Order u/s 263 was bad as CIT did not specify how he arrived at figure of excess depreciation allegedly claimed by the assessee
In a recent order, Hon’ble Supreme Court has dismissed SLP against the order of the Hon’ble Bombay High Court upholding the ITAT that CIT did not apply mind in passing order u/s 263 as it was nowhere mentioned how he arrived at the figure of excess depreciation allegedly claimed by the assessee.
ABCAUS Case Law Citation:
4238 (2024) (08) abcaus.in SC
In the instant case, the Pr. Commissioner of Income Tax (PCIT) had challenged the order passed by the Hon’ble High Court in confirming the order of the ITAT quashing the revisionary order u/s 263 of the Income Tax Act, 1961 (the Act) as passed without application of mind.
The PCIT observed that there was excess depreciation that had been allowed to Respondent by the Assessing Officer which according to PCIT should not have been allowed. According to PCIT, Respondent had received contributions/grants/subsidies towards costs of the capital assets which should have been reduced from the costs of the capital assets under Section 43(1) of the Act.
PCIT passed revisionary order u/s 263 of the Act and directed the Assessing Officer to obtain complete details of the contributions/grants/ subsidies received by Respondent towards costs of the capital assets and recompute the depreciation admissible under the Income Tax Rules by reducing such contributions/grants/subsidies from the costs of the capital assets as per the provision of Section 43(1) of the Act.
ITAT found that though the PCIT in order passed u/s 263 mentioned the amount of excess depreciation allegedly claimed by the assessee, it cannot be found anywhere as to how CIT arrived at the figure of excess depreciation.
Moreover, it was noted that CIT had also asked the Assessing Officer to examine the details and compute the admissible depreciation. Therefore, ITAT opined that the CIT had contradicted himself in his order and in the exercise of jurisdiction of revisionary power, CIT had not applied his mind.
The matter travelled to Hon’ble Bombay High Court.
The High Court opined that the Tribunal had not committed any perversity or applied incorrect principles to the given facts and when the facts and circumstances are properly analysed and correct test is applied to decide the issue at hand, no substantial question of law arose.
Not satisfied with the order of the Bombay High Court, the PCIT challenged it before the Hon’ble Supreme Court by filing a Special Leave to Appeal (SLP). However a full bench of the Supreme Court declined to interfere with the impugned judgment and dismissed the special leave petition.
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