Igarashi Motors India Limited, CHENNAI V. ACIT, CHENNAI

ITA 1203/CHNY/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2685 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 9 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-03-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 04-01-2018
• Assessment Year: 2005-2006
• Appeal Filed On: 15-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: N VIJAY KUMAR
• Keywords: Depreciation; Unabsorbed depreciation

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , , $ BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER /. I.T.A. NO.1203/CHNY/2017 / ASSESSMENT YEAR : 2005-06 IGARASHI MOTORS INDIA LIMITED, PLOT NO. B-12 TO B-15, PHASE-II, MEPZ-SEZ, TAMBARAM, CHENNAI 600 045. [PAN: AAACC 1305R] VS. ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE -2(2), CHENNAI 034. ( / APPELLANT) ( %&' /RESPONDENT ) '( / APPELLANT BY : SHRI. N. VIJAY KUMAR, CA %&'( / RESPONDENT BY : SHRI. A R V SREENIVASAN, JCIT ( /DATE OF HEARING : 18.12.2019 ( /DATE OF PRONOUNCEMENT : 10.03.2020 / O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER : THE ASSESSEE FILED THIS APPEAL AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-9, CHENNAI, IN ITA NO. 42(2009 -10) & 06(2008- 09)/CIT(A)-9 DATED 27.02.2017 FOR ASSESSMENT YEAR 2 005-06. :-2-: ITA NO.1203/CHNY/2017 2. M/S. IGARASHI MOTORS INDIA LTD., THE ASSESSEE, IS ENGAGED IN THE BUSINESS OF MANUFACTURE OF ELECTRIC MICRO MOTOR S AND SUB-ASSEMBLIES. IN ITS RETURN FILED FOR THE ASSESSMENT YEAR 2005-06 , THE ASSESSEE AFTER ADJUSTING THE BROUGHT FORWARD LOSSES FROM ITS GROS S TOTAL INCOME ARRIVED THE TOTAL INCOME AT NIL. WHILE DOING THE ASSESSMEN T, THE AO HELD THAT IN VIEW OF PROVISIONS OF SECTION 10A(6), THE ASSESSEE IS NOT ELIGIBLE TO SET OFF LOSSES WHERE SUCH LOSS RELATE TO ANY OF THE ASSESSM ENT YEARS ENDING BEFORE THE FIRST DAY OF APRIL 2001 AND ACCORDINGLY COMPLETED THE ASSESSMENT REJECTING THE ASSESSEES CLAIM. AGGRIEV ED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A). THE LD. CIT(A) DISMIS SED THE APPEAL. AGGRIEVED AGAINST THE ORDER OF THE LD. CIT(A), THE ASSESSEE FILED THIS APPEAL. 3. THE LD. AR INVITING OUR ATTENTION TO THE COPY OF THE PAPER BOOK SUBMITTED THAT THE ASSESSEE COMPANY THOUGH COMMENCE D ITS PRODUCTION DURING THE PERIOD RELATING TO ASSESSMENT YEAR 1994- 95, IT DID NOT CLAIM THE BENEFIT OF DEDUCTION U/S. 10A UPTO ASSESSMENT Y EAR 1997-98. IT STARTED AVAILING THE BENEFIT OF DEDUCTION U/S. 10A ONLY FROM THE ASSESSMENT YEAR 1997-98. IN THIS REGARD, THE LD. A R INVITED OUR ATTENTION TO THE COPY OF ASSESSEES LETTERS DATED 2 4.11.1997 & 27.11.1998 TO THE AO AND CORRESPONDING COPIES OF 1 43(1)(A) ORDERS DATED 