DCIT, Karnal V. M/s. Piccadily Agro Inds. Ltd, Karnal

ITA 1485/DEL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 8056 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-03-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 03-03-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 15-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHOK KUMAR PANDEY
• Assessee Lawyers: A K JINDAL
• Keywords: Business income; Depreciation; Unabsorbed depreciation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F : NEW DELHI BEFORE SHRI I.P.BANSAL, JM AND SHRI R.C.SHARMA, AM ITA NO.1485/DEL/2009 ASSESSMENT YEAR : 2006-07 DY.COMMISSIONER OF INCOME TAX, KARNAL CIRCLE, KARNAL. VS. M/S PICCADILY AGRO INDUSTRIES LTD., VILLAGE BHADSON, KARNAL. PAN NO.AABCP7343R. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ASHOK KUMAR PANDEY, CIT-DR. RESPONDENT BY : SHRI A.K.JINDAL, CA. ORDER PER R.C.SHARMA, AM : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) DATED 11.2.2009 FOR AY 2006-07, IN THE MATTER OF ORDER PA SSED BY THE AO U/S 143(3) OF THE IT ACT. 2. THE ONLY GRIEVANCE OF THE REVENUE RELATES TO ALL OWING CLAIM OF ASSESSEE TO CARRY FORWARD UNABSORBED DEPRECIATION OF RS.2.36 CR ORES PERTAINING TO THE AY 1998-99 TO AY 2007-08. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. THE FACTS OF THE CASE ARE THAT ASSESSEE HAD UNABSORBED DEPRECIATION OF RS.5,47,68,817/- PERTAINING TO AY 1998-99 OUT OF WHICH ONLY RS.3,11,44,026/- CO ULD BE SET OFF AGAINST THE INCOME OF THE ASSESSMENT YEAR UNDER CONSIDERATION I .E. AY 2006-07 AND THE AO REJECTED THE CLAIM OF CARRY FORWARD OF THE BALANCE DEPRECIATION OF RS.2,36,24,791/- PERTAINING TO AY 1998-99 HOLDING THAT UNABSORBED DE PRECIATION PERTAINING TO AY 1998-99 IS TO BE RESTRICTED TO 8 YEARS ONLY FOR THE PURPOSE OF CARRY FORWARD. WHEREAS, ASSESSEE HAS CLAIMED THAT WITH THE AMENDME NT BY FINANCE ACT, 2001 W.E.F. 1.4.2002 IN THE PROVISIONS OF SECTION 32(2), UNABSORBED DEPRECIATION GETS ITA-1485/DEL/2009 2 MERGED WITH THE CURRENT DEPRECIATION AND ACCORDINGL Y CARRIED FORWARD WITHOUT ANY RESTRICTION OF PERIOD OF 8 YEARS. 4. BY THE IMPUGNED ORDER, CIT(A) ALLOWED ASSESSEES CLAIM BY OBSERVING THAT SECTION 32(2) WAS AMENDED BY FINANCE ACT, 1996 W.E. F. 1.4.1997, THE EFFECT OF THE AMENDMENT WAS THAT UNABSORBED DEPRECIATION COULD BE CARRIED FORWARD TO 8 YEARS ONLY AND DURING THESE 8 YEARS IT COULD ONLY BE SET OFF AGAINST THE BUSINESS INCOME, WHEREAS, PRIOR TO THIS AMENDMENT THE PROVISIONS WER E THAT UNABSORBED DEPRECIATION BECOMES PART OF THE CURRENT DEPRECIATI ON IN A NEXT YEAR AND ACCORDINGLY SET OFF AND CARRIED FORWARD WITHOUT ANY LIMITATION OF PERIOD. THE PROVISIONS OF SECTION 32(2) WERE AGAIN AMENDED BY F INANCE ACT, 2001 W.E.F. 1.4.2002, AS PER WHICH AGAIN THE OLD PROVISIONS WER E RESTORED WHICH WERE EXISTING PRIOR TO