Everllence India Private Limited Vs PCIT (ITAT Pune)
The appeal before the ITAT Pune concerned the validity of revisionary proceedings initiated under Section 263 of the Income Tax Act for Assessment Year 2018–19. The assessee, a private limited company engaged in manufacturing diesel engines and steam turbines, had originally filed its return declaring income of ₹62.26 crore. The case was selected for scrutiny on specific issues including deductions, export-import transactions, duty drawback, and international related party transactions. The Assessing Officer (AO) completed the assessment under Section 143(3) read with Section 144C(13), making certain additions and determining total income at ₹70.57 crore.
Subsequently, the Principal Commissioner of Income Tax (PCIT) invoked revisionary powers under Section 263 on the ground that the AO had failed to examine two issues: (i) depreciation claimed on goodwill amounting to ₹6.21 crore, and (ii) deduction relating to warranty provision of ₹1.68 crore. The PCIT held that the assessment order was erroneous and prejudicial to the interests of the Revenue due to lack of proper verification.
The assessee challenged this action before the Tribunal, contending that depreciation had been claimed on the opening written down value (WDV) of goodwill created in earlier years pursuant to an amalgamation. The goodwill had been recognised in Assessment Year 2016–17 and depreciation allowed in that year. Therefore, the claim for the current year was a continuation of an accepted position. It was further argued that the AO had no jurisdiction to examine issues beyond the scope of the limited scrutiny.
