KERALA TRANSPORT DEVELOPMENT FINANCE CORPORATION LIMITED,THIRUVANANTHAPURAM V. ITO, CIRCLE 1(1), THIRUVANANTHAPURAM

ITA 41/COCH/2025

AI Insights

The case involves the Kerala Transport Development Finance Corporation, a wholly owned Public Sector Undertaking of the Government of Kerala, which appealed against the order of the Commissioner of Income Tax (Appeals) at the National Faceless Appeal Centre, Delhi. The dispute centered on the assessment for the Assessment Year 2018-19, where the initial return declared NIL income. Following a revision under Section 263 of the Income Tax Act by the Principal Commissioner of Income Tax, the assessment was reopened, leading to a substantial income assessment due to disallowed depreciation on an intangible asset and reclassification of rental income. The Tribunal's decision to quash the reassessment was based on the finding that the earlier order under Section 263 was flawed.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 708593 (ITAT-COCHIN)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2018-2019
• Other Referred Cases: ITA No. 443/Coch/2023
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VENI RAJ
• Assessee Lawyers: K.P. PRADEEP
• Keywords: Depreciation
• Section: 143(3); 263; 32

Judgement Text

"1 ITA No.41/Coch/2025 Kerala Transport Development Finance Corportion vs. ITO IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH BEFORE SHRI INTURI RAMA RAO, AM AND SONJOY SARMA, JM ITA No.41/Coch/2025 Assessment Year:2018-19 Kerala Transport Development Finance .......... Appellant Corporation Limited, Thiruvananthapuram. PAN: AABCK1318F vs. Income Tax Officer .......... Respondent Circle-1(1), Trivandrum. Appellant by: Shri K.P. Pradeep, Advocate Respondent by: Smt. Veni Raj, CIT-DR Date of Hearing: 10.06.2025 Date of Pronouncement: 15.07.2025 O R D E R Per: Inturi Rama Rao, AM This appeal filed by the assessee is directed against the order of the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (in short “CIT(A)”), dated 11/11/2024 for Assessment Year (AY) 2018- 19. 2 ITA No.41/Coch/2025 Kerala Transport Development Finance Corportion vs. ITO 2. Briefly the facts of the case are that the appellant is a wholly owned Public Sector Undertaking of Government of Kerala. It is formed with the objective of support and finance the Transport Service as NBFC and to build up commercially viable infrastructure like bus stations, commercial complexes etc., under BOT Model. The Return of Income for the AY 2018-19 was filed on 05/10/2018 declaring NIL income and the same was revised on 29/03/2019 disclosing NIL income. The assessment against the said return of income was completed by the AO vide order dated 23/03/2021 passed U/s. 143(3) of the Act accepting the returned loss. Subsequently, on the scrutiny of the assessment order, the Ld. Principal Commissioner of Income Tax (in short “Ld. PCIT”) was of the opinion that the assessment order is erroneous and prejudicial to the interest of the Revenue for the failure of the AO to verify the claim for allowance of depreciation U/s. 32 of the Act on intangible asset of Rs. 33,50,45,372/-. Accordingly, the Ld. PCIT set-aside the assessment order with a direction to re-do the assessment. Thereafter, consequential order to the order passed U/s. 263 of the Act was passed by the AO ie., Assistant Commissioner of Income Tax, Circle-1(1), Trivandrum vide order dated 12/03/2024 passed U/s. 143(3) r.w.s 263 of the Act at a total income of Rs. 18,02,12,607/-. While doing so, the AO disallowed the claim for depreciation on the “Right to Collect Toll” of Rs. 33,50,45,372/- and also treated the rental income of Rs.3,10,28,960/- under the head ‘income from house property’. 3 ITA No.41/Coch/2025 Kerala Transport Development Finance Corportion vs. ITO 3. Being aggrieved by the assessment order, an appeal was filed before the CIT(A), who vide the impugned order dismissed the appeal. 4. Being aggrieved, the appellant is in appeal before us in the present appeal. 5. At the outset, we find that the order passed by the Ld. PCIT U/s. 263 fo the Act was quashed by us in ITA No. 443/Coch/2023 (AY 2018-19), for the reasons stated therein and therefore, the consequential assessment order also fails. Thus, the assessment order, dated 12/03/2024, impugned before us is herey quashed. 6. In the result, appeal filed by the assessee stands allowed. Order pronounced in the open court on 15th July, 2025. Sd/- Sd/- (SONJOY SARMA) JUDICIAL MEMBER (INTURI RAMA RAO) ACCOUNTANT MEMBER Cochin, Dated: 15th July, 2025 okk sps Copy to: 1. The Appellant 2. The Respondent 3. The Pr. CIT concerned 4. The Sr. DR, ITAT, Cochin 5. Guard File Assistant Registrar ITAT, Cochin "