUPPORT OF WHICH HE ALSO POINTED TO THE COPY OF THE COMPUTATION OF INCOME WH ICH IS PLACED AT PAGE 27 & 28 OF THE PAPER BOOK. HE THEREFORE SUBMITTED THAT LD CIT HAS WRONGLY ASSUMED THAT ASSESSEE HAS CLAIMED DEDUCTION U/S. 35 D ON AMORTIZATION OF LAND. WITH RESPECT TO THE CLAIM OF DEPRECIATION, LD A.R. POINTED TO THE BREAK- UP OF THE ADDITION TO OFFICE EQUIPMENTS WHICH IS PL ACED AT PAGE 31 & 32 OF THE PAPER BOOK. HE POINTED OUT THAT SIMILAR ADDITIO N TO ASSETS WERE MADE IN EARLIER YEARS AND THE CLAIM OF DEPRECIATION AT 15% WAS ALLOWED BY THE A.O IN SCRUTINY ASSESSMENT MEANING THEREBY THAT IT WAS ACC EPTED BY THE REVENUE DEPARTMENT THAT ASSESSEE WAS RIGHT IN CLAIMING THE DEPRECIATION AT 15%. HE THEREFORE SUBMITTED THAT IN THE ABSENCE OF ANY CHAN GE IN FACTS, A DIFFERENT VIEW COULD NOT BE TAKEN BY LD. CIT. WITH RESPECT TO THE CLAIM OF DEDUCTION U/S. 35D, HE SUBMITTED THAT THE ISSUE OF SECTION 35 D WAS EXAMINED IN THE 1 ST YEAR WHEN THE EXPENSES WERE INCURRED AND AFTER THE EXAMINATION OF THE CLAIM, THE DEDUCTION WAS ALLOWED IN THE YEAR OF INC URRING OF EXPENDITURE AND SUBSEQUENT YEARS. HE THEREFORE SUBMITTED THAT ASSE SSEE CANNOT BE DENIED THE CLAIM OF DEDUCTION UNDER 35D MORE SO WHEN THE C LAIM HAS BEEN ALLOWED AFTER SCRUTINY ASSESSMENTS IN THE PAST AND WITHOUT DISTURBING EARLIER YEARS DEDUCTIONS AND FOR THIS PROPOSITION HE RELIED ON TH E DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF GUJARAT NARMADA V ALLEY CORPORATION VS. D.C.I.T. (2014) 369 ITR 763 (GUJ.). HE FURTHER SUBM ITTED THAT WHERE TWO VIEWS ARE POSSIBLE AND THE A.O HAS TAKEN ONE VIEW O N THE BASIS OF EVIDENCE PRODUCED WITH WHICH THE COMMISSIONER DOES NOT AGREE , THEN IN THAT CASE THE ITA NO 1362/ AHD/2015 . A.Y. 2010-2 011 9 ORDER PASSED BY A.O CANNOT BE TREATED AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE, UNLESS THE VIEW TAKEN BY THE A .O IS UNSUSTAINABLE IN LAW AND FOR THIS PROPOSITION HE RELIED ON THE DECISION OF HONBLE APEX COURT OF MAX INDIA CITED IN 295 ITR 282 (SC). HE FURTHER SU BMITTED THAT EVEN OTHERWISE THE ORDER OF A.O CANNOT BE CONSIDERED TO BE PRE-JUDICIAL TO THE INTEREST OF THE REVENUE BECAUSE THE ENTIRE INCOME U NDER THE HEAD PROFITS AND GAINS OF BUSINESS AND PROFESSION IS EXEMPT U/S . 80IB AND EVEN ASSUMING THAT IF THERE ARE CERTAIN DISALLOWANCES, T HE DISALLOWANCES WOULD RESULT IN INCREASING THE INCOME UNDER THAT HEAD WHI CH WOULD CORRESPONDINGLY GO THE INCREASE THE QUANTUM OF DEDU CTION U/S. 80IB AND IN THAT SENSE ALSO, THE ORDER OF A.O CANNOT BE CONSIDE RED TO BE PREJUDICIAL TO THE INTEREST OF REVENUE. HE THEREFORE SUBMITTED THAT TH E ORDER OF LD. CIT DESERVES TO BE QUASHED BOTH ON MERITS AND LEGALLY. 