YRCR Infrastructure Limited, Hyderabad, Hyderabad V. ITO, Ward-17(4), Hyderabad, Hyderabad

ITA 1622/HYD/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2689 (ITAT-HYDERABAD)
• Duration Of Justice: 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 07-08-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 01-12-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: A V RAGHURAM
• Keywords: Depreciation; Unabsorbed depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. P. MADHAVI DEVI, JUDICIAL MEMBER I.T.A. NO. 1622/HYD/2016 ASSESSMENT YEAR: 2012-13 M/S. YRCR INFRASTRUCTURE LIMITED, HYDERABAD [PAN: AAACY0853G] VS THE INCOME TAX OFFICER, WARD-17(4), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI A.V. RAGHU RAM, AR FOR REVENUE : SHRI A.G.V. PRASAD, DR DATE OF HEARING : 07-08-2017 DATE OF PRONOUNCEMENT : 07-08-2017 O R D E R PER CHANDRA POOJARI, A.M. : THIS IS AN APPEAL FILED BY ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-5, HYDERABAD, DATED 30-09-2016. 2. THE FACTS OF THE CASE ARE THAT, THE ASSESSEE IS ENGA GED IN EXECUTING CIVIL CONTRACT WORKS. IT HAS FILED ITS RETURN O F INCOME ADMITTING TOTAL INCOME AT RS. NIL ON 30-09-2012. THE ASS ESSING OFFICER (AO) TOOK UP THE CASE FOR SCRUTINY. DURING TH E COURSE OF SCRUTINY, THE ASSESSEE FILED REVISED COMPUTATION SHOWI NG THE LOSS TO BE RS.1,24,303/-. THE AO PROCEEDED TO COMPLETE THE ASSESSMENT AND DETERMINED THE LOSS AT RS.1,39,007/- AS AGAINST LO SS ADMITTED ITA NO. 1622/HYD/16 M/S. YRCR INFRASTRUCTURE LIMITED :- 2 - : AND HAS FURTHER DETERMINED THAT THERE IS SHORT TERM CAPITA L GAIN OF RS.10,00,000/-. WHILE DOING SO THE AO HAS HELD THAT TH IS SHORT TERM CAPITAL GAINS DETERMINED U/S.50 OF I.T.ACT CANNO T BE SET OFF AGAINST LOSS NOT ONLY OF BROUGHT FORWARD AMOUNT BUT EVEN THE CURRENT YEAR LOSS. DURING THE COURSE OF ASSESSMENT PRO CEEDINGS IN RESPONSE TO AO'S QUERIES IT WAS SUBMITTED THAT THE ASSESSE E IS ENTITLED TO SET OFF THE SHORT TERM CAPITAL GAINS AGAINST LOS S AS THE PROVISIONS OF SEC.50 IS ONLY A DEEMING PROVISION FO R COMPUTATION AND CANNOT EXTEND BEYOND THAT AND THAT THE BALANCE AFTER SET OFF WITH CURRENT YEAR SHOULD BE TREATED AS BUSINESS INCOM E AND SET OFF AGAINST BROUGHT FORWARD LOSS. THE AO, HOWEVER, HAS NO T ACCEPTED THE SAME AND HAS TAXED THE SHORT TERM CAPITAL GAIN SEPARA TELY. CIT(A) CONFIRMED THE ORDER OF THE AO. AGAINST THE SAM E, ASSESSEE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LEARNED CIT(A) IS ERRONEOUS BO TH ON FACTS AND IN LAW IN SO FAR AS IT IS PREJUDICIAL TO THE ASSESSEE. 2. THE ORDER OF THE LEARNED CIT(A) CONFIRMING THE A CTION OF THE AO IN NOT SETTING OFF THE CAPITAL GAINS ASSESSED IN THE ASSES SMENT ORDER IS WITHOUT APPLICATION OF MIND. 3. THE LEARNED CIT(A) ERRED IN NOT CONSIDERING THE SUBMISSIONS THAT ARE MADE AND REFERENCE TO THE DECISION OF THE MUMBAI IT AT AND ALSO THE SUBMISSION THAT THE CARRIED FORWARD DEPRECIATION FO RMS PART OF THE CURRENT YEAR DEPRECIATION AND THEREFORE OUGHT TO HAVE BEEN SET OFF AND THEREBY ERRED IN CONFIRMING THE ASSESSMENT OF CAPITAL GAIN S. 