Shree Maroli Vibhag Khand Udyog Sahakari Mandli Ltd., Navsari V. The ACIT, Navsari Circle, Navsari

ITA 1657/AHD/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94890 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 10-12-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 06-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MODI
• Keywords: Depreciation; Unabsorbed depreciation
• Section: 142(1); 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENCH AHMEDABAD BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER. ITA. NO.1657/AHD/2013 (ASSESSMENT YEARS:2009-10) SHREE MAROLI VIBHAG KHAND UDYOG SAHAKARI MANDLI LTD., MAROLI, TAL. JALALPORE, DIST. NAVSARI - 396436 APPELLANT VS. THE ACIT, NAVSARI CIRCLE, NAVSARI RESPONDENT PAN: AAAAM1187H /BY APPELLANT : SHRI M. S. MODI, A.R. /BY RESPONDENT : SHRI JAMES KURIAN, SR. D.R. /DATE OF HEARING : 10.12.2015 /DATE OF PRONOUNCEMENT : 11.12.2015 ORDER PER RAJESH KUMAR, A.M: THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE OR DER OF CIT(A), VALSAD, DATED 15.03.2013 FOR A.Y. 2009-10 ON FOLLOW ING GROUNDS: (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AS WELL IN LAW, THE LEARNED CIT (APPEALS) GROSSLY ERRED IN CONFIRMING THE ACTION OF THE AC IT, NAVSARI CIRCLE, NAVSARI DENYING THE CARRIED FORWARDS OF UNABSORBED DEPRECIATION FOR THE ASSTT.YEAR: 1997-98 TO 2001-02 CLAIMED TO THE EXTENT OF RS. 1,24,54,904/-, PURELY UNDER GROSS MISINTERPRETATION, MISCONSTRUCTION AND MISAPPLICATION OF THE PROVISIONS OF SECTION 32(2) OF THE ACT AND HENCE, NOT JUSTIFIED. (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AS WELL IN LAW, BOTH THE LOWER AUTHORITIES ERRED IN OVERLOOKING AND IN SUMMARILY REJECTING THE 2 ITA NO.1657/ AHD 2013 FOR A.Y. 2009-10 DETAILED STATEMENT OF FACTS SUBMITTED ALONG WITH MEMORANDUM OF APPEAL AND HENCE, THE ACTION FOR DENYING THE CLAIM OF CARRIED FORWARDS OF UNABSORBED DEPRECIATION U/S 32(2) OF THE ACT AS APPLICABLE TO THE RELEVANT YEAR, UNDER AN ERRONEOUS INTERPRETATION OF THE RELEVANT PROVISIONS OF LAW AS ALSO THE CBDT'S CIRCULAR ON THE SUBJECT, IS WITHOUT JURISDICTION, BAD IN LAW, ILLEGAL AND LIABLE TO BE STRUCK DOWN. 2. THE ISSUE RAISED IN GROUND NOS. 1 & 2 RELATES TO CONFIRMING THE ACTION OF ASSESSING OFFICER IN NOT ALLOWING HE UNABSORBED DEPRECIATION FOR A.YS. 1997-98 TO 2001-02 OF RS.1,24,54,904/- TO BE CARRIE D FORWARD TO THE SUBSEQUENT YEAR. