DCIT CORPORATE CIRCLE-1, COIMBATORE V. M/S SRI LAKSHMI ELECTRO SMELTERS PRIVATE LIMITED, COIMBATORE

ITA 1969/CHNY/2025

AI Insights

The case involves the Assistant Commissioner of Income Tax, Corporate Circle-1, Coimbatore (Appellant) against M/s. Sri Lakshmi Electro Smelters Private Limited (Respondent) concerning the Assessment Year 2014-15. The primary issues revolved around the assessment of income, denial of set off of unabsorbed depreciation, and the taxability of sundry creditors. The AO had made additions to the income assessed and denied claims for set off of losses, which were partially contested and remanded back for re-examination by the CIT(A). The Tribunal's decision focused on procedural correctness and the substantive issues of taxability under the appropriate sections of the Income Tax Act.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 826319 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2026
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: misc
• Appeal Filed On: 11-07-2025
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R. ANITHA
• Assessee Lawyers: K. BALASUBRAMANIAN; C.A
• Keywords: Set aside; Business income; Depreciation; Unabsorbed depreciation

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH: CHENNAI BEFORE HON’BLE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI SS VISWANETHRA RAVI, JUDICIAL MEMBER ITA No.1969/Chny/2025, Assessment Years: 2014-15 CO No.86/Chny/2025, Assessment Years: 2014-15 The Assistant Commissioner of Income Tax, Corporate Circle-1, Coimbatore. M/s.Sri Lakshmi Electro Smelters Private Limited, No.93/30A, Balaji Nagar West, Ramanathapuram, Coimbatore, Tamil Nadu-641 045. [PAN: AAECS5453J] Appellant Respondent Assessee by : Mr.K.Balasubramanian, C.A Revenue by : Ms.R.Anitha, Addl.CIT Date of Hearing : 07.01.2026 Date of Pronouncement : 07.01.2026 O R D E R PER INTURI RAMA RAO, A.M : This appeal filed by the Revenue is directed against the order of the NFAC (herein after called CIT(A)’ in short], Delhi, dated 13.05.2025 for Assessment Year-2014-15 and the CO No.86/Chny/20025 filed by the assessee company. 2.0 Briefly the facts of the case are that the respondent assessee is a company duly incorporated under the provisions of the companies Act 1956. It is engaged in the business of manufacture and sale of Ferro Printed from counselvise.com ITA No.1969 & CO-86/Chny/2025 Page - 2 - of 4 Alloys. The return of income for Assessment Year 2014-15 was filed on 18.12.2015 disclosing a income of Rs.19,850/-. Against the said return of income, the assessment was completed by the Assistant Commissioner of Income Tax, Corporate Circle-2, Coimbatore (hereinafter called “AO”) at a total income of Rs.1,25,19,850/- vide order dated 10.10.2016 passed u/s 143(3). While doing so, the AO made addition of the outstanding sundry creditors of Rs.1,25,00,000/- being the amount of advance received against the supply of machinery from M/s.Cethar Vessels Private Limited, Trichy, based on the concession made by the respondent assessee company. The AO also denied the claim made during the course of assessment proceedings for set off of unabsorbed depreciation of Rs.2,00,06,636/- and carry forward business loss of Rs.14,87,948/- by holding that the respondent assessee company had failed to substantiate the claim. 3.0 Being aggrieved by the above assessment order, an appeal was filed before the CIT(A) contending that the AO ought to have allowed set off of unabsorbed depreciation loss against the business income determined. Further, contended that the addition made on account of disbelieving the sundry creditors on receipt of advance against the supply of machinery cannot be made u/s 41(1), but under provisions of section 51(1) of the Act. The learned CIT(A) on due consideration of the written submissions made by the responded company had restored the issue of set off unabsorbed Printed from counselvise.com ITA No.1969 & CO-86/Chny/2025 Page - 3 - of 4 depreciation loss against the business losses for fresh examination by the AO. However, the issue of taxability of sundry creditors u/s 51(1) remains unadjudicated by the CIT(A). Being aggrieved, the revenue is in appeal before us. 4.0 The learned Sr.DR submits that the CIT(A) ought not to have allowed the benefit of set off of unabsorbed depreciation loss in the absence of the return of income for the earlier years and merely based on the written submissions of the respondent. On the other hand, the learned A.R supports the order of NFAC. 5.0 We heard the rival submissions and perused the material on record. On careful perusal of the impugned order, it would be clear that the NFAC had only set aside the issue of set off of unabsorbed depreciation loss against the business income determined to the file of AO. The direction of the NFAC would not cause any prejudice to the department. Therefore, we do not find any merit in the grounds of appeal filed by the revenue. In the result, the appeal filed by the revenue stands dismissed. 6.0 The Cross Objection filed by the assessee is also dismissed as withdrawn. Order pronounced on 7th , January-2026 at Chennai. Printed from counselvise.com ITA No.1969 & CO-86/Chny/2025 Page - 4 - of 4 Sd/- (SS VISWANETHRA RAVI) Judicial Member Sd/- (INTURI RAMA RAO) Accountant Member Chennai, Dated: 7th , January-2026. KB/- Copy to: 1. Appellant 2. Respondent 3. CIT - Chennai/Coimbatore/Madurai/Salem. 4. DR 5. GF Printed from counselvise.com "