ACIT, Coimbatore V. M/s. Kamala Sugar Mills Ltd., Coimbatore

ITA 1169/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57995 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 06-03-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 21-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K E B RANGAR AJAN JR; ANIRUDH RAI
• Assessee Lawyers: S SRIDHAR
• Keywords: Depreciation; Unabsorbed depreciation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NO.1169/MDS/2011 (ASSESSMENT YEAR : 2007-08) THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-IV(1) INCOME TAX BUILDING, RACE COURSE ROAD, COIMBATORE-641 018. VS. M/S.KAMALA SUGAR MILLS LTD. 1338, AVINASHI ROAD, PEELAMEDU, COIMBATORE-641 004. PAN:AAACK9148C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ANIRUDH RAI, CIT DR & SHRI K.E.B.RANGARAJAN, JR. STANDING COUNSEL & RESPONDENT BY : SHRI S.S RIDHAR DATE OF HEARING : 6 TH MARCH, 2012 DATE OF PRONOUNCEMENT : 6 TH MARCH, 2012 O R D E R PER VIKAS AWASTHY, JUDICIAL MEMBER: THE APPEAL HAS BEEN PREFERRED BY THE DEPARTMENT AGAINST THE ORDER DATED 15 TH MARCH, 2011 PASSED BY COMMISSIONER OF INCOME TAX(APPEALS)-I, COIMBATORE. 2. THE FACTS OF THE CASE IN BRIEF ARE THAT THE ASSE SSEE COMPANY FILED RETURN FOR THE ASSESSMENT YEAR 2007-0 8 ON 27.10.2007 DECLARING ITS INCOME TO BE NIL. THE CAS E OF THE ITA NO.1169/MDS/2011 2 ASSESSEE WAS SELECTED FOR SCRUTINY. ASSESSMENT UND ER SECTION 143(3) WAS COMPLETED BY THE ASSESSING OFFI CER BY MAKING SEVERAL ADJUSTMENTS, INTER-ALIA, SHORT TERM CAPITAL GAINS WAS ADJUSTED AGAINST THE BROUGHT FORWARD DEPR ECIATION LOSS INSTEAD OF SET OFF AGAINST BROUGHT FORWARD BU SINESS LOSSES AS CLAIMED BY THE ASSESSEE. AGGRIEVED BY TH E ORDER OF THE ASSESSING OFFICER, THE ASSESSEE COMPANY PREFERR ED AN APPEAL BEFORE THE LEARNED CIT(A) ASSAILING THE ADJU STMENTS MADE BY THE ASSESSING OFFICER. THE LEARNED CIT(A) H ELD THAT THE SHORT TERM CAPITAL GAINS CAN BE SET OFF AGAINST BROUGHT FORWARD BUSINESS LOSSES AS CLAIMED BY THE ASSESSE. THE LEARNED CIT(A) FURTHER DIRECTED THE ASSESSING OFFI CER TO SET OFF BROUGHT FORWARD BUSINESS LOSSES AGAINST THE SHO RT TERM CAPITAL GAINS. 3. THE DEPARTMENT IS IN APPEAL IMPUGNING THIS ORDE R OF THE LEARNED CIT(A). THE LEARNED D.R. SUBMITTED THAT TH E CIT(A) OUGHT TO HAVE CONSIDERED THAT SECTION 72 OF THE INC OME TAX ACT ALLOWS TO SET OFF THE SHORT TERM CAPITAL GAINS AGAINST THE BROUGHT FORWARD DEPRECIATION LOSS AND NOT BUSINESS LOSS AND ITA NO.1169/MDS/2011 3 THUS THE LEARNED CIT(A) HAS ERRED IN ALLOWING THE A PPEAL OF THE ASSESSEE. 4. ON THE OTHER HAND, THE LEARNED A.R. SUBMITTED TH AT THE ORDER PASSED BY THE LEARNED CIT(A) IS A WELL REASO NED AND A DETAILED ORDER. HE FURTHER RELIED ON THE ORDER PAS SED BY THIS TRIBUNAL IN ITA NO.1649/MDS/2010 IN THE CASE OF M/S . SOUTHERN PETROCHEMICAL INDUSTRIES CORPORATION LTD. DECIDED ON 16.06.2011 AND SUBMITTED THAT THE CASE OF THE AS SESSEE IS SQUARELY COVERED BY THE SAID ORDER. 5. AFTER HEARING BOTH THE PARTIES, PERUSING THE D OCUMENTS ON RECORD AND THE FACTS OF THE CASE, WE ARE OF THE VIEW THAT THE LEARNED CIT(A) HAS RIGHTLY ALLOWED THE APPEAL O F THE ASSESSE. WE FIND THAT A SIMILAR ISSUE WAS CONSIDER ED BY THE TRIBUNAL IN ITA NO.1649/MDS/2010 (SUPRA), WHEREIN IN PARAGRAPHS 2 & 3, THE TRIBUNAL OBSERVED AS UNDER:- 2. THE GROUND RAISED BY THE REVENUE IN THE PRESENT APPEAL IS THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN ALLOWING THE ASSESSEE TO SET OFF OF BROUGHT FORWARD UNABSORBED BUSINESS LOSSES AGAINST THE CURRENT YEARS SHORT TERM CAPITAL GAINS . THIS ISSUE WAS CONSIDERED BY THE ITAT, CHENNAI B BENCH IN THE CASE OF INCOME-TAX OFFICER VS. M/S. RP IL SIGNALLYING SYSTEMS LTD. IN I.T.A.NO.383/MDS/2006 THROUGH THEIR ORDER DATED 25.4.2008. THIS ORDER OF THE ITA NO.1169/MDS/2011 4 TRIBUNAL HAS BEEN UPHELD BY THE HON'BLE MADRAS HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME-TAX VS. RPIL SIGNALLING SYSTEMS LTD. (328 ITR 283) WHERE THE HON'BLE HIGH COURT HAS HELD THAT THE UNABSORBED DEPRECIATION BROUGHT FORWARD COULD BE SET OFF AGAIN ST THE TAXABLE BUSINESS PROFIT OR INCOME UNDER ANY OTH ER HEAD FOR THE FOLLOWING EIGHT ASSESSMENT YEARS. 3. IN VIEW OF THE ABOVE, WE FIND THAT THIS APPEAL FILED BY THE REVENUE IS LIABLE TO BE DISMISSED. 6. RESPECTFULLY FOLLOWING THE ORDER OF THE CO-ORDIN ATE BENCH OF THE TRIBUNAL CITED ABOVE, WE CONFIRM THE D ECISION OF THE CIT(A) ON THIS ISSUE, AND DISMISS THE APPEAL FI LED BY THE REVENUE. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON 6 TH MARCH, 2012. SD/- SD/- ( DR. O.K.NARAYANAN) ( VIKAS AWASTHY ) VICE PRESIDENT JUDICIAL MEMBER CHENNAI, DATED THE 6 TH MARCH, 2012. SOMU COPY TO: (1) APPELLANT ( 4) CIT(A) (2) RESPONDENT (5) D.R. (3) CIT (6) G.F.