Indian Bank, CHENNAI V. DCIT, CHENNAI

ITA 1220/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8149 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 13-10-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 05-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL IRS
• Assessee Lawyers: S SWAMINATHAN
• Keywords: Business income; Depreciation; Unabsorbed depreciation
• Section: 32

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI . . . , !' . #$#% , & '' ( [BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ] ./ I.T.A. NO. 1220/MDS/2016 / ASSESSMENT YEAR : 2003-2004 INDIAN BANK CORPORATE OFFICE, ACCOUNTS DEPARTMENT, 254-256, AVVAI SHANMUGAM SALAI, ROYAPETTAH, CHENNAI 600 014. [ PAN AAACI 1607G ] VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 2(2) CHENNAI. ( )* / APPELLANT) ( +,)* /RESPONDENT) / APPELLANT BY : SHRI. S. SWAMINATHAN, C.A. /RESPONDENT BY : SHRI. SUPRIYO PAL, IRS, JCIT. / DATE OF HEARING : 13-10-2016 ! / DATE OF PRONOUNCEMENT : 28-10-2016 / O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER IN THIS APPEAL FILED BY THE ASSESSEE, ITS ASSAI LS AN ORDER DATED 01.03.2016 OF COMMISSIONER OF INCOME TAX (APP EALS)-6, CHENNAI CONFIRMING RECTIFICATION MADE BY THE LD. AS SESSING OFFICER U/S.154 OF THE ACT FOR THE IMPUGNED ASSESSMENT YEAR . ITA NO. 1220/MDS/2016. :- 2 -: 2. FACTS APROPOS ARE THAT THE ASSESSEE A NATIONALISED BANK HAD FILED ITS RETURN FOR THE IMPUGNED ASSESSMENT YEAR O N 25.11.2003. ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT ON 3 1.03.2006. THEREAFTER, NOTICE U/S.154 OF THE ACT WAS ISSUED TO THE ASSESSEE ON 19.03.2013. THE NOTICE STATED THAT CARRIED FORWARD UNABSORBED DEPRECIATION OUGHT NOT HAVE BEEN ALLOWED BEYOND E IGHT YEARS AND THERE WAS A MISTAKE APPARENT IN THE ASSESSMENT ORD ER IN ALLOWING SET OFF OF SUCH DEPRECIATION AGAINST NON BUSINESS INC OME. ASSESSEE THEREUPON SUBMITTED THAT LAW APPLICABLE FOR THE ASS ESSMENT YEAR 2003-04 WAS THAT WHICH APPEARED IN THE ACT AS ON 1 ST APRIL, 2003. AS PER ASSESSEE LIMITATION OF EIGHT PERIOD STOOD WITHD RAWN ON THAT DATE AND CARRY FORWARD OF UNABSORBED DEPRECIATION COULD NOT BE RESTRICTED TO SUCH PERIOD, NOR ITS SET OFF WITH OTHER INCOME C OULD BE DENIED. HOWEVER THIS CONTENTION WAS NOT ACCEPTED BY THE LD. ASSESSING OFFICER. HE PASSED AN ORDER DATED 19 TH APRIL, 2013 U/S.154 OF THE ACT WHEREBY UNABSORBED DEPRECATION LOSS PERTAINING TO ASSESSMEN T YEAR 1994-95 CLAIMED BY THE ASSESSEE WAS DISALLOWED. 3. ASSESSEE THEREUPON MOVED IN APPEAL BEFORE LD. COMMISSIONER OF INCOME TAX (APPEALS). ARGUMENT OF THE ASSESSEE WAS THAT THERE WAS NO MISTAKE IN THE ASSESSMENT WHI CH WAS AMENABLE TO A RECTIFICATION U/S.154 OF THE ACT. HOWEVER, THE LD. COMMISSIONER OF ITA NO. 1220/MDS/2016. :- 3 -: INCOME TAX (APPEALS) WAS NOT APPRECIATIVE OF THIS CONTENTION. ACCORDING TO HIM, BY VIRTUE OF JUDGMENTS OF HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. PIONEER ASIA PACKAGING PRIVATE LIMITED (200 9) 310 ITR 198 AND THAT OF CIT VS. S & S POWER SWITCHGEAR LIMITED 318 ITR 187 UNABSORBED DEPRECIATION LOSS COULD BE ADJUSTED ON LY AGAINST BUSINESS PROFIT. AS PER LD. COMMISSIONER OF INCOME TAX (APPEALS) SUCH UNABSORBED DEPRECIATION COULD NOT BE ALLOWED A SET OFF AGAINST INCOME FROM HOUSE PROPERTY AND INCOME FROM OTHER S OURCE AS DONE BY THE ASSESSEE. THUS, HE HELD THAT LD. ASSESSING OFFICER WAS JUSTIFIED IN INVOKING U/S.154 OF THE ACT AND EFFECTING RECTIF ICATION. 