7. THE LD. D.R. ON THE OTHER HAND SUPPORTED THE ORDER OF LD. CIT AND FURTHER SUBMITTED THAT WHEN A.O HAS ALLOWED THE CLAIM OF TH E ASSESSEE WITHOUT ANY DISCUSSION, THE ORDER PASSED BY THE A.O WAS ERRONEO US AND PREJUDICIAL INTEREST OF REVENUE. WITH RESPECT TO THE CLAIM OF A MORTIZATION OF LEASE HOLD LAND THAT WAS ALLOWED BY A.O, HE SUBMITTED THAT A.O HAD NOT EXAMINED THE CLAIM OF THE ASSESSEE IN THE LIGHT OF PROVISIONS OF SECTION 35D(2) AS THE SECTION DOES NOT PROVIDE FOR AMORTIZATION OF LAND A ND THUS IT WAS WRONG APPLICATION OF LAW AT THE END OF A.O. WITH RESPECT TO CLAIM OF DEPRECIATION ON OFFICE EQUIPMENT AT 15%,HE SUBMITTED THAT THE OF FICE EQUIPMENT CANNOT BE CONSIDERED TO BE PLANT AND MACHINERY AND THEREFO RE ASSESSEE WAS NOT ELIGIBLE TO CLAIM THE DEPRECIATION AT 15% AND THERE FORE THE CLAIM MADE BY THE ASSESSEE WAS NOT AS PER LAW. WITH RESPECT TO THE CL AIM OF DEDUCTION U/S. 35D, HE SUBMITTED THAT ASSESSEE WAS NOT AN INDUSTRI AL UNDERTAKING AND ITA NO 1362/ AHD/2015 . A.Y. 2010-2 011 10 THEREFORE AS ENVISAGED IN SECTION 35D OF THE ACT AS IT HAD NOT STARTED ITS BUSINESS ON OR AFTER 01,04,2009 AND THAT THE SECTIO N HAS BEEN AMENDED FROM THAT DATE AND THE AMENDED SECTION THEREFORE DOES NO T APPLY TO THE ASSESSEE. WITH RESPECT TO THE A.RS CONTENTION THAT EVEN IF T HE DISALLOWANCES WERE MADE THE SAME WOULD GO TO INCREASE THE PROFITS ELIG IBLE FOR DEDUCTION HE SUBMITTED THAT THIS ARGUMENT OF LD. A.R. CANNOT BE UPHELD AND FOR THIS HE RELIED ON THE DECISION OF AHMEDABAD TRIBUNAL IN THE CASE OF DCIT VS. RAMESHBHAI PRAJAPATI (2013) 29 TAXMAN.COM 64 (AHD T RIBUNAL). HE ALSO PLACED RELIANCE ON THE DECISIONS IN THE CASE OF CIT VS. INFOSIS TECHNOLOGIES LTD. 17 TAXMAN.COM 203 (KARNATAKA), CIT VS. JAWAHAR BHATTACHARJEE 24 TAXMAN.COM 215 (GUWATI), MALABAR INDUSTRIAL COMPANY LTD. VS. CIT 109 TAXMAN.COM 109 TAXMAN.COM66 (SC), CIT VS. AHSOK LOG ANI 11 TAXMAN.COM 208 (DEL) AND GEE VEE ENTERPRISES VS. AD DITIONAL CIT 99 ITR 375 (DEL). HE THUS SUPPORTED THE ORDER OF LD. CIT(A ). 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS ABOUT THE INVOKING THE PROVISIONS OF SECTION 263 BY LD. CIT. 9. S. 263(1) OF THE ACT, THE POWERS UNDER WHICH LD. CI T HAS ASSUMED POWER FOR REVISION READS AS UNDER: THE COMMISSIONER MAY CALL FOR AND EXAMINE THE RECO RD OF ANY PROCEEDING UNDER THIS ACT, AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE ITO IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, HE MAY, AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTE R MAKING OR CAUSING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY, PASS SUCH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY, INCLUDING AN ORD ER ENHANCING OR MODIFYING THE ASSESSMENT, OR CANCELLING THE ASSESSMENT AND DIRECT ING A FRESH ASSESSMENT. ITA NO 1362/ AHD/2015 . A.Y. 2010-2 011 11 10. THE READING OF THE ABOVE PROVISIONS MAKES IT VERY C LEAR THAT THE POWER OF SUO MOTU REVISION U/S 263(1) IS IN THE NATURE OF SU PERVISORY JURISDICTION AND THE SAME CAN BE EXERCISED ONLY IF THE CIRCUMSTANCES SPECIFIED THEREIN EXIST. TWO CIRCUMSTANCES MUST EXIST TO ENABLE THE COMMISSI ONER TO EXERCISE POWER OF REVISION U/S 263, NAMELY (I) THE ORDER IS ERRONE OUS (II) BY VIRTUE OF BEING ERRONEOUS PREJUDICE HAS BEEN CAUSED TO THE INTEREST S OF THE REVENUE. 11. INTERPRETATION OF SECTION 263 HAS BEEN SUBJECT MATT ER OF CONSIDERATION IN VARIOUS DECISIONS INCLUDING THE DECISION IN THE CAS E OF MALABAR INDUSTRIAL CO. LTD. VS. CIT (2000) 243 ITR 83 WHERE THE HONBL E APEX COURT WHILE INTERPRETING SECTION 263 AT PARA 7 HAS OBSERVED AS UNDER:- 7. THERE CAN BE NO DOUBT THAT THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASS ESSING OFFICER, IT IS ONLY WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTR ACTED. AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SA TISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. IN THE SAME CATEGORY FALL OR DERS PASSED WITHOUT APPLYING THE PRINCIPLES OF NATURAL JUSTICE OR WITHOUT APPLIC ATION OF MIND . 12. IN THE CASE OF CIT VS. GABRIEL INDIA LTD. (1999) 2 03 ITR 108, THE HONBLE HIGH COURT WHILE INTERPRETING SECTION 263 HAS HELD THAT AN ORDER PASSED BY THE ASSESSING OFFICER CANNOT BE TERMED AS ERRONEOUS UNLESS IT IS NOT IN ACCORDANCE WITH LAW. IT FURTHER HELD THAT SECTION D OES NOT VISUALIZE THE CASE OF SUBSTITUTION OF THE JUDGMENT OF THE COMMISSIONER FOR THAT OF THE INCOME TAX OFFICER AND PASS THE ORDER, UNLESS THE DECISION IS HELD TO BE ERRONEOUS. IT FURTHER HELD THAT INCOME TAX OFFICER HAVING EXERCIS ED THE QUASI JUDICIAL POWER VESTED IN HIM IN ACCORDANCE WITH LAW AND HAVI NG ARRIVED AT A ITA NO 1362/ AHD/2015 . A.Y. 2010-2 011 12 CONCLUSION THAT CONCLUSION CANNOT BE TERMED TO BE E RRONEOUS SIMPLY BECAUSE THE COMMISSIONER DOES NOT FEEL SATISFIED WITH THE C ONCLUSION. 13. SEEN IN THE LIGHT OF THE REQUIREMENT OF PROVISIONS OF SECTION 263 AND THE DECISIONS CITED HEREINABOVE, IN THE PRESENT CASE, I T IS SEEN THAT SECTION 263 HAS BEEN INVOKED ON 3 GROUNDS NAMELY THE CLAIM OF D EDUCTION OF RS. 3,75,48,727/- ON ACCOUNT OF AMORTIZED VALUE OF LEAS E HOLD LAND WHICH ACCORDING TO CIT WAS NOT ALLOWABLE, THE CLAIM OF DE PRECIATION AT 15% ON OFFICE EQUIPMENT AND THE DEDUCTION OF RS. 14,74,336 /- CLAIMED U/S. 35D OF THE ACT. ON THE AFORESAID 3 ISSUES, IT IS SEEN THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A.O HAD RAISED QUERY ON ALL THE AFORESAID 3 ISSUES AND THE SAME WERE ALSO REPLIED BY THE ASSESSEE VIDE LETTERS DATED 21.03.2013, 08.01.2013, 08.11.2012, THE COPIES OF W HICH ARE PLACED IN THE PAPER BOOK AT PAGE 37 TO 79 OF THE PAPER BOOK. THUS IT IS SEEN THAT ON THE AFORESAID 3 GROUNDS, THE A.O HAD RAISED THE QUERY, THE SAME WERE REPLIED BY THE ASSESSEE AND IT APPEARS THAT THE REPLY OF THE A SSESSEE WAS FOUND ACCEPTABLE TO THE A.O BECAUSE NO ADDITION ON THESE AFORESAID 3 ISSUES WERE MADE BY THE A.O IN THE ASSESSMENT ORDER. 