Metro Diary Limited, V. C.I.T Kolkata - III,

ITA 1655/KOL/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4436 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 02-08-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 30-05-2013
• Court: TRIBUNAL
• Assessee Lawyers: SUSHMITA BOSE; BIKASH CHANDRA
• Keywords: Capital asset; Depreciation; Opportunity of being heard; Assessment record
• Section: 143(3); 142(1); 32; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO.1655/KOL/2013 ASSESSMENT YEAR 2008-09 & ITA NO.729/KOL/2014 ASSESSMENT YEARS:2009-10 METRO DAIRY LTD. 21, GOPAL MUKHERJEE ROAD, KOLKATA-700 002 [ PAN NO.AABCM 8352 K ] / V/S . COMMISSIONER OF INCOME TAX-III, KOLKATA, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 /APPELLANT .. /RESPONDENT /BY ASSESSEE SMT. SUSHMITA BOSE, AR & SHRI BIKASH CHANDRA, AR /BY REVENUE SHRI VIJAY SHANKAR, CIT-DR /DATE OF HEARING 02-08-2016 /DATE OF PRONOUNCEMENT 09-09-2016 /O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- BOTH APPEALS HAVE BEEN FILED BY THE ASSESSEE RELATI NG TO ASSESSMENT YEARS (AY) 2008-09 & 2009-10 AGAINST THE ORDER PASSED BY COMMISSIONER OF INCOME TAX- III, KOLKATA (CIT FOR SHORT) UNDER THE PROVISION OF SEC. 263 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE NO . CIT-III/DC(HQ)-3/KOL/263/2012- 13/8859 DATED 25.03.2013 AND NO. CIT-III/DC(HQ)-3/K OL/279/88/2013-14/7087 DATED 25.03.2014. ASSESSMENTS WERE FRAMED BY DCIT,CIRCLE- 7, KOLKATA U/S 143(3) VIDE HIS ORDERS DATED 29.11.2010 & 19.12.2011 FOR ASSESSMENT YEARS 2008-09 AND 2009-10 RESPECTIVELY. ITA NO.1655/KOL/2013 & 729/KOL/2014 A .YS. 08-09 & 09-10 METRO DAIRY LTD. VS. CIT-III, KOL. PAGE 2 2. THESE APPEALS ARE HEARD TOGETHER AND DEEM IT APP ROPRIATE TO DISPOSE THEM BY WAY OF THIS COMMON ORDER. SMT.SUSHMITA BOSE AND SHRI BIKASH CHANDRA LD. ADVOC ATES APPEARED ON BEHALF OF ASSESSEE AND SHRI VIJAY SHANKAR, LD. DR REPRESENTED ON BEHALF OF REVENUE. FIRST WE TAKE UP ITA NO.1655/KOL/2013 FOR A.Y 08-09 . 3. IN THIS APPEAL VARIOUS GROUNDS HAVE BEEN RAISED OUT OF WHICH GROUND NO.8 IS OF GENERAL IN NATURE AND DOES NOT REQUIRE SEPARATE ADJ UDICATION. THE OTHER GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER:- 1. FOR THAT THE ORDER MADE BY THE LEARNED COMMISSI ONER OF INCOME TAX - ILL, KOLKATA, UNDER SECTION 263 OF THE INCOME TAX ACT, 1 961 (THE 'ACT') IS ILLEGAL, INVALID, NOT SUSTAINABLE IN LAW AND LIABLE TO STRUC K DOWN. 2. FOR THAT THE LEARNED COMMISSIONER OF INCOME TAX, ERRED IN LAW IN HOLDING THAT THE ASSESSMENT ORDER UNDER SECTION 143(3) IS E RRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE IN RESPECT OF DEPRECIAT ION ALLOWABLE UNDER THE PROVISIONS OF THE ACT, WITHOUT APPRECIATING THAT TH ERE WAS NO ERROR IN SUCH CALCULATION. 