AMENDMENT BY FINANCE ACT, 1996 AND ACCORDI NGLY UNABSORBED DEPRECIATION IS ALLOWED TO BE CARRIED FORWARD TO NE XT YEAR AND IN NEXT YEAR IT BECOMES PART OF THE DEPRECIATION OF CURRENT YEAR AN D ACCORDINGLY SET OFF FIRST AGAINST BUSINESS INCOME AND THEN ANY OTHER INCOME A ND REMAINING UNABSORBED DEPRECIATION IS CARRIED FORWARD TO NEXT YEAR WITHOU T ANY LIMITATION OF PERIOD. AGGRIEVED BY THIS ORDER OF CIT(A), THE REVENUE IS I N FURTHER APPEAL BEFORE US. 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, GONE T HROUGH THE ORDERS OF THE AUTHORITIES BELOW AND ALSO DELIBERATED UPON THE AME NDED PROVISIONS OF SECTION 32(2) BY THE FINANCE ACT, 2001 W.E.F. 1.4.2002 ACCO RDING TO WHICH OLD PROVISIONS WERE RESTORED WHICH WERE EXISTING PRIOR TO THE AMEN DMENT BY THE FINANCE ACT, 1996, ACCORDING TO WHICH, UNABSORBED DEPRECIATION I S ALLOWED TO BE CARRIED FORWARD TO THE NEXT YEAR AND IN THE NEXT YEAR IT BE COMES PART OF THE DEPRECIATION OF THE CURRENT YEAR WHICH CAN BE SET OFF AGAINST BUSIN ESS INCOME AND THEREAFTER AGAINST ANY OTHER INCOME. THE REMAINING UNABSORBED DEPRECIATION IS CARRIED FORWARD TO THE NEXT YEAR WITHOUT ANY LIMITATION OF PERIOD INSOFAR AS SUCH DEPRECIATION IS CONSIDERED TO BE PART OF THE CURREN T DEPRECIATION. IN THE CASE OF THE ASSESSEE, THE RELEVANT UNABSORBED DEPRECIATION PERT AINS TO AY 1998-99. THE ITA-1485/DEL/2009 3 PROVISIONS WHICH WERE BROUGHT BY FINANCE ACT, 1996 BY AMENDING SECTION 32(2) HAVE BEEN REPEALED AND THERE IS NO SAVING CLAUSE OF THOSE PROVISIONS FOR ANY PERIOD WHATSOEVER, HENCE IT IS CLEAR THAT FOR UNABSORBED D EPRECIATION FOR ALL THE YEARS INCLUDING AY 1996-97 TO AY 2000-01, ANY UNABSORBED DEPRECIATION AFTER AMENDMENT BY FINANCE ACT, 2001 W.E.F. 1.4.2002 WILL BE SET OFF AS PER THE AMENDED PROVISIONS AS EXISTING AS ON DATE. FOR AY 2006-07, THE EXISTING PROVISIONS OF SECTION 32(2) ARE AS AMENDED BY FINAN CE ACT, 2001 AND ACCORDINGLY THE SAME ARE APPLICABLE TO THE CASE OF THE ASSESSEE FOR ALL UNABSORBED DEPRECIATION BROUGHT FORWARD AND TO BE CARRIED FORWARD. 6. THUS, WE CAN SAFELY CONCLUDE THAT THE ISSUE RELA TING TO SETTING OFF THE UNABSORBED DEPRECIATION OF AY 1998-99 AGAINST THE I NCOME FOR AY 2006-07 IS REQUIRED TO BE CONSIDERED AND DECIDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 32(2) AMENDED W.E.F. 1 ST APRIL, 2002 BY THE FINANCE ACT, 2001 WHICH ARE APPLICABLE TO THAT YEAR, HENCE BALANCE OF UNABSORBE D DEPRECIATION REMAINED SETTING OFF AGAINST BUSINESS INCOME WAS RIGHTLY ELIGIBLE FO R SET OFF AND CARRY FORWARD. THUS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A). 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 3 RD MARCH, 2010. SD/- SD/- (I.P.BANSAL) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 03.03.2010. VK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT DEPUTY REGISTRAR ITA-1485/DEL/2009 4