Appollo Tyres Ltd. vs Deputy Commissioner of Income Tax

Dr. Manjula Chellur, C.J.—Heard learned senior counsel, Sri Joseph Markose, appearing for the appellant-assessee. The writ petition (appeal?) was filed questioning the revisional jurisdiction exercised by the Commissioner of income tax u/s 263 of the income tax Act, 1961 (for short, "the Act"). It is not in dispute that regular assessment was completed u/s 143(3) of the Act on December 31, 2007. Several issues came up for consideration before the Commissioner of income tax (Appeals) and even the appellate authority proceeded to pass orders on June 23, 2008. Meanwhile, the Commissioner of income tax, who is the authority under the Act, passed order dated March 15, 2010, exercising its revisional powers u/s 263 of the Act. According to the revisional authority, several issues raised in the order passed u/s 263 of the Act were not explained properly and further through the material available on record, though tried to be explained by the assessee, it was not satisfactory, therefore, the matter came to be remanded for fresh consideration by the Assessing Officer, as the order passed by the Assessing Officer is erroneous and is prejudicial to the interests of the Revenue. Issues (i) to (ix) in annexure A3 order read as under:

(i) In the computation of depreciation on building used for residential purpose, the sale value of office building was wrongly adjusted resulting in allowance of excess depreciation.

(ii) Depreciation at appropriate rate is being claimed and allowed in respect of vehicles purchased under the dealer vehicle scheme on the full value without considering the deposit amount.

(iii) Depreciation on computer accessories has been allowed at 60 per cent as against 25 per cent allowable. Excess depreciation has to be withdrawn.

(iv) The Assessing Officer has omitted to include the deposits collected from the dealers under the dealer network expansion programme (ATW showroom) as income of the assessee.

(v) One-eighth portion of the corporate office building has been let out and the Assessing Officer has disallowed one-eighth depreciation on that building u/s 38(2). However, the Assessing Officer has failed to consider the proportionate disallowance on repairs and maintenance expenditure of the building.

(vi) The Assessing Officer has omitted to disallow the employees as well as employers contribution towards provident fund for the month of March, 2005, which were not paid u/s 36(1)(va)/43B of the Act.

(vii) The Assessing Officer has omitted to include the receipts as per the TDS certificates filed. It was also not verified by the Assessing Officer whether the entire miscellaneous receipts of Rs. 31,14,449 accounted represents receipts as per the TDS certificates.

(viii) The Assessing Officer has omitted to disallow the proportionate expenditure on exempted income (dividend) u/s 14A of the Act. Similarly, income from sale of investment is computed under capital gains and, therefore, expenses attributable to acquisition of the investments cannot be deducted while computing the income from business.

(ix) According to the details of additions to the plant and machinery during the year furnished as per the annexure to the depreciation statement, an amount of Rs. 2,00,75,230 relates to the plant and machinery installed at the office premises, the value of which cannot be considered for additional depreciation under clause (b) of the second proviso. The excess additional depreciation granted u/s 32(1)(iia) on the plant and machinery installed at the office premises requires to be withdrawn.

This order of the Commissioner was challenged before the Tribunal, who confirmed the order of the Commissioner by order dated February 8, 2013. Aggrieved by this, the appellant-assessee is before us.

According to learned senior counsel, the Commissioner failed to appreciate that the Assessing Officer did consider the specific nine points raised u/s 263 of the Act, therefore, there was nothing which could be termed as erroneous consideration on the part of the Assessing Officer, as the Assessing Officer is not required to make roving enquiry into each and every issue concerned, item-wise while accepting the returns of the assessee. On a perusal of the records, we notice that the order of the Commissioner passed u/s 263 of the Act is a detailed order discussing each of the nine points raised by the revisional authority. The Tribunal, after referring to the decision of the Bombay High Court in the case of Grasim Industries Ltd. Vs. Commissioner of Income Tax, analysed what exactly would mean prejudice to the interests of the Revenue and how an authority exercising powers u/s 263 of the Act has to proceed in the matter. Ultimately, following the decision of apex court in MALABAR INDUSTRIAL CO. LTD. Vs. COMMISSIONER OF INCOME TAX, the Tribunal also confirmed the opinion of the Commissioner that there was no application of mind while considering the assessment u/s 143(3) of the Act, therefore, it is not only erroneous but also prejudicial to the interests of the Revenue. Opining that the procedure adopted definitely would have implication on the tax computation which ultimately causes prejudice to the Revenue, the Tribunal confirmed the orders of the Commissioner u/s 263 of the Act.

Having regard to the reasoning of the Tribunal, we affirm the opinion of the Tribunal that the fresh consideration of the matter by the assessing authority in the light of the observations of the revisional authority has to be made afresh untrammeled by any of the observations made by the authorities concerned. We find no good ground to interfere with the opinion of the authorities concerned. Hence, the appeal is dismissed.