3. FOR THAT THE LEARNED COMMISSIONER OF INCOME TAX WAS NOT JUSTIFIED IN SETTING ASIDE THE ORDER OF THE ASSESSING OFFICER PASSED U/S 143(3) OF THE ACT SINCE THE CLAIM OF DEPRECIATION HAD BEEN COMPUTED IN ACCORDAN CE WITH SECTION 32 OF THE ACT. 4 FOR THAT THE LEARNED COMMISSIONER OF INCOME TAX WAS NOT JUSTIFIED IN SETTING ASIDE THE IMPUGNED ASSESSMENT ORDER ON A MERE PRESU MPTION THAT THE WRITTEN DOWN VALUE OF ASSETS OF THE APPELLANT (WHICH HAS BE EN DULY ACCEPTED BY THE REVENUE OVER THE YEARS) WAS ARRIVED AFTER NON-ADJUS TMENT OF GRANTS. 5. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED COMM ISSIONER OF INCOME TAX WAS NOT JUSTIFIED IN ASSUMING JURISDICTION U/S 263 OF THE ACT ON THE ASSESSMENT ORDER FOR THE AY 2008-09, IN RESPECT OF AN ADJUSTME NT RELATING TO AY 2002-03. 6. FOR THAT THE LEARNED COMMISSIONER OF INCOME TAX WAS NOT JUSTIFIED IN DIRECTING THE ASSESSING OFFICER TO RE-EXAMINE THE I SSUE OF CREDIT OF RS. 29,83,023/-. 7. FOR THAT THE ORDER PASSED BY THE LEARNED COMMISS IONER OF INCOME TAX U/S 263 OF THE ACT IS AGAINST THE SETTLED PRINCIPLE OF LAW THAT AN ORDER OF ASSESSING OFFICER SHOULD BE BOTH ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE, AND SUCH TESTS BEING NOT SATISFIED IN THE INSTANT C ASE, THE ORDER U/S 263 IS LIABLE TO BE QUASHED. ITA NO.1655/KOL/2013 & 729/KOL/2014 A .YS. 08-09 & 09-10 METRO DAIRY LTD. VS. CIT-III, KOL. PAGE 3 4. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IN THE PRESENT CASE IS A LIMITED COMPANY AND ENGAGED IN THE MANUFACTURING BUSINESS OF DAIRY PRODUCTS AND SUPPLY OF FRESH MILK. THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION HAS F ILED ITS INCOME TAX RETURN ON 27-09- 2008 DECLARING TOTAL INCOME OF RS.1,93,61,560/-. TH EREAFTER THE CASE WAS SELECTED FOR SCRUTINY THROUGH THE CASS MODULE AND ACCORDINGLY NO TICES U/S 143(2) R.W.S 142(1) OF THE ACT WAS ISSUED. THE ASSESSMENT WAS FRAMED U/S 1 43(3) OF THE ACT AFTER MAKING CERTAIN ADDITIONS / DISALLOWANCES ON DATED 29-11-20 10 AT AN INCOME OF RS. 2,03,87,900/-. SUBSEQUENTLY THE LEARNED CIT UNDER S ECTION 263 OF THE ACT ISSUED NOTICE VIDE LETTER DATED 11-03-2013 BY CONSIDERING THE ORDER OF THE AO AS ERRONEOUS IN SO FAR PREJUDICIAL TO THE INTEREST OF REVENUE ON TH E FOLLOWING COUNTS. I. IT WAS OBSERVED FROM THE ASSESSMENT RECORDS THAT TH E ASSESSEE HAS SHOWN DEFERRED INCOME FOR RS.73,34,650/- IN THE FINANCIAL STATEMENT IN RELATION TO THE GRANT RECEIVED FROM NDDB ON THE CAPITAL ASSETS. THE ASSESSEE HAS ADJUSTED THE AMOUNT OF GRANT SHOWN AS DEFERRED INCO ME IN THE FINANCIAL STATEMENTS WITHOUT MAKING ANY CORRESPONDING EFFECT IN COMPUTATION OF INCOME WITH REGARD TO THE AMOUNT OF DEPRECIATION CL AIMED IN THE RETURN OF INCOME