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY WAS ENGAGED IN THE BUSINESS OF MANUFACTURING AND SALE OF SUGAR AND ITS BY-PRODUCTS. THE ASSESSEE FILED ITS RETURN OF INCOME ON 23.09.2009 D ECLARING TOTAL INCOME AT RS.NIL. THE CASE OF ASSESSEE WAS SELECTED FOR SCRU TINY AND NOTICE U/S.143(2) AND 142(1) WAS ISSUED AND SERVED ON THE ASSESSEE ON 28.08.2010 CALLING UPON THE ASSESSEE TO FILE VARIOUS INFORMATION. DURING C OURSE OF ASSESSMENT PROCEEDINGS, ASSESSING OFFICER NOTICED THAT ASSESSE E HAD CLAIMED CARRY FORWARD OF UNABSORBED DEPRECIATION RELATING TO THE A.Y. 1997-98 TO 2001-02 AMOUNTING TO RS.1,24,54,904/-. THE ASSESSING OFFIC ER ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE AND DENIED CARRY FORWARD OF UNABSORBED DEPRECIATION RELATING TO A.YS. 1997-98 TO 2001-02 BY REJECTING T HE SUBMISSION OF THE ASSESSEE AND BY HOLDING THAT AS PER SUB-SECTION 2 ( III)(B) OF SECTION 32 AS AMENDED BY THE FINANCE (NO.2) ACT, 1996 WITH EFFECT FROM 1 ST APRIL, 1997, UNABSORBED DEPRECIATION RELATING TO A.YS. 1997-98 T O 2001-02 COULD ONLY BE CARRIED FORWARDED AND SET OFF UP TO EIGHT SUCCEEDIN G ASSESSMENT YEARS BY FOLLOWING THE DECISION IN CASE OF DCIT VS. M/S. TIMES GUARANTY LIMITED, ITA NOS. 4917 & 4978/MUM/2008. 4. THE LD. CIT(A) DISMISSED THE APPEAL OF THE ASSES SEE BY HOLDING THAT THERE WAS NO DISCREPANCY IN NOT ALLOWING CARRY FORW ARD UNABSORBED DEPRECIATION RELATING TO A.YS. 1997-98 TO 2001-02 A ND THERE IS NO NEED TO INTERFERE IN THE FINDING OF ASSESSING OFFICER. 3 ITA NO.1657/ AHD 2013 FOR A.Y. 2009-10 5. THE LD. A.R. SUBMITTED BEFORE US THAT UNABSORBED DEPRECIATION RELATING TO A.YS. 1997-98 TO 2001-02 OF RS.1,24,54,904/- WAS WRONGLY NOT ALLOWED TO BE CARRIED FORWARDED FOR FUTURE SET OFF BY WRONGLY INTERPRETING THE PROVISIONS OF SECTION32(2)(III)(B). LD. COUNSEL DREW OUR ATTE NTION TO THE DECISION OF HONBLE HIGH COURT IN CASE OF GENERAL MOTORS INDIA LTD. VS. ACIT(2013) 354 ITR 244 (GUJ.), WHEREIN IT HAS BEEN DECIDED THAT THE CARRY FORWARD AND SET OFF OF UNABSORBED DEPRECIATION FOR THE A.Y. 1997-98 IS AVAILABLE EVEN AFTER THE PERIOD OF EIGHT YEARS WITHOUT ANY LIMIT WHATSOEVER IN ACCORDANCE WITH SECTION 32(2) AS AMENDED BY THE FINANCE ACT, 2001. HE FURTHER POINTED OUT THAT IN CASE OF SAHAKARI KHAND UDYOG MANDAL LTD. VS . ACIT (2015) 370 ITR 107 (GUJ.), HONBLE JURISDICTIONAL HIGH COURT UPHEL D THE SAME BY FOLLOWING ITS ORDER IN CASE OF GENERAL MOTORS INDIA LTD. (SUP RA). ON THE OTHER HAND, LD. D.R. RELIED ON THE ORDERS OF AUTHORITIES BELOW. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE LD. A.O. DENIED THE BENEF IT OF CARRY FORWARD OF UNABSORBED DEPRECIATION AMOUNTING TO RS.1,24,54,904 /- RELATING TO A.YS. 1997-98 TO 2001-02 IN VIEW OF THE PROVISION OF SECT ION 32(2)(III)(B) AS AMENDED BY THE FINANCE (NO.2) ACT, 1996. WE FIND T HAT THE HONBLE JURISDICTIONAL HIGH COURT IN CASE OF GENERAL MOTORS INDIA LTD. (SUPRA) HELD THAT UNABSORBED DEPRECIATION IS DEEMED TO BE PART O F THE CURRENT DEPRECIATION AND THAT ANY UNABSORBED DEPRECIATION AVAILABLE TO A SSESSEE AS ON 01.04.2002 (A.Y. 2002-03) WILL BE DEALT WITH IN ACCORDANCE