Oriental Buildtech Private Limited Vs PCIT (ITAT Delhi)
In a recent ruling, the Income Tax Appellate Tribunal (ITAT) Delhi has set aside a revisionary order passed by the Principal Commissioner of Income-Tax (PCIT) concerning the allowance of depreciation on goodwill for Assessment Year 2016-17 in the case of Oriental Buildtech Private Limited. The ITAT’s decision highlights critical aspects of revisionary jurisdiction under Section 263 of the Income-Tax Act, 1961, and the applicability of accounting standards.
The case originated from the assessment year 2016-17, for which Oriental Buildtech Private Limited had e-filed its return on October 16, 2016, declaring a loss. The initial assessment order, passed under Section 143(3) on December 22, 2018, accepted the returned loss. However, the PCIT subsequently invoked revisionary powers under Section 263, issuing an order on March 31, 2021. The primary reason cited by the PCIT for this revision was the Assessing Officer’s “inability to disallow depreciation on goodwill on account of technical issues.”
Oriental Buildtech Private Limited challenged this revisionary order before the ITAT. In its previous order dated February 23, 2023, the ITAT had set aside the PCIT’s initial revisionary order, directing the PCIT to pass a fresh order after properly considering the assessee’s submissions. The assessee had, in fact, filed a detailed reply to the PCIT’s show-cause notice, which was reportedly not taken into account in the first revisionary order.