UNDER THE PROVISIONS OF INCOME TAX ACT. II. IT WAS OBSERVED FROM THE ASSESSMENT RECORDS THAT TH E ASSESSEE HAS CREDITED THE DEPRECIATION ACCOUNT BY AN AMOUNT OF RS. 29,83, 023/- WHICH WAS SHOWN IN THE BALANCE SHEET. HOWEVER THE SAME AMOUNT WAS N OT ADJUSTED IN THE DEPRECIATION ACCOUNT DEBITED IN THE PROFIT & LOSS A CCOUNT. IN RESPONSE TO THE NOTICE THE ASSESSEE SUBMITTED TH AT THE DEPRECIATION OF RS.2,68,76,124/- WAS CLAIMED IN THE PROFIT & LOSS A CCOUNT BOOKS AS PER THE COMPANIES ACT WHICH WAS DULY ADDED BACK IN THE COMPUTATION OF INCOME AND DEPRECIATION OF RS.1,84,61,661/- AS PER THE INCOME TAX ACT WAS CLAI MED AS DEDUCTION IN THE COMPUTATION OF INCOME. THE DEPRECIATION UNDER THE I NCOME TAX ACT WAS CALCULATED ON THE WRITTEN DOWN VALUE OF ASSETS AS APPEARING IN TH E IMMEDIATE PRECEDING PREVIOUS YEAR. THE ASSESSEE ALSO EXPLAINED THAT SUCH A WRITT EN DOWN VALUE WAS ARRIVED AT AFTER REDUCING THE AMOUNT OF GRANT RECEIVED FROM THE VALU E OF THE ASSETS. THE ASSESSEE ITA NO.1655/KOL/2013 & 729/KOL/2014 A .YS. 08-09 & 09-10 METRO DAIRY LTD. VS. CIT-III, KOL. PAGE 4 RECEIVED THE LAST GRANT IN RELATION TO THE CAPITAL ASSETS IN THE AY 2002-03 AND THE SAME WAS ADJUSTED WITH THE VALUE OF THE CAPITAL ASSETS S O AS TO ARRIVE AT THE WDV OF THE BLOCK OF ASSETS FOR THE PURPOSE OF CHARGING THE DEP RECIATION. FOR THE AMOUNT OF RS. 29,83,023/- CREDITED IN THE D EPRECIATION ACCOUNT, THE ASSESSEE SUBMITTED THAT THIS RELATES TO THE ACCUMULATED DEPR ECIATION ON THE ASSETS DISPOSED DURING THE YEAR. THIS AMOUNT WAS ADJUSTED IN THE FI NANCIAL ACCOUNT AND IT HAS NO IMPACT ON THE AMOUNT OF DEPRECIATION AS PER INCOME TAX ACT. THE SALE PROCEEDS OF DISPOSED ASSETS WERE DULY ADJUSTED WITH THE BALANCE OF WRITTEN DOWN VALUE OF THE RELEVANT BLOCK OF ASSETS. HOWEVER, THE LD. CIT DISREGARDED THE PLEA OF THE AS SESSEE WITH REGARD TO THE FIRST DISPUTE OF ADJUSTMENT OF GRANT BY HOLDING THAT THE AO HAS NOT EXAMINED THE ISSUE IN DEPTH SO AS TO VERIFY WHETHER THE WRITTEN DOWN VALU E OF THE BLOCK OF ASSETS IS NET OF GRANT AMOUNT. SIMILARLY THE LD. CIT DISREGARDED THE PLEA OF THE A SSESSEE WITH REGARD TO THE SECOND DISPUTE FOR THE ADJUSTMENT OF THE ACCUMULATED DEPRE CIATION BY DIRECTING THE AO TO EXAMINE AND VERIFY THE ISSUE. BEING AGGRIEVED BY THE IMPUGNED ORDER OF THE LD. CI T U/S 263 OF THE ACT THE ASSESSEE IS IN APPEAL BEFORE US. 5. THE LD. AR BEFORE US SUBMITTED A PAPER BOOK RUNN ING IN PAGES FROM 1 TO 179 AND DREW OUR ATTENTION ON 21 OF THE PAPER BOOK WHER E THE RECONCILIATION STATEMENT FOR EARLIER YEARS BEGINNING FROM AY 2002-03 TO AY 2009- 10 WAS PLACED. AS PER THE STATEMENT THE ASSESSEE RECEIVED THE GRANT LAST IN T HE AY 2002-03 WHICH WAS DULY ADJUSTED WITH THE RELEVANT BLOCK OF ASSETS. THE GRA