4. BEFORE US, LD. AUTHORISED REPRESENTATIVE STRONGLY A SSAILING THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (AP PEALS) SUBMITTED THAT THE ASSESSEE HAD BROUGHT TO THE NOTICE OF THE ASSESSI NG OFFICER THE AMENDMENT MADE BY FINANCE, ACT, 2001 THOUGH WHI CH SUB SECTION (2) OF SEC. 32 WAS SUBSTITUTED. AS PER LD. AUTHORI SED REPRESENTATIVE ONCE THIS SUBSTITUTION CAME INTO STATUTE ONLY THE S UBSTITUTED PROVISION WOULD APPLY. SUB SECTION (2) OF SEC.32 OF THE ACT H AS IT STOOD TODAY ALLOWED CONSIDERING UNABSORBED DEPRECIATION AS A P ART OF CURRENT DEPRECATION. ACCORDING TO HIM, SUCH UNABSORBED DEP RECIATION WHICH BECAME PART OF CURRENT DEPRECIATION COULD BE SET OF F AGAINST INCOME UNDER ANY HEAD. ITA NO. 1220/MDS/2016. :- 4 -: 5. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE SUBMITT ED THAT SUB-SECTION (2) OF SECTION 32 OF FINANCE ACT, 2001 DID NOT IN ANY WAY EFFECT THE TREATMENT TO BE GIVEN FOR CARRYING FORWA RD DEPRECIATION. AS PER LD. DEPARTMENTAL REPRESENTATIVE CARRY FORWARD D EPRECATION PERTAINING TO YEARS PRIOR TO ASSESSMENT YEAR 2002-0 3 WOULD STILL BE GOVERNED BY THE OLD PROVISIONS. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. NO DOUBT THE HON BLE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF PIONEER ASIA PACKAGING PRIVATE LIMITED (SUPRA) HAD HELD THAT BY VIRTUE OF AMENDMENT TO SEC. 32(2 ) OF THE ACT W.E.F. 01.04.1997, THE DEEMING FICTION O F EARLIER YEARS, WHEREBY UNABSORBED DEPRECIATION WAS TREATED AS PAR T OF CURRENT DEPRECIATION WAS REMOVED AND A LIMIT OF EIGHT YEAR S WAS PUT TO CARRYING FORWARD UNABSORBED DEPRECIATION. IN THE C ASE OF S & S POWER SWITCHGEAR LIMITED (SUPRA) THE LORDSHIP HELD THAT UNABSORBED DEPRECIATION RELATING TO ASSESSMENT YEARS PRIOR TO ASSESSMENT YEAR 1997-1998 COULD BE SET OFF AGAINST BUSINESS INCOME OR INCOME FROM ANY OTHER HEAD FOR ASSESSMENT YEAR 1997-1998 AND SE VEN SUBSEQUENT YEARS. THE IMPUGNED ASSESSMENT YEAR HERE IS 2003-2 004 AND IT CAN BE ARGUED THAT IT FALLS WITHIN THE SEVEN YEAR PERIO D. EVEN OTHERWISE BY VIRTUE OF SUBSTITUTION OF SEC. (2) OF SEC. 32 OF TH E ACT, THE OLD PROVISION ITA NO. 1220/MDS/2016. :- 5 -: STOOD REINSTATED THEREBY BRINGING BACK THE DEEMING FICTION OF TREATING EARLIER YEARS UNABSORBED DEPRECIATION AS PART OF C URRENT DEPRECIATION. THUS, CLAIM OF THE ASSESSEE FOR THE IMPUGNED ASSESS MENT YEAR FOR SET OFF OF UNABSORBED DEPRECIATION AS ON 01.04.1997 AGA INST OTHER HEADS OF INCOME CANNOT IN OUR OPINION BE FAULTED. IN ANY CASE, WE CANNOT SAY THAT THERE WAS A MISTAKE IN THE ASSESSMENT ORDER WH ICH WAS APPARENT FROM THE RECORD AND WHICH COULD BE CORRECTED BY A RECTIFICATORY PROCEEDINGS U/S.154 OF THE ACT. WE, THEREFORE SET ASIDE THE ORDER OF THE AUTHORITIES BELOW . 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS AL LOWED. ORDER PRONOUNCED ON FRIDAY, THE 28TH DAY OF OCTOBER, 2016, AT CHENNAI. SD/- SD/- ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER ( !' . #$#% ) (ABRAHAM P. GEORGE) & / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED:28TH OCTOBER, 2016 KV &' ()*) / COPY TO: 1 . / APPELLANT 3. +,' / CIT(A) 5. )-. / / DR 2. / RESPONDENT 4. + / CIT 6. .01 / GF