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Income Tax Appellate Tribunal - Mumbai

Kosi Bridge Infrastructure Company Pvt ... vs Pr Cit -6, Mumbai on 5 March, 2021

                                1      I.T.A. Nos.3471 & 3578/Mum/2019


                    IN THE INCOME TAX APPELLATE TRIBUNAL
                              "H" BENCH, MUMBAI

                  BEFORE SHRI SAKTIJIT DEY (JUDICIAL MEMBER)
                                      AND
                  SHRI N.K. PRADHAN (ACCOUNTANT MEMBER)

            I.T.A. No.3471/Mum/2019       - Assessment Year- 2012-13
            I.T.A. No.3578 /Mum/2019      - Assessment Year- 2014-15

Kosi Bridge Infrastructure Company vs     Principal Commissioner of Income-
Private Ltd, Unit No.703, 7th Floor       tax-6, Mumbai
Tower 3, Equinox Business Park
Off BKC, LBS Marg, Mumbai-400 070
PAN : AACCK8652M
             APPELLANT                                 RESPONDENT

Appellant by                             Shri Rakesh Joshi
Respondent by                            Shri Vinay Sinha, CIT,DR

Date of hearing                          16-02-2021
Date of pronouncement                    05-03-2021

                                    ORDER

Per Saktijit Dey (JM) Captioned appeals have been filed by the assessee challenging the validity of the orders passed by the learned Principal Commissioner of Income Tax (PCIT)- 6, Mumbai under section 263 of the Income-tax Act, 1961 for the assessment years 2012-13 and 2014-15.

2. The facts relevant for disposal of this appeal are, the assessee is a resident company and is engaged in the activity of developing various infrastructure projects. While carrying on such activity, the assessee had constructed a part of National Highway No.57, being a bridge over river Kosi in the state of Bihar on build, operate and transfer (BOT) basis under the Annuity Scheme. For the assessment year 2012-13, the assessee filed its return of income, originally on 26- 09-2012 declaring loss of Rs.61,99,84,578/-. Subsequently, assessee filed a revised return on 29-03-2014 revising loss to Rs.62,53,59,860/- after claiming depreciation on the BOT project constructed by it. Originally, assessment was completed under section 143(3) of the Act vide order dated 11-03-2016 accepting the income/loss returned by the assessee, after allowing the claim of depreciation. Subsequently, the assessment was reopened under section 147 of the Act on the reasoning that the assessee not being the owner of the bridge constructed, is ineligible to claim depreciation. Ultimately, the assessing officer concluded the assessment under section 143(3) r.w.s. 147 of the Act vide order dated 18-1-2017 disallowing assessee's claim of depreciation on the BOT project.

3. Against the re-assessment order passed disallowing claim of depreciation, assessee filed appeal before learned Commissioner of Income-tax (Appeals). In the meanwhile, on an application filed by the assessee making an alternative claim of amortization of expenditure incurred in the BOT project, the assessing officer passed an order under section 154 of the Act on 14-03-2019 allowing assessee's claim of amortization in terms of CBDT circular No.9 of 2014.

4. When the matter stood thus, learned PCIT, in exercise of his power under section 263 of the Act called for the assessment records of the assessee. After perusing the records, he was of the view that while completing the re-

assessment, the assessing officer has not examined the capitalization of expenditure in earlier years, as well as, has not verified the genuineness of expenditure claimed before allowing amortization of such expenditure. Therefore, he issued show cause notice to the assessee to explain, why the re- assessment order as well as the order passed under section 154 of the Act should not be set aside. Though, the assessee made submissions challenging the validity of power exercised under section 263 of the Act as well as the merits of the claim of amortization; however, the revisional authority was not convinced. Learned PCIT, ultimately, passed the impugned order setting aside the order passed under section 143(3) r.w.s.147 of the Act as well as the rectification order passed under section 154 of the Act while directing the assessing officer to verify the veracity and genuineness of assessee's claim of capitalized expenditure and thereafter allow the amortization benefit. After passing of the order under section 263 of the Act, learned Commissioner (Appeals), while deciding assessee's appeal filed against the assessment order passed under section 143(3) r.w.s.147 of the Act, passed an order on 22-10-2019 directing the assessing officer to allow assessee's claim of depreciation on the BOT project. While giving effect to the directions of learned PCIT and learned Commissioner (Appeals) in the respective orders passed by them, the assessing officer passed a fresh assessment order under section 143(3) r.w.s. 263 of the Act on 18-12-2019 allowing assessee's claim of depreciation on the BOT project.

5. We have heard Shri Rakesh Joshi, learned Authorised Representative of the assessee and Shri Vinay Sinha, learned Departmental Representative.

6. As could be seen from the facts emerging from record and briefly discussed earlier, the major dispute is with regard to assessee's claim of depreciation on the 4 I.T.A. Nos.3471 & 3578/Mum/2019 BOT project. In the re-assessment order, the assessing officer had disallowed the depreciation claimed. However, in an order passed under section 154 of the Act, the assessing officer allowed amortization of the expenditure in terms of CBDT circular referred to above. Learned PCIT, while exercising his power under section 263 of the Act has set aside the re-assessment order as well as the order passed under section 154 of the Act, as referred to above, by directing the assessing officer to verify the genuineness of expenditure claimed by the assessee and thereafter allow amortization. Whereas, while deciding assessee's appeal against disallowance of depreciation on BOT project, learned Commissioner (Appeals) has directed the assessing officer to allow the claim of depreciation. It is observed, in the fresh assessment order passed under section 143(3) r.w.s. 263 of the Act the assessing officer, after verifying the details, has recorded a categorical finding that the expenditures claimed by the assessee on the BOT project are genuine. Further, the assessing officer has also given effect to the directions of learned Commissioner (Appeals) by allowing depreciation on the BOT project. Thus, it is apparent, the assessing officer has carried out the directions of, both, learned PCIT and learned Commissioner (Appeals) in letter and spirit. As far as validity of assumption of jurisdiction under section 263 of the Act is concerned, in principle, we agree with the learned Counsel for the assessee that the reassessment order cannot be held as either erroneous or prejudicial to the interest of revenue, as, the assessment was reopened only for the purpose of disallowing assessee's claim of depreciation. In the reassessment proceeding the assessing officer was not required to examine the genuineness of expenditure capitalized as it was a subject matter of original assessment proceeding. Be that as it may, in the fresh assessment order the assessing officer has verified the details of expenditure 5 I.T.A. Nos.3471 & 3578/Mum/2019 capitalized and found them to be genuine. Further, the assessing officer has also allowed assessee's claim of depreciation. Thus, in view of the fresh assessment order passed under section 143(3) r.w.s 263 of the Act, the issues raised in the present appeal are now of mere academic interest. In effect, the present appeal of the assessee having become infructuous, does not require adjudication.

7. In the result, appeal is dismissed.

8. The facts in this appeal are more or less identical to ITA No.3471/Mum/2019 decided in the earlier part of this order, except, for the fact that in the assessment order passed under section 143(3) of the Act, the assessing officer, though, disallowed assessee's claim of depreciation on the BOT project; however, he allowed amortization of expenditure incurred on the BOT project. Whereas, learned PCIT, in the order passed under section 263 of the Act has set aside the assessment order with a direction to verify the genuineness of expenditure claimed and thereafter allow amortization. Like in the Assessment Year 2012-13, learned Commissioner (Appeals) allowed assessee's claim of depreciation on the BOT project. In the fresh assessment order passed under section 143(3) r.w.s 263 of the Act the assessing officer has verified the expenditure capitalized and found them to be genuine and thereafter has allowed depreciation on the BOT project. In view of the aforesaid, our decision inITA No.3471/Mum/2019, supra, would apply mutatis mutandis to this appeal also. Accordingly, the appeal having become infructuous is dismissed.

9. In the result, both the appeals are dismissed.

Order pronounced on 05/03/2021.

                sd/-                                       sd/-
           (N.K. PRADHN)                          (SAKTIJIT DEY)
     ACCOUNTANT MEMBER                          JUDICIAL MEMBER
Mumbai, Dt : 05/03/2021
Pavanan
Copy to :
  1. Appellant
  2. Respondent
  3. The CIT concerned
  4. The CIT(A)
  5. The DR, ITAT, Mumbai
  6. Guard File
                            /True copy/
                                                By Order



                                       Asstt. Registrar, ITAT, Mumbai
 7   I.T.A. Nos.3471 & 3578/Mum/2019