M/s. Pricewaterhouse Coopers Private Limited, Kolkata V. ACIT, Circle - 1(1), Kolkata

ITA 195/KOL/2021

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 2676 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 23-06-2021
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Depreciation; Additional depreciation
• Section: 263; 143(3); 142(1); 144C; 143(2)

Judgement Text

1. ITA No.195/Kol/2021 AY 2014-15 Price Water House Coopers P.Ltd IN THE INCOME TAX APPELLATE TRIBUNAL BENCH “A” KOLKATA Before Shri Rajpal Yadav, Vice President (KZ) and Shri Manish Borad, Accountant Member आयकर अपील सं.य/ ITA No. 195/Kol/2021 Assessment Year: 2014-15 M/s.Pricewater House Coopers Private Limited Block-EP, Plot-Y 14 Salt Lake City, Sector- V, Kolkata-700 091. बनाम V/s. A.C.I.T,Cir-1(1), Kolkata Aaykar Bhavan, P-7 Chowringhee Square, Kolkata-700 069. PAN: AABCP9181H अपीलाथ /Appellant .. यथ /Respondent अपीलाथ क ओर से/By Appellant/Assessee Shri Bikash Jain, CA, Ld.AR यथ क ओर से/By Respondent/Department Md. Ghyas Uddin, CIT/Ld.DR स ु नवाई क तार ख/Date of Hearing 14-06-2022 घोषणा क तार ख/Date of Pronouncement 27-06 -2022 आदेश /O R D E R PER MANISH BORAD, AM. This appeal of the assessee for the assessment year 2014-15 is directed against the order passed u/s. 263 of the Income-tax Act, 1961 [ hereinafter, referred to as ‘the Act’] by the ld. Pr. Commissioner of Income-tax [ in short, hereafter referred to as ‘the PCIT’], Kolkata-1. 2. At the time of hearing the registry has informed that the present appeal is time barred by 32 days. The assessee 2. ITA No.195/Kol/2021 AY 2014-15 Price Water House Coopers P.Ltd prayed for condonation of the delay. The reasons are placed on record. We, after perusing the same as well as material available on record find merit in the reasonable cause stated by the assessee and in the larger interest of justice, condone the delay and admit the appeal for adjudication. 3. The assessee has raised the following grounds of appeal:- 1. That on the facts and in law and in the circumstances of the case, the order dated 24 March, 2021 passed by the learned Principal Commissioner of Income-tax - 1, Kolkata (hereinafter referred to as 'Ld. Pr. CIT') under section 263 of the Income-tax Act, 1961 (hereinafter referred to as the 'Act') is bad in law, unsustainable and is liable to be quashed. 2. That on the facts and in law and in the circumstances of the case, the Ld. Pr. CIT erred in assuming jurisdiction under section 263 of the Act without satisfying the preconditions necessary for assumption of such jurisdiction i.e. an error in assessment order must be an error of law or fact. 3. That on the facts and in law and in the circumstances of the case, the Ld. Pr. CIT erred in initiating revisionary proceedings on the same issues on which rectification proceedings was already initiated by the Assessing Officer and that such exercise of concurrent jurisdiction amounts to erroneous / incorrect assumption of jurisdiction under section 263 of the Act by the Ld. PC IT. 4. That on the facts and in law and in the circumstances of the case, the Ld. Pr. CIT erred in invoking his jurisdiction under section 263 of the Act as issues 3. ITA No.195/Kol/2021 AY 2014-15 Price Water House Coopers P.Ltd raised in the show cause and examined by the Ld. PCIT are not prejudicial to interests of the revenue, on the contrary it shall reduce the returned income if such directions are followed by the Assessing Officer in pursuance to the impugned order passed under section 263 of the Act. 5. That on the facts and in law and in the circumstances of the case, the Ld. Pr. CIT erred in invoking his jurisdiction under section 263 of the Act on an issue which has been considered and examined by the Assessing Officer on material on record while completing the assessment order dated 30 October 2018 under section 143(3) read with section 144C of the Act. 6. That on the facts and in law and in the circumstances of the case, the Ld. Pr. CIT erred in mentioning that ‘assessee had to show the entire interest receivable income of Rs. 81,53,73,583/- as income without deduction of Rs. 1,88,01,826/- in its Profit & Loss accounts’ without appreciating that the aforesaid amount/issue does not pertain to the appellant at all. 7. That on the facts and in law and in the circumstances of the case, the Ld. Pr. CIT erred in initiating and concluding revisionary proceedings on an erroneous assumption that the Assessing Officer has passed the assessment order without making enquiries or verification which should have been made in the instant case, thus clause (a) of Explanation-2 to section 263(1) of the Act is attracted. 