25.04.1998 & 02.11.1998, WHEREIN THE AO HAS M ENTIONED UNDER :-3-: ITA NO.1203/CHNY/2017 THE COLUMN EXPLANATION FOR ADJUSTMENTS (IF ANY) MAD E AS OPTED OUT/IN OF SECTION 10A VIDE LETTER DATED 27.11.1998 COPY GIVEN AND SUBMITTED THAT THEREFORE THE BLOCK OF 10 CONSECUTIVE ASSESSMENT YE ARS AVAILING THE DEDUCTION U/S. 10A HAS TO COMMENCE FROM ASSESSMENT YEAR 1997-98 ONLY AS PROVIDED U/S. 10A(8) FOR THE REASON THAT T HE ASSESSEE HAS EXERCISED THE OPTION TO AVAIL THE BENEFIT OF DEDUCT ION UNDER SECTION 10A FROM THAT ASSESSMENT YEAR ONLY. THEREFORE, THE ASS ESSEE IS ENTITLED TO SET OFF THE BROUGHT FORWARD LOSSES OF ASSESSMENT YE ARS 1994-95 TO 1997- 98 AGAINST THE GROSS TOTAL INCOME OF ASSESSMENT YEA R 2005-06 AND HENCE PLEADED TO ALLOW THE ASSESSEES APPEAL. PER CONTRA , THE LD. DR SUBMITTED THAT THE ASSESSEE COMMENCED ITS MANUFACTURING ACTIV ITY IN ASSESSMENT YEAR 1994-95. THEREFORE, THIS ASSESSMENT YEAR IS T HE FIRST YEAR OF ELIGIBILITY, THE 10 TH YEAR OF CLAIM WOULD BE ASSESSMENT YEAR 2003-04 AND HENCE THE ASSESSEE WOULD NOT BE ENTITLED TO CLAIM T HE EXEMPTION U/S. 10A FROM ASSESSMENT YEAR 2004-05 ONWARDS. THE ASSE SSMENT YEAR UNDER CONSIDERATION IS ASSESSMENT YEAR 2005-06. TH EREFORE, AS HELD BY THE LD. CIT(A), THE ASSESSEE IS NOT ENTITLED FOR TH E EXEMPTION U/S. 10A IN THE ASSESSMENT YEAR 2005-06 AND ACCORDINGLY HE SUP PORTED THE ORDER OF THE LD. CIT(A) SUBMITTING THAT NOWHERE SECTION 10A (8) PROVIDES THAT THE LOSS RELATING TO THE PERIOD WHERE NO CLAIM IS MADE IS ENTITLED TO BE CARRIED FORWARD IN SPITE OF SECTION 10A(6) OF THE ACT. IN THE NORMAL COURSE THE ASSESSEE COULD HAVE BEEN ELIGIBLE TO CARRY FORWARD THE UNABSORBED :-4-: ITA NO.1203/CHNY/2017 DEPRECIATION ALLOWANCE AND THE BUSINESS LOSS FROM T HE ASSESSMENT YEAR 1998-99 ONWARDS WITHOUT ANY RESTRICTION WITH OR WIT HOUT SECTION 10A(8). BUT , BECAUSE OF THE RESTRICTION AS PROVIDED U/S. 1 0A(6), WITH EFFECT FROM ASSESSMENT YEAR 2001-02, AS AMENDED BY FINANCE ACT 2003, THE BUSINESS LOSS AND UNABSORBED DEPRECIATION RELATING TO RELEVA NT ASSESSMENT YEARS ENDING BEFORE 01.04.2001 IS NOT ENTITLED TO BE CARR IED FORWARD AFTER THE COMPLETION OF BLOCK OF 10 CONSECUTIVE ASSESSMENT YE ARS. IN VIEW OF THE ABOVE, THE CARRY FORWARD BUSINESS LOSS AND THE UNAB SORBED DEPRECIATION RELATED TO THE ASSESSMENT YEARS 1994-95 TO 1997-98 IS NOT ELIGIBLE TO BE SET OFF AGAINST THE INCOME OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2005-06. 4. WE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH RELEVANT MATERIAL. IT IS CLEAR FROM THE ABOVE THAT THE ASSE SSEE COMPANY COMMENCED ITS PRODUCTION DURING THE PERIOD RELATING TO ASSESSMENT YEAR 1994-95, HOWEVER, IT IS PLEADED THAT IT DID NOT CLA IM THE BENEFIT OF DEDUCTION U/S. 10A UP TO THE ASSESSMENT YEAR 1997-9 8. IT STARTED AVAILING THE BENEFIT OF DEDUCTION U/S. 10A ONLY FRO M THE ASSESSMENT YEAR 1997-98 AS EVIDENCED BY THE INTIMATIONS ISSUED FOR THE ASSESSMENT YEARS 1997-98 & 1998-99. THEREFORE, THE BLOCK OF 10 CONS ECUTIVE ASSESSMENT YEARS FOR AVAILING THE DEDUCTION U/S. 10A HAS TO C OMMENCE FROM ASSESSMENT YEAR 1997-98 AS PROVIDED U/S. 10A(8). HO WEVER, THE :-5-: ITA NO.1203/CHNY/2017 REVENUE PLEADS THAT THE ASSESSEE COMMENCED ITS MANU FACTURING ACTIVITY IN THE ASSESSMENT YEAR 1994-95. THEREFORE, THIS AS SESSMENT YEAR IS THE FIRST YEAR OF ELIGIBILITY, THE 10 TH YEAR OF CLAIM WOULD BE ASSESSMENT YEAR 2003-04. THE ASSESSEE WOULD NOT BE ENTITLED TO CLAI M THE EXEMPTION U/S. 10A FROM ASSESSMENT YEAR 2004-05 ONWARDS AND THEREF ORE DEFINITELY IT IS NOT ENTITLED FOR THIS ASSESSMENT YEAR IE AY 2005-06 . HOWEVER THE PROVISIONS OF SECTIONS 10(8) READS AS UNDER : (8) NOTWITHSTANDING ANYTHING CONTAINED IN THE FOR EGOING PROVISIONS OF THIS SECTION, WHERE THE ASSESSEE, BEFORE THE DUE DA TE FOR FURNISHING THE RETURN OF INCOME UNDER SUB-SECTION (1) OF SECTION 1 39, FURNISHES TO THE ASSESSING OFFICER A DECLARATION IN WRITING THAT THE PROVISIONS OF THIS SECTION MAY NOT BE MADE APPLICABLE TO HIM, THE PROV ISIONS OF THIS SECTION SHALL NOT APPLY TO HIM FOR ANY OF THE RELEVANT ASSE SSMENT YEARS. THEREFORE, IT IS REQUIRED, TO EXAMINE AS TO WHETHER THE ASSESSEE CLAIMED THE BENEFIT OF THE PROVISIONS OF SECTION 10A FOR T HE ASSESSMENT YEARS 1994-95 TO 1996-97 OR NOT. IN VIEW OF THAT WE DEEM IT FIT TO REMIT THIS ISSUE BACK TO THE AO TO VERIFY THE CLAIM AND IF HE FINDS THAT THE ASSESSEE HAS NOT CLAIMED THE DEDUCTION AS CANVASSED BY IT, T HEN THE AO SHALL NOT APPLY THE PROVISIONS OF SECTION 10A FROM THOSE ASSE SSMENT YEARS AND ACCORDINGLY ALLOW THE SET OFF THE BROUGHT FORWARD L OSSES OF ASSESSMENT YEARS 1994-95 TO 1997-98 AGAINST THE GROSS TOTAL IN COME OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2005-06. THE ASSESSE SHALL ALSO PLACE RELEVANT MATERIAL IN SUPPORT OF ITS CONTENTIONS BEFORE THE A O AND COMPLY WITH HIS :-6-: ITA NO.1203/CHNY/2017 REQUIREMENTS IN ACCORDANCE WITH LAW. THE AO ON EXAM INATION OF THEM, SHALL PASS A SPEAKING ORDER. THUS, THE ASSESSEE S APPEAL IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 5. IN THE RESULT, THE ASSESSEES APPEAL IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON TUESDAY, 10 TH MARCH, 2020 AT CHENNAI. SD/- ( ) (GEORGE MATHAN) ! /JUDICIAL MEMBER SD/- ( ) (S. JAYARAMAN) ! /ACCOUNTANT MEMBER /CHENNAI, 0 /DATED: 10 TH MARCH, 2020 JPV (%2343 /COPY TO: 1. '/ APPELLANT 2. %&' /RESPONDENT 3. 5 ) (/CIT(A) 4. 5 /CIT 5. 3% /DR 6. /GF