NT AMOUNT FROM NDDB WAS DULY ADJUSTED WITH THE AMOUNT OF PROPORTIONATE DEPRECIAT ION AS EVIDENT FROM THE SCHEDULE 2 AND 19 OF THE AUDITED BALANCE SHEET OF THE ASSESSEE WHICH IS PLACED ON PAGES 82 & 92 OF THE PAPER BOOK RESPECTIVELY. ONLY THE NET AMOUN T OF DEPRECIATION WAS CHARGED IN THE PROFIT & LOSS ACCOUNT AS DEPICTED FROM THE PROF IT & LOSS ACCOUNT AND COMPUTATION OF INCOME OF THE ASSESSEE PLACED ON PAGE 84 & 23 OF THE PAPER BOOK. OUR ATTENTION WAS ALSO DRAWN ON PAGE 46 OF THE PAPER BOOK WHERE T HE DEPRECIATION SCHEDULE AS PER ITA NO.1655/KOL/2013 & 729/KOL/2014 A .YS. 08-09 & 09-10 METRO DAIRY LTD. VS. CIT-III, KOL. PAGE 5 INCOME TAX ACT WAS PLACED SHOWING DEPRECIATION OF R S.1,84,61,661/-. THE DETAILS OF THE GRANTS RECEIVED BY THE ASSESSEE UP TO THE AY 20 00-01 WERE PLACED ON PAGE 19 OF THE PAPER BOOK. LD. AR FURTHER DREW OUR ATTENTION O N PAGE 129 OF THE PAPER BOOK WHERE IT WAS MENTIONED IN THE AUDITED ACCOUNTS THAT THE OPENING WRITTEN DOWN VALUE APPEARING AS ON 01.04.2001 REPRESENTS THE GROSS VAL UE OF THE ASSETS CAPITALIZED FOR THE PURPOSE OF THE INCOME TAX ACT AND NO DEPRECIATION U NDER THE INCOME TAX ACT WAS CLAIMED EARLIER. SIMILARLY THE LD. AR SUBMITTED THAT THE AMOUNT OF A CCUMULATED DEPRECIATION OF RS.29,83,023/- RELATES TO THE CAPITAL ASSETS DISPOS ED DURING THE YEAR. THE AMOUNT CREDITED IN THE PROFIT AND LOSS ACCOUNT IS MERELY A N ADJUSTMENT FOR DEPRECIATION CHARGED IN EARLIER YEARS SO THAT THE RETURN ON VALU E OF THE ASSETS CORRECTLY COMPUTED IN THE BOOKS OF THE ASSESSEE. THE ADJUSTMENT MADE IN T HE FINANCIAL STATEMENT OF THE ASSESSEE DOES NOT HAVE ANY IMPACT ON THE AMOUNT OF DEPRECIATION CLAIMED UNDER THE PROVISIONS OF THE INCOME TAX ACT AS THE WRITTEN DOW N VALUE OF THE BLOCK OF ASSETS HAS BEEN REDUCED BY THE AMOUNT OF THE SALE PROCEEDS. AC CORDINGLY THE DEPRECIATION CHARGED UNDER THE COMPANIES ACT AND INCOME TAX ACT IS DEPICTING THE CORRECT FIGURE AND HE PRAYED BEFORE THE BENCH TO CONFIRM THE ORDER OF AO. 6. ON THE OTHER HAND THE LD. DR SUBMITTED THAT NO P APER BOOK WAS SUBMITTED AT THE TIME PROCEEDINGS UNDER SECTION 263 OF THE ACT. THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE CIT. 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE LD. CIT IN THE I NSTANT CASE HELD THE ORDER OF THE AO ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E ON TWO COUNTS. FIRSTLY THE AO HAS NOT CARRIED OUT THE PROPER VERIFICATION WHETHER THE WDV OF THE BLOCK OF ASSETS HAS BEEN ADJUSTED WITH THE AMOUNT OF GRANT RECEIVED ON THE CAPITAL ASSETS BEING THE PART OF THE BLOCK OF ASSETS. SECONDLY THE AMOUNT OF ACCUMULATED DEPRECIATION PERTAINING TO THE FIXED ASSETS DISPOSED DURING THE YEAR WAS CREDITED TO THE DEPRECIATION ACCOUNT AND THIS ASPECT