Section 263 Revision Quashed: Tax-Neutral Depreciation Issue Not Prejudicial to Revenue

ANI Technologies Pvt Ltd Vs PCIT (ITAT Bangalore) Summary: The Supreme Court held that the revisionary powers of the Principal Commissioner of Income Tax (PCIT) under Section 263 of the Income-tax Act cannot be exercised unless an assessment order is both erroneous and prejudicial to the revenue. The assessee, a loss-incurring entity, claimed depreciation on software expenditure of ₹2.62 crore for AY 2020-21. The AO conducted detailed enquiries, including party-wise breakups and supporting documents, and passed the assessment allowing depreciation. The PCIT alleged lack of enquiry and prejud...