SUZUKI MOTOR GUJARAT PVT LTD,AHMEDABAD, GUJARAT V. PRINCIPLE COMMISSONER OF INCOME TAX, AHMEDANAD-3, AHMEDABAD

ITA 998/AHD/2024

AI Insights

The case involves Suzuki Motor Gujarat Pvt Ltd, which appealed against the order of the Principal Commissioner of Income-tax, Ahmedabad-3, concerning the assessment year 2018-19. The dispute centered on the computation of depreciation claimed by the assessee, which the PCIT found to be excessive, leading to a revision of the assessment order under Section 263 of the Income-tax Act, 1961. The Tribunal examined the method of depreciation computation and found it to be in accordance with the statutory provisions and the prescribed return filing utility, leading to the allowance of the appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 473967 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2018-2019
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V. NANDAKUMAR
• Assessee Lawyers: ROHIT JAIN
• Keywords: Depreciation; Additional depreciation; Capital Gains; Prejudicial to interest
• Section: 143(3); 263; 32; 2; 144C; 115JB

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD BEFORE DR. B.R.R. KUMAR, VICE-PRESIDENT SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I.T.A. No. 998/Ahd/2024 (Assessment Year: 2018-19) Suzuki Motor Gujarat Pvt Ltd Block No. 334/335, Hansalpur, Near Becharaji, Mandal, Ahmedabad, Gujarat-382130 [PAN : AAUCS 5797 D] Vs. Principal Commissioner of Income-tax, Ahmedabad-3 (Appellant) .. (Respondent) Appellant by : Shri Rohit Jain, Advocate, Shri Deepesh Jain, Advocate & Ms. Somya Jain, CA Respondent by: Shri V. Nandakumar, CIT-DR Date of Hearing 07.01.2025 Date of Pronouncement 28.02.2025 O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT : This appeal has been filed by the Assessee against the order passed by the Ld. Principal Commissioner of Income-tax, Ahmedabad-3 (hereinafter referred to as \"PCIT\" for short) dated 13.03.2024 in exercise of his revisionary powers under Section 263 of the Income-tax Act, 1961 [hereinafter referred to as “the Act”], for the Assessment Year 2018-19. 2. The assessee has raised following grounds of appeal:- “1. That on the facts and circumstances of the case and in law, the order dated 13.03.2024 passed by the Principal Commissioner of Income Tax, Ahmedabad-3 [PCIT'] under section 263 of the Income Tax Act, 1961 ('the Act') is without jurisdiction, illegal, bad in law, and liable to be quashed. ITA No. 998/Ahd/2024 Suzuki Motor Gujarat Pvt Ltd Vs. PCIT Asst. Year : 2018-19 - 2– 1.1. That the PCIT erred on facts and in law in setting aside the assessment order dated 08.11.2021 passed under section 143(3) r.w.s. 144C and 144B of the Act holding the same to be erroneous and prejudicial to the interest of Revenue and directing the assessing officer to pass a fresh assessment order after re-computing claim allowable related to general depreciation. 1.2. That the PCIT erred on facts and in law in exercising revisionary powers under section 263 of the Act without appreciating that the twin jurisdictional condition of the assessment order being: (a) erroneous; and (b) prejudicial to the interest of the Revenue, are not satisfied and consequently, the impugned order is illegal and bad-in-law. 1.3. That the PCIT erred on facts and in law in setting aside the assessment order by exercising powers under section 263 of the Act without appreciating that: (a) assessment order was passed by due enquiry and application of mind qua claim of depreciation; (b) computation of depreciation by the appellant as accepted by the assessing officer is not just plausible but the only correct view/ computation; and (c) revisionary powers cannot be exercised merely to substitute view taken by the assessing officer. 1.4. That the PCIT erred on facts and in law in relying on Explanation 2 to section 263 of the Act without appreciating that the same cannot be applied to exercise unfettered powers of revision, in violation of the main section. 