4. A perusal of the grounds of appeal shows that, the sole grievance of the assessee is challenging the validity of jurisdiction 4. ITA No.195/Kol/2021 AY 2014-15 Price Water House Coopers P.Ltd invoked by the ld.PCIT u/s. 263 of the Act and the impugned order being bad in law, unsustainable and liable to be quashed. 5. Brief facts of the case as culled out from records are that the assessee is a private limited company engaged in providing consultancy, accounting and advisory service. E-return of income for the AY 2014-15 filed on 28-11-2014 declaring total income at Rs.59,51,72,921/-. The return was revised on 31-03-2016 declaring income at Rs.69,53,53,702/-. The case was selected for scrutiny through CASS(Computer Aided Scrutiny Selection) followed by serving of notices issued u/s. 143(2) and 142(1) of the Act. Various information called for and after considering the same the assessment was completed on 30-10-2018 assessing the income at Rs. 75,16,99,450/-. 6. Consequently, the ld. PCIT after going through the assessment records observed that certain issues remained to be examined by the ld. AO. Therefore, a show cause notice was issued u/s. 263 of the Act. Necessary submissions were made by the assessee and after considering the same, the ld. PCIT held the order dt. 30-10-2018 of the ld. AO as erroneous and pre-judicial to the interest of the revenue with regard to certain issues observed/raised in the said show cause notice and thereafter, gave direction to the ld.AO to frame fresh assessment after considering the following issues:- Sl.No. Issue Amount 1 Difference in addition in fixed asset (as per financial statement and as per Tax Audit Report (TAR) & depreciation thereon 1,85,95,413/- 2 Disallowance on an issue not pertaining to the 18,801,826/- 5. ITA No.195/Kol/2021 AY 2014-15 Price Water House Coopers P.Ltd appellant 3 Excess claim of depreciation on electrical installation 6,50,000/- 7. Thereafter, the ld. AO to the direction given in the impugned order dt. 24-03-2021 acted and passed an assessment order on 30- 03-2022 u/s. 143(3) r.w.s 263 r.w.s 144B of the Act. Out of the above stated three issues the ld. AO made the addition/disallowance only on account of following two issues:- Sl.No. Issue Amount 1 Disallowance on an issue not pertaining to the appellant 18,801,826/- 3 Excess claim of depreciation on electrical installation 6,50,000/- 8. Before us Ld. Counsel for the assessee further referred to a rectification order passed by the ld. PCIT on 12-04-2022 and the following words appearing in para 5 of the impugned order has been deleted, which reads as under:- "5 Moreover, as per provision of I.T Act, 1961 the assessee had to show the entire interest receivable income of Rs.8,15,37,3583/- as income without deduction of RS.1,88,0l,826/- in its Profit & Loss accounts. The amount to be set apart for statutory reserve fund is then required to be reduced from the net profit. The assessee has failed to provide any explanation on this point." In view of above, ground no. 6 becomes infructuous and is dismissed. 6. ITA No.195/Kol/2021 AY 2014-15 Price Water House Coopers P.Ltd 9. From the above, it is noticed that out of the three issues referred in the impugned order the live issue remaining is regarding excess claim of depreciation on electrical installation at Rs. 6,50,000/-. 10. The Ld. Counsel for the assessee has contended that the assessee has rightly claimed depreciation at 15% and enquiry was made by the Ld. AO during the assessment proceeding and the assessee duly replied for/responded the same. The Tax auditor has also certified the claim of assessee of charging depreciation @ 15% as against @ 10% on electrical installation. The Ld. Counsel referred to plethora of judgments and in support of which filed case laws paper book (running from page 1 to 147) dt. 08-02-2022, another case laws paper book dt. 14.6.22. 