J.K. Lakshmi Cement Ltd., Kolkata V. CIT, Central - I, Kolkata, Kolkata

ITA 1513/KOL/2011

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3235 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 08-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANDEEP CHAUBE
• Assessee Lawyers: SAJAY SEN
• Keywords: Depreciation; Unabsorbed depreciation
• Section: 143(3); 32; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH D KOLKATA BEFORE SHRI N.V.VASUSDEVAN, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 1513 / KOL / 2011 ASSESSMENT YEAR :2007-08 J.K. LAKSHMI CEMENT LTD., 7, COUNCIL HOUSE STREET, KOLKATA 700 001 [ PAN NO.AAACJ 6715 G ] V/S . COMMISSIONER OF INCOME TAX, CENTRAL-1, 18, RABINDRA SARANI, PODDAR COURT, KOLKATA-700 001 /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI SIDDHARTH JHAJHARIA, FCA & SHRI SAJAY SEN, AR /BY RESPONDENT SHRI SANDEEP CHAUBE, CIT-DR /DATE OF HEARING 17-12-2015 /DATE OF PRONOUNCEMENT 05-02-2016 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE ASSESSEE AGAINST THE ORDER OF C OMMISSIONER OF INCOME TAX (CENTRAL-I) KOLKATA IN APPEAL NO.CIT(C-I )/263/JK LAKSHMI CEMENT LTD./TECH/11-12/KOL/6446-48 DATED 27/28.09.2011. AS SESSMENT WAS FRAMED BY ACIT,CC-VI, KOLKATA U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 19.1 1.2009 FOR ASSESSMENT YEAR 2007-08. ITA NO.1513/KOL/2011 A.Y. 2007-08 JK LAKSHMI CEMENT LTD. V. CIT-C-I, KOL PAGE 2 2. ONLY ISSUE RAISED BY ASSESSEE IN ITS APPEAL IS T HAT LD. CIT ERRED IN CONFIRMING THE ASSESSMENT ORDER OF ASSESSING OFFICE R BY DISALLOWING THE DEPRECIATION FOR AN AMOUNT OF RS.228,77,86,812/- TO BE CARRIED FORWARD. 3. FACTS OF THE CASE ARE THAT ASSESSEE IS A LIMITED COMPANY IS ENGAGED IN BUSINESS OF MANUFACTURING AND SALE OF CEMENT. ASSES SEE HAS SHOWN UNABSORBED DEPRECIATION AMOUNTING TO RS.228,77,86,8 12/- IN THE YEAR UNDER CONSIDERATION. THIS DEPRECIATION PERTAINS TO AY BEG INNING FROM AY 1992-93 TO 2001-02. AS PER THE LAW UNABSORBED DEPRECIATION CAN BE CARRIED FORWARD UPTO EIGHT YEARS. LD. CIT FOUND FROM THE ASSESSMENT ORDE R OF AO THAT THE ISSUE OF UNABSORBED DEPRECIATION HAS NOT BEEN EXAMINED BY AO . THEREFORE, LD. CIT OPINED THAT THE ORDER OF AO IS ERRONEOUS AND PREJUD ICIAL TO THE INTEREST OF REVENUE. ACCORDINGLY, LD. CIT ISSUED SHOW CAUSE NOT ICE U/S. 263 OF THE ACT FOR CERTAIN CLARIFICATION ON THE ISSUE AS DISCUSSED ABO VE. ASSESSEE SUBMITTED THAT FOR THE RELEVANT AY 2007-08 NO SET OFF OF THE UNABS ORBED DEPRECIATION RELATING TO AYS 1992-93 TO 2001-02 HAVE BEEN CLAIMED BY ASSE SSEE. BESIDES THE ABOVE, ASSESSEE SUBMITTED THAT AO IN HIS ORDER FOR RELEVANT TO AY 2007-08 HAS ALREADY HELD THAT UNABSORBED DEPRECIATION PERTA INING TO ASSESSMENT YEAR BEGINNING FROM 1992-93 TO 2001-02 FOR AN AMOUNT OF RS.228,77,86,812/- NOT AVAILABLE TO BE CARRIED FORWARD. HOWEVER, ASSESSEE HAS GONE IN APPEAL BEFORE LD. CIT(A) AGAINST THE ASSESSMENT ORDER WHICH IS SUB JUDICE . IN VIEW OF ABOVE, ASSESSEE SUBMITTED THAT THE ISSUE OF UNABSORBED DEP RECIATION WHICH WAS CARRIED FORWARD FROM THE EARLIER YEARS DO NOT MAKE THE ORDER OF AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E. ASSESSEE ALSO SUBMITTED THAT THE RESTRICTION FOR CLAIMING THE UNABSORBED DE PRECIATION HAS BEEN REMOVED WITH EFFECT FROM 01.04.2002. NOW AS PER THE PROVISIONS OF THE ACT THE UNABSORBED DEPRECIATION CARRY FORWARD UP TO ANY NUM BER OF YEARS. HOWEVER, LD. CIT DISREGARDED THE CLAIM OF ASSESSEE BY OBSERV ING THAT UNABSORBED DEPRECIATION OF RS.228,77,86,812/- FOR AYS 1992-93 TO 2001-02 WAS WRONGLY ALLOWED TO BE CARRIED FORWARD BY THE ORDER OF AO BE CAUSE AS PER THE PROVISION U/S 32 SUB-SECTION 2 OF THE ACT BECAME EFFECTIVE ON LY FROM 01.04.2002 AND ITA NO.1513/KOL/2011 A.Y. 2007-08 JK LAKSHMI CEMENT LTD. V. CIT-C-I, KOL PAGE 3 UNABSORBED DEPRECIATION OF RS. 228,77,86,812.00 PER TAINS TO AY PRIOR TO THE AMENDMENT IN THE IT ACT. ACCORDINGLY, LD. CIT HELD THAT THE ORDER OF AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E. HENCE, THE ORDER OF THE AO WAS SET ASIDE WITH A DIRECTION TO PASS AFRESH OR DER IN THE LIGHT OF ABOVE DISCUSSION ACCORDINGLY AFTER GIVING REASONABLE OPPO RTUNITY OF BEING HEARD TO ASSESSEE. 4. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE U S. SHRI SIDDHARTH JHAJHARIA & SHRI SUJOY SEN LD. AUTHO RIZED REPRESENTATIVE APPEARING ON BEHALF OF ASSESSEE AND SHRI SANDEEP CH AUBE, LD. DEPARTMENTAL REPRESENTATIVE APPEARING ON BEHALF OF REVENUE. 5. WE HAVE HEARD RIVAL SUBMISSIONS OF BOTH THE SIDE AND PERUSED THE MATERIALS AVAILABLE ON RECORD. LD. AR SUBMITTED PAP ER BOOK WHICH IS RUNNING FROM PAGES 1 TO 29 AND RELIED ON THE ORDER PASSED B Y AO WHEREAS LD. DR RELIED ON THE ORDER PASSED BY LD. CIT. FROM THE AFO RESAID DISCUSSION, WE FIND THAT ASSESSEES CLAIM OF UNABSORBED DEPRECIATION PE RTAINING TO AYS BEGINNING FROM 1992-93 TO 2001-02 FOR AN AMOUNT OF RS.228,77, 86,812/- WHICH WAS ALLOWED TO BE CARRIED FORWARD BY AO IN HIS ORDER FO R THE RELEVANT AY I.E. 2007- 08 BUT LD. CIT FOUND THAT UNABSORBED DEPRECIATION W AS NOT ALLOWABLE TO BE CARRIED FORWARD FOR A PERIOD MORE THAN 8 YEARS. THE REFORE, LD. CIT OPINED THAT MATTER TO BE RESTORED TO FILE OF AO FOR FRESH ADJUD ICATION. WE FURTHER FIND THAT SAME ISSUE HAS BEEN DECIDED BY HON'BLE GUJARAT HIGH COURT IN THE CASE OF GENERAL MOTORS INDIA (P) LTD. VS. DCIT (2013) 354 ITR 244 (GUJ) AND HEAD- NOTE OF EXTRACT PORTION IS REPRODUCED BELOW:- ANY UNABSORBED DEPRECIATION AVAILABLE TO AN ASSESS EE ON 1 ST DAY OF APRIL, 2002 (A.Y 2002-03) WILL BE DEALT WITH IN ACCORDANCE WITH THE PROVISIONS OF SECTION 32(2) AS AMENDED BY FINANCE ACT, 2001 AND N OT BY THE PROVISIONS OF SECTION 32(2) AS IT STOOD BEFORE THE SAID AMENDMENT . HAD THE INTENTION OF THE LEGISLATURE BEEN TO ALLOW THE UNABSORBED DEPRECIATI ON ALLOWANCE WORKED OUT IN A.Y 1997-98 ONLY FOR EIGHT SUBSEQUENT ASSESSMENT YEARS EVEN AFTER THE AMENDMENT OF SECTION 32(2) BY FINANCE ACT, 2001 IT WOULD HAVE INCORPORATED A PROVISION TO THAT EFFECT. HOWEVER, IT DOES NOT CO NTAIN ANY SUCH PROVISION. ITA NO.1513/KOL/2011 A.Y. 2007-08 JK LAKSHMI CEMENT LTD. V. CIT-C-I, KOL PAGE 4 THEREFORE, THE PROVISIONS OF SECTION 32(2) AS AMEND ED BY FINANCE ACT, 2001 WOULD