INCOME TAX ACT, 1961

Section 263

Revision under section 263 - Erroneous and prejudicial order - Enquiry made by AO was inadequate -

AO allowed depreciation at 25% on the right to leasehold land, which was classified as an intangible asset by assessee. CIT initiated proceedings under section 263 and directed AO to redo the assessment in the light of observations made in the order. Held: Tribunal found that AO on meticulous appreciation of evidence on record had allowed depreciation on intangible assets and CIT while passing the order under section 263 had held that the enquiry and verification made by AO was inadequate and the land could not be treated as intangible asset. Tribunal had held that mere inadequacy of an enquiry or insufficiency of material on record cannot be a ground to invoke powers under section 263. Therefore, CIT was not justified in invoking provision of section 263.

Applied :Ultratech Cement Ltd. & Ors. v. State of Rajasthan & Ors. [Civil Appeal No. 2773/2020 dt. 17-7-2020], CIT v. Max India Ltd. (2007) 295 ITR 282 (SC) : 2007 TaxPub(DT) 1548 (SC) and Malabar Industrial Co. Ltd. v. CIT (2000) 243 ITR 83 (SC) : 2000 TaxPub(DT) 1227 (SC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2006-07

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