Assistant Commissioner of Income Tax Circle-3, Nagpur V. M/s Indoworth India Limited , Nagpur

ITA 108/NAG/2020

AI Insights

The case involves an appeal by the Assistant Commissioner of Income Tax (ACIT), Circle-3, Nagpur against M/s. Indoworth India Ltd. concerning the assessment year 2009-2010. The appeal was directed against the order of the CIT(A)-2, Nagpur, which had deleted additions made by the Assessing Officer (AO) regarding unabsorbed depreciation and disallowances under section 36(1)(iii) of the Income Tax Act, 1961. The Tribunal conducted a virtual hearing and, after considering the submissions and the relevant legal provisions, upheld the CIT(A)'s decision, dismissing the Revenue's appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 136591 (ITAT-NAGPUR)
• Duration Of Justice: 3 year(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 19-09-2023
• Assessment Year: 2009-2010
• Appeal Filed On: 07-10-2020
• Other Referred Cases: DCIT-Cir-3, Mumbai vs. Times Gurently Ltd., Hindustan Unilever Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Notional interest; Unabsorbed depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH : NAGPUR [THROUGH VIRTUAL HEARING AT INCOME TAX APPELLATE TRIBUNAL : PUNE BENCHES : PUNE] BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND DR. DIPAK RIPOTE, ACCOUNTANT MEMBER I.T.A.No.108/NAG./2020 Assessment Year 2009-2010 The ACIT, Circle-3, Room No.302, 3 rd Floor, Saraf Chambers, Sadar, Mount Road, Nagpur – 440 001. Maharashtra. vs. M/s. Indoworth India Ltd., B-130, MIDC Industrial Area, Butibori. Dist – Nagpur – 441 122. Maharashtra. PAN AABCI0704R (Appellant) (Respondent) For Revenue : Shri Kailash Kanojiya, Sr. DR. For Assessee : -None- Date of Hearing : 20.09.2023 Date of Pronouncement : 12.10.2023 ORDER PER SATBEER SINGH GODARA, J.M. : This Revenue’s appeal arises against the CIT(A)-2, Nagpur, Nagpur’s order in case no.CIT(A)-2/166/2014-15- ITBA.No.10398, dated 27.07.2020, involving proceedings u/s.143(3) r.w.s. 147 of the Income Tax Act, 1961 (in short “the Act”). Despite service of notice, none appears at assessee’s behest. It is accordingly proceeded ex-parte. 2 ITA.No.108/Nag./2020 2. The Revenue pleads the following substantive grounds in the instant appeal : 1. “Whether on the facts and in circumstances of the case and in law the learned CIT(A)-2, Nagpur was justified in deleting addition made by the AO on account of unabsorbed depreciation who had relied on the decision of the Honorable ITAT, Mumbai in the case of DCIT-Cir-3, Mumbai -vs- Times Gurently Ltd. (2010) 40 SOT (Mum) wherein the Honourable ITAT has opined on the issue of carry forward of unabsorbed depreciation and which is squarely applicable to the facts and circumstances of this case. 2. Whether on facts and in the circumstances of the case and in law the Ld. CIT(A)-2, was justified in deleting the additions made on account of disallowances u/s 36(l)(iii) of the Income Tax Act, 1961 in spite of the fact that the as per audit report submitted by the assessee it was clear that assessee had given interest free advances and therefore, the AO had charged notional interest on it and disallowed the interest expenses claimed by the assessee. 3. Any other grounds of appeal at the time of hearing.” 3. Coming to the Revenue’s first and foremost issue of carry forward of the assessee’s unabsorbed depreciation disallowed by the Assessing Officer in his assessment dated 3 ITA.No.108/Nag./2020 03.02.2014; we note that the CIT(A) has accepted the latter’s stand as under : 4 ITA.No.108/Nag./2020 5 ITA.No.108/Nag./2020 4. Suffice to say, it has come on record that the instant issue as to whether the assessee is entitled to carry forward it’s unabsorbed depreciation/losses only for a period of eight years or not; is hardly res integra in light of honble jurisdictional high court’s decision in M/s. Hindustan Unilever Ltd., (supra). The Revenue could hardly pinpoint any illegality or infirmity to this settled legal proposition. We uphold the learned CIT(A)'s findings therefore. 6 ITA.No.108/Nag./2020 5. The outcome would be hardly any different in the Revenue’s later substantive ground seeking to revive sec.36(1)(iii) interest disallowance/addition of Rs.4,88,97,486 which has been reversed in the CIT(A)'s detailed discussion as under : 7 ITA.No.108/Nag./2020 8 ITA.No.108/Nag./2020 6. The Revenue could hardly rebut the clinching fact that the assessee had been having non-interest bearing funds exceeding the interest free loans (supra). That being the case, we conclude that the CIT(A) has rightly followed the foregoing various judicial precedents to conclude that the necessary inference in such an instance is of utilisation of interest free funds only. The Revenue’s instant second substantive ground also fails therefore. 7. This Revenue’s appeal is dismissed. Order pronounced in the open Court on 12.10.2023. Sd/- Sd/- [DR. DIPAK P. RIPOTE] [SATBEER SINGH GODARA] ACCOUNTANT MEMBER JUDICIAL MEMBER Pune, Dated 12 th October, 2023 VBP/- 9 ITA.No.108/Nag./2020 Copy to 1. The applicant 2. The respondent 3. The CIT(A)-2, 215, Aayakar Bhavan, Telangkhedi Road, Civil Lines, Nagpur. PIN – 440 001. 4. The Pr. CIT-2/3, Nagpur. 5. D.R. ITAT, Nagpur Bench, Nagpur. 6. Guard File. //By Order// //True Copy // Assistant Registrar, ITAT, Pune Benches, Pune.