1.5 That the PCIT erred on facts and in law in not appreciating that assessments order framed by National Faceless Assessment Centre in terms of procedure prescribed under section 144B of the Act are not amenable to revisionary jurisdiction under section 263 of the Act 2. That on the facts and circumstances of the case and in law, the PCIT erred in holding that the appellant has claimed and is allowed excessive depreciation to the extent of Rs. 23,40,03,327 in the original assessment. 2.1. That the PCIT erred in law in holding that the appellant was required to deduct the remaining 10% [50% of 20%] of the additional depreciation relating to assets acquired and put to use for less than 180 days in the preceding year, from the opening written down value (WDV) of the block for the year under consideration, and general depreciation @15% be computed on reduced WDV. 2.2. That the PCIT erred on facts and in law in not appreciating that the alleged computation/ adjustment of depreciation is contrary to provisions of ITA No. 998/Ahd/2024 Suzuki Motor Gujarat Pvt Ltd Vs. PCIT Asst. Year : 2018-19 - 3– the Act, particularly sections 32 and 43(6) of the Act, and also the return filling utility/ form designed by the CBDT in line with prevailing law. 2.3. That the PCIT erred in law in not appreciating that, inter alia, the depreciation 'actually allowed' in the preceding year is required to be reduced while computing opening WDV for the relevant year. 2.4. That the PCIT erred in not appreciating that the additional depreciation claimed by the appellant was neither disputed by the tax auditor(s) or by the Centralized Processing Centre (CPC) while processing return under section 143(1) of the Act or the assessing officer in scrutiny assessment, which clearly indicating that the same is correctly computed by the appellant. 2.5. That the PCIT erred on facts and in law in not appreciating that (i) the method of computation of WDV and depreciation is consistently followed by the appellant over the years and have been accepted by the Department; and (ii) the issue is revenue neutral and hence not prejudicial to interest of the Revenue.” 3. The brief facts of the case are that the assessee-company, a 100% subsidiary of Suzuki Motor Corporation, Japan which manufactures passenger cars in India, filed its original return of income for the year under consideration on 29.11.2018 declaring total income at Rs. Nil under the normal provisions of the Act. As per the return filed by the assessee, book profit u/s.115JB of the Act was at Rs. 207,85,71,276/-. The case of assessee was selected for Complete Scrutiny under CASS and scrutiny assessment u/s 143(3) r.w.s. 144C r.w.s 144B of Act was completed on 08.11.2021 determining income at Rs. 50,43,61,446/- under normal provisions of the Act and Book Profit of Rs. 207,85,71,276/- u/s 115JB of the Act. 4. The issue : The Ld. PCIT has sought to revise the assessment order dated 08.11.2021 passed by the assessing officer under section 143(3) r.w.s 144C(3) and 144B of the Act on the ground that the same was erroneous in so far as prejudicial to the interests of the Revenue, inasmuch as the ITA No. 998/Ahd/2024 Suzuki Motor Gujarat Pvt Ltd Vs. PCIT Asst. Year : 2018-19 - 4– Assessing Officer has failed to examine the claim of depreciation made by the assessee as a consequence of claiming brought forward additional depreciation of Rs. 156,00,22,181 from earlier assessment year 2017-18, which has resulted in the assessee availing excess depreciation. The Ld. PCIT held that brought forward additional depreciation of Rs.156.00 crore from AY 2017-18 should have first been reduced from the opening WDV and thereafter current year’s normal and additional depreciation should have been computed for AY 2018-19. The Ld. PCIT has, accordingly, set- aside the aforesaid assessment order passed under section 143(3) of the Act on the aforesaid issue and directed the assessing officer to pass fresh assessment order and compute correct amount of depreciation and disallow the excess depreciation. 5. Aggrieved by the order of the Ld. PCIT, the assessee is now in appeal before the Tribunal. 6. Before us, the Ld. AR relied on the computation declared in the return whereas the ld. DR relied on the order of the Ld. PCIT. 7. Heard both the parties and perused the material available on record. 