WIT H THE PROVISION OF SECTION 32(2) AS AMENDED BY THE FINANCE ACT, 2001. THE REL EVANT PARA 38 OF THIS ORDER IS REPRODUCED AS UNDER: 38. THEREFORE, IT CAN BE SAID THAT, CURRENT DEPRECIATION IS DEDUCTIBLE IN T HE FIRST PLACE FROM THE INCOME OF THE BUSINESS TO WHICH IT RELATES. IF SUCH DE PRECIATION AMOUNT IS LARGER THAN THE AMOUNT OF THE PROFITS OF THAT BUSINESS, THEN SUCH EXCE SS COMES FOR ABSORPTION FROM THE PROFITS AND GAINS FROM ANY OTHER BUSINESS OR BUSINESS, IF ANY, CARRIED ON BY THE ASSESSEE. IF A BALANCE IS LEFT EV EN 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 O VER, IT IS TO BE TREATED AS UNABSORBED DEPRECIATION AND IT IS TAKEN TO THE NEXT SUCCEEDING YE AR. WHERE THERE IS CURRENT DEPRECIATION FOR SUCH SUCCEEDING YEAR THE UNABSOR BED DEPRECIATION IS ADDED TO THE CURRENT DEPRECIATION FOR SUCH SUCCEEDING YEAR AND I S 4 ITA NO.1657/ AHD 2013 FOR A.Y. 2009-10 DEEMED AS PART THEREOF. IF, HOWEVER, THERE IS NO CURRENT DEPRECIATION FOR SUCH SUCCEEDING YEAR, THE UNABSORBED DEPRECIATION BECOMES THE DEPRECIATION ALLOWANCE FOR SUCH SUCCEEDING YEAR. WE ARE OF THE CONSIDERED OPINION THAT ANY UNABSORBED DEPRECIATION AVAILABLE TO AN ASSESSEE ON 1ST DAY OF APRIL 2002 (A.Y. 2002-03) WI LL BE DEALT WITH IN ACCORDANCE WITH THE PROVISIONS 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 AND SET OFF OF UNABSORBED DEPRECIAT ION HAD BEEN DISPENSED WITH, THE UNABSORBED DEPRECIATION FROM A.Y.1997-98 UPTO THE A.Y.2001-02 GOT CARRIED FORWARD TO THE ASSESSMENT YEAR 2002-03 AND BECAME PART THEREOF, IT CAME TO BE GOVERNED BY THE PROVISIONS OF SECTION 32(2) AS AMENDED BY FINANCE ACT, 2001 AND WERE AVAILABLE FOR CARRY FORWARD AND SET OFF AGAINST THE PROFITS AND GAINS OF SUBSEQUENT YEARS, WITHOUT ANY LIMIT WHATSOEVER. IN CASE OF SAHAKARI KHAND UDYOG MANDAL LTD. VS. ACI T (SUPRA), SAME ISSUE HELD BY THE HONBLE JURISDICTIONAL HIGH COURT BY FO LLOWING ITS JUDGMENT IN CASE OF GENERAL MOTORS INDIA LTD. (SUPRA) THAT DEPR ECIATION AVAILABLE AS ON 01.04.2002 WILL BE DEALT WITH THE PROVISION OF SECT ION 32(2) OF THE ACT. THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE AFO RESAID DECISIONS OF HONBLE JURISDICTIONAL HIGH COURT. WE, THEREFORE, BY RESPE CTFULLY FOLLOWING THE ABOVE DECISIONS, ALLOW THE APPEAL OF THE ASSESSEE. ASSES SING OFFICER IS DIRECTED ACCORDINGLY. 7. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED . PRONOUNCED IN THE OPEN COURT ON THIS THE 11 TH DAY OF DECEMBER, 2015. SD/- SD/- (SHAILENDRA KUMAR YADAV) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 11/12/2015 TRUE COPY S K SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE $ %&%'( ) / CONCERNED CIT 4 )- / CIT (A) , -./ 00'(1 '( 1 23& / DR, ITAT, AHMEDABAD 4 /56 78 / GUARD FILE. BY ORDER / 1 / 2 % '( 1 23&