ACIT 6(3), MUMBAI V. MILTEX LAMINATES P. TD, MUMBAI

ITA 1623/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79192 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 17-06-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 25-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CAPT PRADEEP ARYA
• Assessee Lawyers: AJAY GHOSALIA
• Keywords: Depreciation; Unabsorbed depreciation

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL G B ENCH, MUMBAI . , !'# $ $ $ $ , %& '()* , %+ ,- % # BEFORE SHRI D.MANMOHAN, VICE PRESIDENT AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ./ I.T.A. NO.1404/MUM/2011 ( . . . . / ASSESSMENT YEAR :2007-08 M/S. MILTEX LAMINATES PVT. LTD., 40, KHADI GRAMADYOG WADI, DOCKYARD ROAD, MUMBAI-400 010 / VS. THE ACIT, CIRCLE 6(3), AAYAKAR BHAVAN, MUMBAI-400 020 ./ I.T.A. NO.1623/MUM/2011 ( . . . . / ASSESSMENT YEAR :2007-08 THE ACIT, CIRCLE 6(3), AAYAKAR BHAVAN, MUMBAI-400 020 / VS. M/S. MILTEX LAMINATES PVT. LTD., 40, KHADI GRAMADYOG WADI, DOCKYARD ROAD, MUMBAI-400 010 -/ %+ ./ 0 ./ PAN/GIR NO. : AAACM 9283C ( /1 / APPELLANT ) .. ( 23/1 / RESPONDENT ) /1 4 % / APPELLANT BY: CAPT. PRADEEP ARYA 23/1 5 4 % / RESPONDENT BY: SHRI AJAY GHOSALIA 5 6+ / DATE OF HEARING :17.06.2014 7. 5 6+ / DATE OF PRONOUNCEMENT :17.06.2014 ,%8 / O R D E R PER N.K. BILLAIYA, AM: ITA NOS. 1404 & 1623/M/2011 2 THESE CROSS APPEALS BY THE ASSESSEE AND THE REVENUE ARE DIRECTED AGAINST THE VERY SAME ORDER OF THE LD. CIT(A)-12, M UMBAI DT.25.11.2010 PERTAINING TO A.Y. 2007-08. BOTH THESE APPEALS WER E HEARD TOGETHER AND ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE O F CONVENIENCE AND BREVITY. ITA NO. 1404/MUM/2011 ASSESSEES APPEAL 2. THE ASSESSEE HAS RAISED TWO SUBSTANTIVE GROUNDS OF APPEAL. GROUND NO. 1 RELATES TO SET OFF AGAINST BROUGHT FORWARD LO SS AGAINST CAPITAL GAINS AND GROUND NO. 2 RELATES TO INAPPROPRIATE DIRECTION BY THE LD. CIT(A) IN RESPECT OF SET OFF OF UNABSORBED DEPRECIATION AGAIN ST CAPITAL GAINS. 3. AT THE VERY OUTSET, THE LD. COUNSEL FOR THE ASSE SSEE STATED THAT GROUND NO. 1 HAS BEEN DECIDED AGAINST THE ASSESSEE BY THE TRIBUNAL BANGALORE SPECIAL BENCH IN THE CASE OF NANDI STEELS LTD. 134 ITD 73. 4. THE LD. DEPARTMENTAL REPRESENTATIVE FAIRLY CONCE DED TO THIS. 5. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE LOWE R AUTHORITIES AND THE DECISION OF THE TRIBUNAL SPECIAL BENCH (SUPRA). WE FIND THAT THE SPECIAL BENCH HAS DECIDED THIS ISSUE AGAINST THE AS SESSEE. RESPECTFULLY FOLLOWING THE DECISION OF THE SPECIAL BENCH, GROUND NO. 1 IS DISMISSED. 6. IN SO FAR AS ISSUE RAISED VIDE GROUND NO. 2 IS C ONCERNED, ADMITTEDLY THE ASSESSEE HAS BROUGHT FORWARD UNABSORBED DEPRECI ATION. THE ASSESSEE ALSO HAS LONG TERM CAPITAL GAIN (LTCG) AND SHORT TE RM CAPITAL GAINS (STCG) DURING THE YEAR UNDER CONSIDERATION. THE AS SESSEE INTENDED TO SET ITA NOS. 1404 & 1623/M/2011 3 OFF THE UNABSORBED DEPRECIATION AGAINST STCG WHEREA S THE AO HAS ALLOWED THE SET OFF AGAINST LTCG. 7. AGGRIEVED BY THIS, THE ASSESSEE IS BEFORE US. W HEN THE MATTER WAS ARGUED BEFORE THE LD. CIT(A), THE LD. CIT(A) DECIDE D AS UNDER: REGARDING THE APPELLANTS CONTENTION THAT THE SAID DEPRECIATION SHOULD HAVE BEEN ALLOWED TO BE SET OFF AGAINST THE SHORT TERM CAPITAL GAINS AND NOT AGAINST THE LONG T ERM CAPITAL GAINS AS PER THE CHOICE OF THE APPELLANT, THE AO IS DIREC TED TO LOOK INTO THE ISSUE AND TAKE NECESSARY ACTION AS PER THE PROV ISIONS OF INCOME TAX ACT ACCORDINGLY. 