WAS NOT VERIFIED BY THE AO AT THE TIME OF AS SESSMENT. ITA NO.1655/KOL/2013 & 729/KOL/2014 A .YS. 08-09 & 09-10 METRO DAIRY LTD. VS. CIT-III, KOL. PAGE 6 NOW, FROM THE AFORESAID DISCUSSION WE FIND THAT THE LD. CIT TREATED THE ORDER OF THE AO ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE. IT IS BECAUSE THAT THE AO HAS NOT VERIFIED THE ADJUSTMENT OF THE GRANT WITH RESPECT TO WDV AND AMOUNT CREDITED IN THE DEPRECIATION ACCOUNT FOR THE ASSETS DISPOSED DURING THE YEAR. THEREFORE THE LD. CIT HELD THE ORDER ERRONEOUS IN SO FAR PREJ UDICIAL TO THE INTEREST OF REVENUE. NOW TO ARRIVE AT THE CORRECT CONCLUSION OF THE CASE , WE DEEM IT NECESSARY TO REPRODUCE THE RELEVANT PROVISIONS OF SECTION 263 OF THE ACT. (1) THE PRINCIPAL COMMISSIONER OR COMMISSIONER MAY CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDING UNDER THIS ACT, AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE [ASSESSING] OFFICER IS ERRONE OUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, HE, MY , AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTER MAKING OR CAUS ING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY, PASS SUCH ORDER THER EON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY, INCLUDING AN ORDER ENHANCING OR M ODIFYING THE ASSESSMENT, OR CANCELLING THE ASSESSMENT AND DIRECTING A FRESH ASS ESSMENT. THE SUM AND SUBSTANCE OF THE ABOVE REPRODUCED SECTI ON 263(1) CAN BE SUMMARIZED IN THE FOLLOWING POINTS:-: 1) THE COMMISSIONER MAY CALL FOR AN EXAMINE THE RECORD OF ANY PROCEEDING UNDER THE ACT; 2) IF HE CONSIDERS THAT THE ORDER PASSED BY THE AO IS (I) ERRONEOUS; AND (II) IS PREJUDICIAL TO THE INTEREST OF REVENUE; 3) HE HAS TO GIVE AN OPPORTUNITY OF HEARING IN THIS RE SPECT TO THE ASSESSEE; AND 4) HE HAS TO MAKE OR CAUSE TO MAKE SUCH ENQUIRY AS HE DEEMS NECESSARY; 5) HE MAY PASS SUCH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY INCLUDING, (I) AN ORDER ENHANCING OR, (II) MODIFYING THE ASSESSMENT OR (III) CANCELLING THE ASSESSMENT AND DIRECTING A FRESH ASS ESSMENT. NOW, IN THE LIGHT OF ABOVE WORDS, WE HAVE TO EXAMIN E AS TO WHETHER THE IMPUGNED ORDER OF THE LD. CIT IS A VALID ORDER IN THE LIGHT OF THE ABOVE STATED POINTS/ PROVISIONS OF SECTION 263 OF THE ACT. ITA NO.1655/KOL/2013 & 729/KOL/2014 A .YS. 08-09 & 09-10 METRO DAIRY LTD. VS. CIT-III, KOL. PAGE 7 7.1 THE ASSESSEE RECEIVED THE GRANT FROM NDDB IN TH E EARLIER YEARS IN RELATION TO CAPITAL ASSETS WHICH WAS SHOWN ON THE LIABILITY SID E OF THE BALANCE SHEET UNDER THE HEAD RESERVE AND SURPLUS IN THE BOOKS OF ACCOUNTS. ON THE OTHER HAND, ASSESSEE RECOGNIZED THE CAPITAL ASSETS AT GROSS PURCHASE VAL UE. AS PER THE POLICY OF THE ASSESSEE THE DEPRECIATION PERTAINING TO THE GRANT WAS WRITTE N OFF AGAINST