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 prejudice to the revenue, directing reassessment. The Court clarified that an inadequate enquiry does not equate to no enquiry, and any disallowance of depreciation would only create a timing difference for a loss-making entity, making it tax-neutral. Since there was no actual prejudice to revenue, the revision under Section 263 was unsustainable. The Supreme Court quashed the PCIT’s order and allowed the assessee’s appeal, reaffirming the principles from Malabar Industrial Co. Ltd. and Soham Buildcon.
ITAT Bangalore Quashes PCIT’s 263 Order Against Ola – Tax-Neutral Depreciation Issue Not Prejudicial to Revenue
ANI Technologies Pvt. Ltd., operator of Ola Cabs, filed appeal against the revision order u/s 263 passed by the PCIT on 18.03.2025, which set aside the assessment u/s 143(3) for AY 2020–21.