7.1 The assessee is engaged in the business of manufacture of passenger cars. During the preceding assessment year 2017-18, the assessee had claimed additional depreciation @10% (50% of the prescribed rate) aggregating to Rs. 156,00,22,181/- on ‘plant and machinery’ put to use for a period of less than 180 days. Closing Written Down Value (‘WDV’) of the block ‘Plant and Machinery’ as on 31.03.2017 amounted to ITA No. 998/Ahd/2024 Suzuki Motor Gujarat Pvt Ltd Vs. PCIT Asst. Year : 2018-19 - 5– Rs.1419,66,02,772/-. The balance additional depreciation of Rs.156,00,22,181/- was carried forward to be claimed in assessment year 2018-19 as per the third proviso to section 32(1 )(ii) of the Act. A working of the total depreciation charged during the year under consideration is tabulated as under:- S.No. Block of assets Plant and Machinery Rate (%) 15 30 40 (i) (ii) (iii) 3a Written down value on the first day of previous year 14,19,66,02,772 - 3b Written down value on the first day of previous year, of those block of assets which were eligible for depreciation @ 50%, 60% or 80% as per the old Table - - 23,10,31,519 4 Additions for a period of 180 days or more in the previous year 1,33,91,27,790 - 3,08,38,247 5 Consideration or other realization during the previous year out of 3 or 4 - - - 6 Amount on which depreciation at full rate to be allowed (3a+3b + 4 - 5) 15,53,57,30,562 - 26,18,69,766 7 Additions for a period of less than 180 days in the previous year 6,65,82,83,901 - 3,02,59,885 8 Consideration or other realizations during the year out of 7 - - - 9 Amount on which depreciation at half rate to be allowed (7 - 8) 6,65,82,83,901 - 3,02,59,885 10 Depreciation on 6 at full rate 2,33,03,59,584 - 10,47,47,906 11 Depreciation on 9 at half rate 49,93,71,293 - 60,51,977 12 Additional depreciation, if any, on 4 25,60,45,955 - - 13 Additional depreciation, if any, on 7 64,83,02,170 - - 14 Additional depreciation relating to immediately 1,56,00,22,181 - - ITA No. 998/Ahd/2024 Suzuki Motor Gujarat Pvt Ltd Vs. PCIT Asst. Year : 2018-19 - 6– S.No. Block of assets Plant and Machinery Rate (%) 15 30 40 (i) (ii) (iii) preceding year' on asset put to use for less than 180 days 15 Total depreciation (10+11+12+13+14) 5,29,41,01,183 - 11,07,99,883 16 Depreciation disallowed under section 38(2) of the I.T. Act (out of column 15) - - - 17 Net aggregate depreciation (15- 16) 5,29,41,01,183 - 11,07,99,883 18 Proportionate aggregate depreciation allowable in the event of succession, amalgamation, demerger etc. (out of column 17) - - - 19 Expenditure incurred in connection with transfer of asset/ assets - - - 20 Capital gains/ loss under section 50(5+ 8-3a-3b -4 -7-19) - - - 21 Written down value on the last day of previous year (6+ 9-15) 16,89,99,13,280 - 18,13,29,768 7.2 For the year under consideration, the assessee claimed aggregate depreciation of Rs.529,41,01,183/- which included additional depreciation of Rs.156,00,22,181 pertaining to assets put to use for less than 180 days in the preceding assessment year 2017-18. The aforesaid depreciation, it is submitted, was computed in accordance with income tax return utility prescribed by CBDT. The Ld. PCIT, in the impugned order, however held that the assessee should, at first, have reduced the additional depreciation ITA No. 998/Ahd/2024 Suzuki Motor Gujarat Pvt Ltd Vs. PCIT Asst. Year : 2018-19 - 7– pertaining to AY 2017-18 from the WDV as on 01.04.2017 and then computed the normal depreciation @ 15% for the year under consideration. As a consequence thereof, the Ld. PCIT has alleged that the assessee has claimed excess normal depreciation for the year under consideration. In this regard, we hold that the aforesaid method of computation provided by the Pr. CIT is not correct as Section 32(1)(ii) of the Act provides that depreciation has to be charged on the written down value of any block of assets as per the rates prescribed. Further section 43(6)(c) of the Act provides that the written down value of a block of asset shall be computed by taking the WDV as on the opening date, which shall be increased by the actual cost of the assets acquired during the year and be reduced by the moneys payable in respect of assets sold during the year and no further adjustment