THE GRANT VALUE SHOWN IN THE BALANCE SHEET AND THE BALANCE DEPRECIATION P ERTAINING TO THE NET VALUE OF THE FIXED ASSETS WAS CHARGED IN THE PROFIT & LOSS ACCOU NT. THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION HAS CALCULATED THE DEPRECIATION IN TH E BOOKS OF ACCOUNTS FOR RS.3,42,10,774/- OUT OF WHICH PROPORTIONATE DEPRECI ATION OF RS.73,34,650/- WAS ADJUSTED AGAINST THE GRANT VALUE SHOWN IN THE BALAN CE SHEET AND THE BALANCE DEPRECIATION OF RS.2,68,76,124/- PROPORTIONATE TO T HE NET VALUE OF FIXED ASSETS WAS DEBITED IN THE PROFIT & LOSS ACCOUNT. THE ASSESSEE ACCORDINGLY HAS ADDED THE DEPRECIATION OF RS.2,68,76,124/- IN THE STATEMENT O F INCOME AND REDUCED THE DEPRECIATION BY THE AMOUNT AS WORKED OUT AS PER WRI TTEN DOWN VALUE OF THE ASSETS UNDER THE INCOME TAX ACT FOR AN AMOUNT OF RS.1,84,6 1,661/-. WE ALSO FIND THAT THE DEPRECIATION UNDER THE INCOME TAX ACT WAS CALCULATE D AT THE WDV WHICH WAS BROUGHT FORWARD FROM THE EARLIER YEARS. THE WDV WAS DULY AC CEPTED BY THE LOWER AUTHORITIES. IN THE YEAR UNDER CONSIDERATION NO GRANT WAS RECEIV ED BY THE ASSESSEE IN RELATION TO ANY CAPITAL ASSETS. THE LD. DR FAILED TO BRING ANYT HING CONTRARY TO THE ARGUMENTS MADE BY THE LD. AR AT THE TIME OF HEARING. IN VIEW OF AB OVE, WE OPINED THAT THE DEPRECIATION CLAIMED BY THE ASSESSEE UNDER THE COMPANIES ACT AND INCOME TAX ACT IS REPRESENTING THE CORRECT FIGURE. 7.2 SIMILARLY FOR THE AMOUNT OF RS.29,83,023/- CRED ITED TO THE DEPRECIATION ACCOUNT DURING THE YEAR FOR THE ASSETS DISPOSED, THE LD CIT IN HIS IMPUGNED ORDER U/S 263 OF THE ACT AT THE OUTSET FAILED TO BRING ANY ERROR FROM TH E FINANCIAL STATEMENT OF THE ASSESSEE AND HAS JUST DIRECTED THE AO FOR EXAMINATION AND VE RIFICATION OF THE AFORESAID AMOUNT. FROM THE SUBMISSION OF THE LD. AR, WE FIND THAT THI S AMOUNT WAS ADJUSTED WITH THE FIGURES OF THE DEPRECIATION ACCOUNT IN THE BOOKS OF ACCOUNTS. THE AFORESAID AMOUNT HAS NOT IMPACTED THE DEPRECIATION AMOUNT CHARGED BY THE ASSESSEE IN THE COMPUTATION OF INCOME. THE AFORESAID AMOUNT WAS THE ACCUMULATED DE PRECIATION WHICH WAS ADJUSTED ITA NO.1655/KOL/2013 & 729/KOL/2014 A .YS. 08-09 & 09-10 METRO DAIRY LTD. VS. CIT-III, KOL. PAGE 8 WITH THE ORIGINAL COST OF ASSETS AS A CONSEQUENCE O F SALE OF THE SAID ASSETS DURING THE YEAR. THE LD. DR FAILED TO BRING ANYTHING CONTRARY TO THE ARGUMENTS MADE BY THE LD. AR AT THE TIME OF HEARING. ACCORDINGLY WE FIND NO E RROR IN THE ORDER OF AO HAVING PREJUDICE TO THE INTEREST OF REVENUE. 8. IN VIEW OF ABOVE WE HAVE NO HESITATION TO CONCLU DE THAT THE ORDER PASSED BY THE AO IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTE REST OF REVENUE. ACCORDINGLY WE FIND THE IMPUGNED REVISION ORDER UNSUSTAINABLE IN L AW, AND WE, THEREFORE, CANCEL THE SAME. THE ISSUE GETS THE RELIEF ACCORDINGLY. COMING TO ITA NO. 729/KOL/2014 FOR AY 09-10. 