ALLOW THE UNABSORBED DEPRECIATION ALLOWANCE A VAILABLE IN THE A.Y 1997- 98, 1999-2000, 2000-01 AN 2001-2002 TO BE CARRIED F ORWARD TO THE SUCCEEDING YEARS, AND IF ANY UNABSORBED DEPRECIATIO N OR PART THEREOF COULD NOT BE SET OFF TILL THE A.Y 2002-03 THEN IT WOULD B E CARRIED FORWARD TILL THE TIME IT IS SET OFF AGAINST THE PROFITS AND GAINS OF SUBSEQU ENT YEARS. CURRENT DEPRECIATION IS DEDUCTIBLE IN THE FIRST PLACE FROM THE INCOME OF THE BUSINESS TO WHICH IT RELATES. IF SUCH DEPRECIATION AMOUNT IS LA RGER THAN THE AMOUNT OF THE PROFITS OF THAT BUSINESS, THEN SUCH EXCESS COMES FO R ABSORPTION FROM THE PROFITS AND GAINS FROM ANY OTHER BUSINESS OR BUSINE SS, IF ANY, CARRIED ON BY THE ASSESSEE. IF A BALANCE IS LEFT EVEN THEREAFTER, THAT BECOMES DEDUCTIBLE FROM OUT OF INCOME FROM ANY SOURCE UNDER ANY OF THE OTHER HEADS OF INCOME DURING THAT YEAR. IN CASE THERE IS A STILL BALANCE LEFT OVER, IT IS TO BE TREATED AS UNABSORBED DEPRECIATION AND IT IS TAKEN TO THE NEXT SUCCEEDING YEAR. WHERE THERE IS CURRENT DEPRECIATION FOR SUCH SUCCEEDING Y EAR THE UNABSORBED DEPRECIATION IS ADDED TO THE CURRENT DEPRECIATION F OR SUCH SUCCEEDING YEAR AND IS DEEMED AS PART THEREOF. IF, HOWEVER, THERE I S NO CURRENT DEPRECIATION FOR SUCH SUCCEEDING YEAR, THE UNABSORBED DEPRECIATION B ECOMES THE DEPRECIATION ALLOWANCE FOR SUCH SUCCEEDING YEAR. TH US ANY UNABSORBED DEPRECIATION AVAILABLE TO AN ASSESSEE ON 1 ST DAY OF APRIL 2002 (A.Y 2002-03) WILL BE DEALT WITH IN ACCORDANCE WITH THE PROVISION S OF SECTION 32(2) AS AMENDED BY FINANCE ACT, 2001. AND ONCE THE CIRCULAR NO. 14 OF 2001 CLARIFIED THAT THE RESTRICTION OF 8 YEARS FOR CARRY FORWARD A ND SET OFF OF UNABSORBED DEPRECIATION HAD BEEN DISPENSED WITH, THE UNABSORBE D DEPRECIATION FROM A.Y 1997-98 UPTO THE A.Y 2001-002 GOT CARRIED FORWARD T O THE ASSESSMENT YEAR 2002-03 AND BECAME PART THEREOF, IT CAME TO BE GOVE RNED BY THE PROVISIONS OF SECTION 32(2) AS AMENDED BY FINANCE ACT, 2001 AND W ERE AVAILABLE FOR CARRY FORWARD AND SET OFF AGAINST THE PROFITS AND GAINS O F SUBSEQUENT YEARS, WITHOUT ANY LIMIT WHATSOEVER. WE FIND THAT HON'BLE GUJARAT HIGH COURT HAS GIVEN R ELIEF TO ASSESSEE ON THE SAME LINE OF FACTS IN THE CASE OF GENERAL MOTORS INDIA (P) LTD. (SUPRA). IN THIS VIEW OF THE MATTER, WE FIND THAT THE ORDER PASSED B Y ASSESSING OFFICER IS NOT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E. IN THIS VIEW OF THE MATTER, WE REVERSE THE ORDER OF LD. CIT PASSED U/S. 263. TH IS GROUND OF ASSESSEES APPEAL IS ALLOWED. 6. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT 05/ 02/2016 SD/- SD/- (N.V.VASUDEVAN) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP !-/ 02 /201 6 ITA NO.1513/KOL/2011 A.Y. 2007-08 JK LAKSHMI CEMENT LTD. V. CIT-C-I, KOL PAGE 5 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-JK LAKSHMI CEMENT LTD. 7, COUNCIL HOUSE STREET, KOLKATA-01 2. /RESPONDENT-CIT (C-I) 18 RABINDRA SARANI, PODDAR CO URT, KOLKATA-01 3. ) *+, , - / CONCERNED CIT KOLKATA 4. , , -- / CIT (A) KOLKATA 5.01233*+, , *+ , / DR, ITAT, KOLKATA 6.26789 / GUARD FILE. BY ORDER/ ,, / , *+ ,