is allowed to be made to the WDV computed as per the provisions of the said section. It is on such WDV so computed that the depreciation has to be computed. The format of income tax return utility notified by the CBDT, the amount of depreciation chargeable on plant and machinery is auto computed in Schedule DPM. An assessee is meant to submit the figure of opening WDV of the block, details of additions made during the year classified by the period for which such asset is put to use (more than or less than 180 days) and the details of assets sold during the year. Basis the aforesaid details submitted, the utility as conceived by the Income-tax Department, calculates the amount of normal and additional depreciation allowable on the block of asset. 7.3 For the sake of ready reference, the Schedule of DPM and the sequence of computation is mentioned below:- ITA No. 998/Ahd/2024 Suzuki Motor Gujarat Pvt Ltd Vs. PCIT Asst. Year : 2018-19 - 8– 1. Block of assets 2. Rate % 3. Written down value on the first day of previous year 4. Additions for a period of 180 days or more in the previous year 5. Consideration or other realization during the previous year out of 3 or 4 6. Amount on which depreciation at full rate to be allowed 3+4-5 (enter 0, if result is negative 7. Addition for a period of less than 180 days in the previous year 8. Consideration or other realizations during the year out of 7 9. Amount on which deprecation at half rate to be allowed (7-8) 10. Depreciation on 6 at full rate 11. Depreciation on 9 at half rate 12. Additional deprecaition, if any, on 4 13. Additional depreciation, if any, on 7 14. Additional deprecaition relating to immediately preceidng year on asset put to use for less than 180 days 15. Total depreciation (10+11+12+13+14) 16. Depreciation disallowed under section 38(2) of the I.T. Act (out of column 15) ITA No. 998/Ahd/2024 Suzuki Motor Gujarat Pvt Ltd Vs. PCIT Asst. Year : 2018-19 - 9– 7.4 Even on going through the above, it can be found that no mechanism for the assessee to first compute and reduce the additional depreciation for the preceding year from the opening WDV and then compute the normal depreciation for the relevant year, as directed by the Ld. PCIT. The said computation of depreciation, as provided in the income tax return utility, has also been found to be in consonance with the Clause 18 of the Tax Audit Report. If the method suggested by the Ld. PCIT in the impugned order were to be followed, in that case, the total depreciation allowable to the assessee, would be higher in subsequent years since the closing WDV would be higher. Being so, the assessee would be allowed higher depreciation is subsequent years. In view these facts, we hold that that there is no error in the depreciation claimed by the assessee, hence no case of order being erroneous inasmuch as it is prejudicial to the interest of revenue could be made out. 8. In the result, appeal of the assessee is allowed. The order is pronounced in the open Court on 28.02.2025 Sd/- Sd/- (SIDDHARTHA NAUTIYAL) (DR. B.R.R. KUMAR) JUDICIAL MEMBER VICE-PRESIDENT Ahmedabad; Dated 28/02/2025 btk ITA No. 998/Ahd/2024 Suzuki Motor Gujarat Pvt Ltd Vs. PCIT Asst. Year : 2018-19 - 10– आदेश की \bितिलिप अ\u000eेिषत/Copy of the Order forwarded to : 1. अपीलाथ\u0007 / The Appellant 2. \b\tथ\u0007 / The Respondent. 3. संबंिधत आयकर आयु\u0015 / Concerned CIT 4. आयकर आयु\u0015(अपील) / The CIT(A)- 5. िवभागीय \bितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड\u001f फाईल / Guard file. आदेशानुसार/ BY ORDER, True Copy उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation ………-…………… 2. Date on which the typed draft is placed before the Dictating Member …26.02.2025……………… 3. Other Member………27.02.2025…………….……………… 4. Date on which the approved draft comes to the Sr.P.S./P.S ……27.02.2025…………… 5. Date on which the fair order is placed before the Dictating Member for pronouncement.28.02.2025 6. Date on which the fair order comes back to the Sr.P.S./P.S ……28.02.2025………………………. 7. Date on which the file goes to the Bench Clerk ………28.02.2025……………………….. 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order 10. Date of Dispatch of the Order…………………………………… "