11. Per contra, Ld. Departmental Representative vehemently argued supporting detailed finding of the Ld. PCIT. 12. We have heard the rival contentions and perused the record placed before us and also carefully gone through the plethora of judgment referred and relied on by the Ld. Counsel for the assessee in two case laws paper books filed before us. The assessee has challenged the revisionary proceedings carried out by the Ld. PCIT directing the ld. AO to examine the claim of depreciation on electrical installation in the direction given in the impugned order passed u/s. 263 of the Act. We find that the assessee has claimed depreciation @ 15% whereas Appendix-1 of I.T Rules r.w. s 32 of the I.T Act, 1961 provides for depreciation @ 10% in respect of electrical installation. Before us the Ld. Counsel for the assessee has contended that the 7. ITA No.195/Kol/2021 AY 2014-15 Price Water House Coopers P.Ltd depreciation charged @ 15% on electrical installation is in accordance with the Tax Audit Report duly certified by the Tax Auditor and the same has been considered under the block of plant & machinery. It is also submitted that the word ‘plant’ is a word of wide import and would take within its sweep any equipment or article that is required for a particular purpose. Considering the nature of business of the assessee (consultancy and advisory services) electrical installation are required as plant & machinery by the nature of consultancy business, which the assesse is carrying on. 13. During the course of hearing the Ld. Counsel for the assessee was asked to demonstrate as to what enquiry was done/made by the ld. AO and what reply/response was submitted by the assessee. It is well evident that an enquiry is set to be complete only when all the issues relevant to such enquiry are addressed in its entirety. With the assistance of the ld. Counsel for the assessee on perusal of records, we find that the ld. AO issued notice u/s. 142(1) on 27-10-2017 and at point 6 asked the assessee to justify the claim of depreciation at higher rate/higher rate for claim of additional depreciation with proper explanation and documentary evidence. In reply, on 15-11-2017 the assessee stated to refer clause xviii of the Tax Audit Report, which is already submitted before the ld. AO having details of each asset/block asset. The above reply given by the assessee to the query raised by the ld. AO “ is neither here nor there”. The assessee has not provided the details relevant to the assets, which it is claiming as part of plant & machinery. The assessee itself accepted that electrical installation are chargeable to depreciation @ 10%, but claimed the same at higher 8. ITA No.195/Kol/2021 AY 2014-15 Price Water House Coopers P.Ltd rate of depreciation. Onus is on the assessee to explain and prove the same with detail about such claim. Since no such specific reply was given by the assessee, the enquiry made by the ld. AO remained incomplete and it ought to have been addressed in the assessment order and Ld. AO should not have allowed the assessee’s claim without examining the issues. This factual aspect remains unverified. 14. The ld. Counsel for the assessee merely kept referring to the decision that an enquiry was made by the ld. AO and section 263 should not have been invoked. We, however, find no merit in the contention of the ld. Counsel for the assesse with regard to the issue of claim of depreciation on electrical installation because though the inquiry was initiated, but the same was incomplete as the assessee did not reply to it in the way it ought to be. Therefore, in real terms, there was no enquiry on the said issue. We, therefore, confirm the findings of the ld. PCIT on the said issue of excess claim of depreciation on electrical installation and dismiss the grounds raised by the assessee challenging the validity of the order passed u/s. 263 of the Act on this issue. 15. In the result, the appeal of the assessee is dismissed The order pronounced in the open Court on 27 .06.2022 Sd/- Sd/- ( RAJPAL YADAV) (MANISH BORAD) VICE PRESIDENT(KZ) ACCOUNTANT MEMBER Dated :27 -06-2022 9. ITA No.195/Kol/2021 AY 2014-15 Price Water House Coopers P.Ltd **PP/SPS आदेश क त ल प अ े षत / Copy of Order Forwarded to:- 1.अपीलाथ /Appellant/Assessee: M/s.Pricewater House Coopers Private Limited, Block-EP, Plot-Y 14 Salt Lake City, Sector- V, Kolkata-700 091. 2. यथ /Respondent/Department: A.C.I.T,Cir-1(1), Kolkata Aaykar Bhavan, P-7 Chowringhee Square, Kolkata-700 069. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त- अपील / CIT (A) 5. वभागीय त न ध, आयकर अपील य अ धकरण कोलकाता / DR, ITAT, Kolkata 6.गाड फाइल/Guardfile. By order/आदेश से, /True Copy/ Assistant Registrar ITAT, Kolkata