The PCIT exercising his powers u/s 263 called for revision of the order passed by the AO. The question before the Hon’ble Gujarat High Court was whether the issue of excess depreciation claimed on windmill @80% as prescribed under IT Act instead of the rate of 15.33% for a continuous plant as per companies Act for the purpose of calculation of book profit u/s 115JB of the IT Act was erroneous or not. Another issue to be considered was whether determination of fair market value u/s 40A(2)(b) of the Act in respect of payments made to related parties during the year under consideration was made without appreciating the facts of the case. The Bench held that the PR. CIT has erred in holding that the assessment order as erroneous since the asessee is allowed to claim higher depreciation under the Income Tax rules as against the rate mentioned in the Companies Act. In the second issue, the Bench followed the decision of the Hon’ble Supreme Court in Pr. CIT v. Shreeji Prints (P.) Ltd. [2021] 130 taxmann.com 294/282 Taxman 464 (SC) and held that the PR. CIT cannot hold the assessment order to be erroneous if the AO has made inquiries and accepted the genuineness a plausible view so taken. (AY. 2010-11)
PCIT v. Kansara Popatlal Tribhuvan Metal (P.) Ltd. (2023) 156 taxmann.com 433/(2024) 296 Taxman 88 (Guj)(HC)
S. 263 : Commissioner-Revision of orders prejudicial to revenue-
Company-Book profit-Depreciation-Consistently charging depreciation in its books of account at rates prescribed in Income-tax Rules and accounts of assessee had been prepared and certified as per provisions of Companies Act, 1956-A specific query was raised by Assessing Officer on issue of payment made to related party and verification of fair market value as per provision of section 40A(2)(b) and when answered-Order of Tribunal quashing the Revision order is affirmed. [S. 32,40A(2)(b), 115JB, 260A]