9. IN THIS APPEAL VARIOUS GROUNDS HAVE BEEN RAISED OUT OF WHICH GROUND NO.7 IS OF GENERAL NATURE AND DOES NOT REQUIRE SEPARATE ADJUDI CATION. THE OTHER GROUNDS RAISED ARE AS UNDER:- 1. FOR THAT THE ORDER MADE BY THE LEARNED COMMISSI ONER OF INCOME TAX - III, KOLKATA,(LD.CIT), UNDER SECTION 263 OF THE INCOME T AX ACT, 1961 (THE 'ACT') IS ILLEGAL, INVALID, NOT SUSTAINABLE IN LAW AND LIABLE TO STRUCK DOWN. 2. FOR THAT THE LD. CIT ERRED IN LAW IN HOLDING THA T THE ASSESSMENT ORDER UNDER SECTION 143(3) IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE IN RESPECT OF DEPRECIATION ALLOWABLE UNDER THE PROVISI ONS OF THE ACT, WITHOUT APPRECIATING THAT THERE WAS NO ERROR IN SUCH CALCUL ATION. 3. FOR THAT THE LD CIT WAS NOT JUSTIFIED IN SETTING ASIDE THE ORDER OF THE ASSESSING OFFICER PASSED U/S 143(3) OF THE ACT SINC E THE CLAIM OF DEPRECIATION HAD BEEN COMPUTED IN ACCORDANCE WITH SECTION 32 OF THE ACT. 4 FOR THAT THE LD CIT WAS NOT JUSTIFIED IN SETTING ASIDE THE IMPUGNED ASSESSMENT ORDER ON A MERE PRESUMPTION THAT THE WRI TTEN DOWN VALUE OF ASSETS OF THE APPELLANT (WHICH HAS BEEN DULY ACCEPTED BY T HE REVENUE OVER THE YEARS) WAS ARRIVED AFTER NON-ADJUSTMENT OF GRANTS. 5. WITHOUT PREJUDICE TO THE ABOVE, THE LD CIT WAS N OT JUSTIFIED IN ASSUMING JURISDICTION U/S 263 OF THE ACT ON THE ASSESSMENT O RDER FOR THE AY 2009-10, IN RESPECT OF AN ADJUSTMENT RELATING TO AY 2002-03. 6. FOR THAT THE ORDER PASSED BY THE LD CIT U/S 263 OF THE ACT IS AGAINST THE SETTLED PRINCIPLE OF LAW THAT AN ORDER OF ASSESSING OFFICER SHOULD BE BOTH ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE, AND SUCH TESTS BEING NOT SATISFIED IN THE INSTANT CASE, THE ORDER U/S 26 3 IS LIABLE TO BE QUASHED. ITA NO.1655/KOL/2013 & 729/KOL/2014 A .YS. 08-09 & 09-10 METRO DAIRY LTD. VS. CIT-III, KOL. PAGE 9 10. AT THE OUTSET WE FIND THAT ISSUE INVOLVED IN TH IS APPEAL IS THE SAME AS ELABORATED IN ITA NO. 729/KOL/2014 AND BOTH THE PARTIES AGREED TH AT WHATEVER VIEW WILL BE TAKEN IN THE ABOVE STATED APPEAL SHALL ALSO BE APPLICABLE FO R THIS APPEAL . HENCE THIS APPEAL OF ASSESSEE IS ALSO ALLOWED. 11. IN THE RESULT, BOTH APPEALS OF ASSESSEE STAND ALLOW ED. ORDER PRONOUNCED IN OPEN COURT ON 09 /09/2016 SD/- SD/- (S.S.VISWANETHRA RAVI) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER *DKP ' - 09/09/2016 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /ASSESSEE-METRO DAIRY LTD., 21, GOPAL MUKHERJEE ROA D, KOLKATA-02 2. /REVENUE-CIT-III, KOLKATA, P-7, CHOWRINGHEE SQUARE , KOLKATA-69 3. % ' / CONCERNED CIT 4. ' - / CIT (A) 5. ( ++% , % / DR, ITAT, KOLKATA 6. - / GUARD FILE. BY ORDER/ , / %,