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE CONTENTION OF THE LD.AR IS THAT IN VIEW OF THE AMENDED PROVISIONS OF SECTION 32(2) BY FINANCE AC T, 2001 W.E.F. 01-04-2002, CARRIED FORWARD UNABSORBED DEPRE CIATION SHALL BE DEEMED AS DEPRECIATION U/S. 32(1) OF THE ACT THAT IS THE DEPRECIATION FOR THE CURRENT YEAR IN FOLLOWING YEAR T O BE SET OFF ITA NO. 1622/HYD/16 M/S. YRCR INFRASTRUCTURE LIMITED :- 3 - : AGAINST INCOME UNDER ANY HEAD. ACCORDING TO HIM, UNAB SORBED CARRIED FORWARD DEPRECIATION TO BE SET OFF AGAINST SH ORT TERM CAPITAL GAIN IN THE ASSESSMENT YEAR UNDER CONSIDERATION. 4. ON THE OTHER HAND, LD.DR RELIED ON THE ORDER OF THE TRIBUNAL OF BANGALORE IN THE CASE OF M/S. NANDI STEELS LIMITED IN ITA NO. 546/BANG/2008 DT. 09-12-2011 STATING THAT CARRIED FORWAR D UNABSORBED DEPRECIATION CANNOT BE SET OFF AGAINST SHOR T TERM CAPITAL GAIN IN VIEW OF SECTION 72 OF THE ACT. IN OUR OPINION, THE ARGUMENT OF THE LD.DR IS TOTALLY MISCONCEIVED, THE ORDE R RELIED ON BY THE LD.DR IS NOT RELATING TO THE ISSUE-IN-DISPUTE. I N THAT CASE, THE FOLLOWING GROUNDS WERE RAISED: GROUND NO.5: THAT THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS THAT THE APPELLANT IS NOT ENTITLED TO SET OFF CARRY FORW ARD BUSINESS LOSS OF RS. 39,99,652/- AGAINST THE LONG TERM CAPITAL GAIN ARIS ING ON SALE OF LAND USED FOR THE PURPOSE BUSINESS GROUND NO.6: THAT THE AUTHORITIES BELOW OUGHT TO H AVE APPRECIATED THAT THERE IS NO CESSATION OF BUSINESS AND THE APPE LLANT IS ENTITLED TO SET OFF THE CARRY FORWARD BUSINESS LOSS. 5. THIS ISSUE WAS CONSIDERED BY THE SPECIAL BENCH OF THE TRIBUNAL AGAINST THE ASSESSEE. HOWEVER, THAT WAS NOT THE ISSUE RELATING TO SETTING OFF OF CARRIED FORWARD DEPRECIATION WITH SHORT TERM CAPITAL GAIN. BEING SO, IN OUR OPINION, IN VIE W OF THE AMENDED PROVISIONS OF SECTION 32(2) BY FINANCE ACT 2001, W.E. F. 01-04-2002, THE CARRIED FORWARD UNABSORBED DEPRECIATION TAKES THE C HARACTER OF CURRENT YEAR DEPRECIATION AND IT COULD BE SET OFF AGAI NST THE SHORT TERM CAPITAL GAIN IN THIS ASSESSMENT YEAR. ACCORDING LY TO THAT EXTENT, WE AGREE WITH THE ARGUMENT OF THE LD.AR. HOW EVER THE CARRIED FORWARD BUSINESS LOSS IF ANY, THAT CANNOT BE S ET OFF AGAINST ITA NO. 1622/HYD/16 M/S. YRCR INFRASTRUCTURE LIMITED :- 4 - : THE SHORT TERM CAPITAL GAIN IN THE ASSESSMENT YEAR UNDE R CONSIDERATION. THE GROUND RAISED BY THE ASSESSEE IS PARTLY ALLOWED. 6. IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH AUGUST, 2017 SD/- SD/- (P. MADHAVI DEVI) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEM BER HYDERABAD, DATED 7 TH AUGUST, 2017 TNMM COPY TO : 1. M/S. YRCR INFRASTRUCTURE LIMITED, C/O. K. VASANT KUMAR, A.V. RAGHU RAM, P. VINOD & M. NEELIMA DEVI, ADVOCATES, 610, BABUKHAN ESTATE, BASHEERBAGH, HYDERABAD. 2. THE INCOME TAX OFFICER, WARD-17(4), HYDERABAD. 3. CIT (APPEALS)-5, HYDERABAD. 4. PR.CIT-5, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.