8. AGGRIEVED BY THIS DIRECTION, THE ASSESSEE IS BEF ORE US. 9. THE LD. COUNSEL FOR THE ASSESSEE STATED THAT THE ACT DOES NOT PROVIDE ANY ORDER OF THE HEAD OF INCOME FOR THE SET TING OFF OF UNABSORBED DEPRECIATION THEREFORE THE ASSESSEE IS FREE TO SET OFF THE UNABSORBED DEPRECIATION AS PER HIS CHOICE. 10. THE LD. DR SUPPORTED THE FINDINGS OF THE AO. 11. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE LOW ER AUTHORITIES. WE AGREE WITH THE CONTENTION OF THE LD. COUNSEL THAT I N SO FAR AS SET OFF OF UNABSORBED DEPRECIATION IS CONCERNED, THE ACT DOES NOT PROVIDE ANY ORDER OF THE HEAD OF INCOME TO SET OFF SUCH UNABSORBED DE PRECIATION. THE UNABSORBED BROUGHT FORWARD DEPRECIATION MERGES WIT H THE CURRENT YEAR DEPRECIATION AS PER THE PROVISIONS OF SEC. 32(2) OF THE ACT. HONBLE SUPREME COURT IN THE CASE OF CIT VS GWALIOR RAYON S ILK MANUFACTURING CO. LTD. AND OTHER APPEALS IN 196 ITR 149 HAS LAID DOWN THE FOLLOWING ITA NOS. 1404 & 1623/M/2011 4 RATIO. IT IS SETTLED LAW THAT THE EXPRESSIONS USED IN A T AXING STATUTE WOULD ORDINARILY BE UNDERSTOOD IN THE SENSE IN WHIC H IT IS HARMONIOUS WITH THE OBJECT OF THE STATUTE TO EFFECTUATE THE LE GISLATIVE INTENTION. IT IS EQUALLY SETTLED LAW THAT, IF THE LANGUAGE IS PLAIN AND UNAMBIGUOUS, ONE CAN ONLY LOOK FAIRLY AT THE LANGUAGE USED AND INTER PRET IT TO GIVE EFFECT TO THE LEGISLATIVE INTENTION. NEVERTHELESS, TAX LAWS H AVE TO BE INTERPRETED REASONABLE AND IN CONSONANCE WITH JUSTICE ADOPTING A PURPOSIVE APPROACH. THE CONTEXTUAL MEANING HAS TO BE ASCERTAI NED AND GIVEN EFFECT TO. A PROVISION FOR DEDUCTION EXEMPTION OR R ELIEF SHOULD BE CONSTRUED REASONABLY AND IN FAVOUR OF THE ASSESSEE . 12. DRAWING SUPPORT FROM THE AFORESTATED RATIO OF H ONBLE SUPREME COURT, WE DIRECT THE AO TO ALLOW SET OFF OF UNABSOR BED DEPRECIATION FROM THE STCG AS CLAIMED BY THE ASSESSEE. GROUND NO. 2 IS ACCORDINGLY ALLOWED. ITA NO. 1623/M/2011 REVENUES APPEAL 13. THE SOLE GRIEVANCE OF THE REVENUE IS THAT THE L D. CIT(A) ERRED IN SETTING ASIDE THE ISSUE TO THE FILES OF THE AO FOR DECIDING THE MATTER, WHEN THE LD. CIT(A) HAS NO POWER TO DO SO. 14. IN ITA NO. 1404/MUM/2011 IN ASSESSEES APPEAL, WE HAVE DISMISSED GROUND NO. 1 AND HAVE ALLOWED GROUND NO. 2 IN FAVOUR OF THE ASSESSEE. IN THE LIGHT OF OUR DECISION IN ASSESSEE S APPEAL, THE CROSS APPEAL FILED BY THE REVENUE BECOME OTIOSE. ITA NOS. 1404 & 1623/M/2011 5 15. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED AND THE CROSS APPEAL FILED BY THE REVENUE IS DISMISSED AS OTIOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH JUNE, 2014 . ,%8 5 . +% 9 :, ; 17.,6.2014 5 < SD/- SD/- (D.MANMOHAN ) (N.K. BILLAIYA) !'# /VICE PRESIDENT %+ ,- / ACCOUNTANT MEMBER MUMBAI; :, DATED 17.6.2014 . . ./ RJ , SR. PS ,%8 ,%8 ,%8 ,%8 5 55 5 26' 26' 26' 26' =%'.6 =%'.6 =%'.6 =%'.6 / COPY OF THE ORDER FORWARDED TO : 1. /1 / THE APPELLANT 2. 23/1 / THE RESPONDENT. 3. > ( ) / THE CIT(A)- 4. > / CIT 5. '?< 26 , , / DR, ITAT, MUMBAI 6. < @ / GUARD FILE. ,%8 ,%8 ,%8 ,%8 / BY ORDER, 3'6 26 //TRUE COPY// ! !! ! / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI