DCIT Vs Johnson & Johnson Private Limited (ITAT Mumbai)
Consequential Assessment u/s 143(3) r.w.s. 263 Invalid Once PCIT’s 263 Order is Quashed; ITAT Mumbai
Mumbai Tribunal has held that once a revision order passed u/s 263 is quashed, the consequential assessment framed by AO u/s 143(3) r.w.s. 263 automatically becomes invalid. Accordingly, the Revenue’s appeal was dismissed and the Assessee’s cross objection was allowed.
Assessee, engaged in manufacturing operations through multiple undertakings, had claimed deduction u/s 80-IC in respect of its consumer division. PCIT, vide order u/s 263 dated 25.06.2018, held that Assessee wrongly claimed 100% deduction in the 6th year instead of the eligible 30% and directed revision of assessment. Consequent to the 263 order, AO passed order u/s 143(3) r.w.s. 263 on 31.10.2018 restricting the deduction.
On appeal, Tribunal in earlier proceedings [ITA No.4947/Mum/2018, order dated 17.07.2019] had already quashed the 263 order. Relying on this, CIT(A) held that the consequential AO order has no legal standing and set it aside.
Revenue carried the matter to ITAT contending that CIT(A) wrongly allowed the second spell of 100% deduction by treating substantial expansion as a fresh initial year. Assessee, through cross objection, pointed out that the Department had accepted the Tribunal’s quashing of 263 (by not appealing further), that the appeal was time-barred & that the allowability of 80-IC deduction on substantial expansion stood settled in its favour by the Supreme Court in Aarham Softronics (412 ITR 623).