14. WE FIND THAT THE HONBLE APEX COURT IN THE CASE OF CIT VS. MAX INDIA LTD. (2007) 295 ITR 282 (SC) HAS HELD THAT WHERE TWO VIE WS ARE POSSIBLE AND ITO HAS TAKEN ONE VIEW WITH WHICH CIT DOES NOT AGRE E, ORDER OF THE A.O CANNOT BE CONSIDERED AS ERRONEOUS ORDER PREJUDICIAL TO THE INTEREST OF REVENUE UNLESS THE VIEW TAKEN BY THE A.O IS UNSUSTA INABLE IN LAW. WE FURTHER FIND THAT HONBLE BOMBAY HIGH COURT IN THE CASE OF IDEA CELLULAR LTD. VS. DCIT REPORTED IN (2008) 301 ITR 407 (BOM) HAS HELD THAT IF A QUERY IS RAISED DURING THE ASSESSMENT PROCEEDINGS AND RES PONDED TO BY THE ITA NO 1362/ AHD/2015 . A.Y. 2010-2 011 13 ASSESSEE, THE MERE FACT THAT IT IS NOT DEALT WITH I N THE ASSESSMENT ORDER WOULD NOT LEAD TO CONCLUSION THAT NO MIND HAS BEEN APPLIE D TO IT. 15. ON THE MERITS ON THE ISSUE OF AMORTIZATION OF COST OF LEASE HOLD LAND, WE FIND ON PERUSING THE COMPUTATION OF TOTAL INCOME, WHICH IS PLACED AT PAGE 27 TO 30 OF THE PAPER BOOK, THAT THE CLAIM OF ASSESSEE OF AMORTIZED VALUE OF LEASE HOLD LAND DEVELOPMENT WAS NOT U/S. 35D WHEREAS LD. CIT IN THE ORDER HAS HELD THAT THE CLAIM OF ASSESSEE WAS U/S. 35D AND TH EREFORE IN SUCH A SITUATION, A.OS ORDER ON THAT ISSUE CANNOT BE CONS IDERED TO BE ERRONEOUS MORE SO BECAUSE THERE WAS NO SUCH CLAIM U/S. 35D BY ASSESSEE. AS FAR AS THE CLAIM OF DEPRECIATION ON OFFICE EQUIPMENTS @ 15% IS CONCERNED, IT IS ASSESSEES SUBMISSION THAT THE CLAIM OF DEPRECIATIO N AT 15% ON THE OFFICE EQUIPMENT WHICH COMPRISES OF SIMILAR ITEMS AS ARE I N THE PRESENT YEAR, HAS BEEN ALLOWED BY THE A.O IN EARLIER YEARS IN THE ASS ESSMENT ORDER PASSED U/S. 143(3) AND THOSE ORDERS HAVE ATTAINED FINALITY. AS FAR AS THE CLAIM OF DEDUCTION U/S. 35D IS CONCERNED IT IS NOT THE CASE OF THE REVENUE THAT THE EXPENSES HAVE BEEN INCURRED IN THE YEAR UNDER CONSI DERATION BUT ON THE CONTRARY IT IS ASSESSEES SUBMISSION THAT THE SAME HAVE BEEN INCURRED IN EARLIER YEARS AND THE DEDUCTION U/S. 35D HAS ALSO B EEN ALLOWED IN EARLIER YEARS. IT IS ALSO NOT A CASE OF THE REVENUE THAT ON THE ISSUE OF DEDUCTION UNDER 35D, DEDUCTION FOR EARLIER YEARS HAS BEEN WIT HDRAWN BY REVENUE. IN SUCH A SITUATION, WITHOUT DISTURBING THE EARLIER YE ARS, IT CANNOT BE SAID THAT THE CLAIM OF DEDUCTION U/S. 35D WAS NOT ALLOWABLE T O THE ASSESSEE. THE AFORESAID SUBMISSIONS OF LD. A.R HAS ALSO NOT BEEN CONTROVERTED BY REVENUE. FURTHER, BEFORE US REVENUE HAS NOT BROUGHT ANY MATE RIAL ON RECORD TO DEMONSTRATE THAT THE VIEW TAKEN BY THE A.O WAS IMPE RMISSIBLE VIEW AND WAS CONTRARY TO LAW OR WAS UPON ERRONEOUS APPLICATION O F LEGAL PRINCIPLES ITA NO 1362/ AHD/2015 . A.Y. 2010-2 011 14 INITIATING THE EXERCISING OF REVISIONARY POWERS U/S . 263. FURTHER THE CASE LAWS WAS ARE RELIED UPON BY THE REVENUE ARE DISTINGUISHA BLE ON FACTS AND THEREFORE CANNOT BE APPLIED TO THE FACTS OF THE PRE SENT CASE. IN VIEW OF THE AFORESAID FACTS, WE ARE OF THE VIEW THAT LD.CIT WAS NOT JUSTIFIED IN RESORTING TO REVISIONARY POWERS U/S. 263 OF THE ACT. WE THERE FORE SET ASIDE THE ORDER OF LD. CIT SETTING ASIDE THE ASSESSMENT ORDER PASSED U /S. 143(3) OF THE ACT. THUS THE GROUNDS OF ASSESSEE ARE ALLOWED. 16. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 29 - 10 - 2015. SD/- SD/- (S.S. GODARA) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT ,AHMEDABAD