ACIT Corporate Circle 3(1), CHENNAI V. Tamil Nadu Civil Supplies Corporation, CHENNAI

ITA 1902/CHNY/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0403 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 08-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS PAVUNA SUNDARI
• Assessee Lawyers: P SELVAMOORTHY
• Keywords: Depreciation; Unabsorbed depreciation
• Section: 143(3); 147

Judgement Text

, , IN THE INCOME-TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . , . , BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ I T.A. NO. 1902/CHNY/2018 / ASSESSMENT YEAR :2008-09 THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 3(1), NEW BLOCK, 4 TH FLOOR, 121, MAHATMA GANDHI ROAD, NUNGAMBAKKAM, CHENNAI 600 034. VS. TAMIL NADU CIVIL SUPPLIES CORPORATION, NO. 12, THAMBUSWAMY ROAD, KILPAUK, CHENNAI 600 010. [PAN:AABCT0551H] ( APPELLANT ) ( RESPONDENT) / APPELLANT BY : MRS. PAVUNA SUNDARI, JCIT / RESPONDENT BY : SHRI P. SELVAMOORTHY, CA / DATE OF HEARING : 20.11.2018 /DATE OF PRONOUNCEMENT : 27.11.2018 / O R D E R PER DUVVURU RL REDDY, JUDICIAL MEMBER: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) 11, CHENNAI DATED 14.03.2018 RELEVANT TO THE ASSESSMENT YEAR 2008-09. THE ONLY EFFECTIVE GROUND RAISED IN THE APPEAL OF THE REVENUE IS THAT THE LD. CIT(A) HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO ALLOW THE ASSESSEES CLAIM OF UNABSORBED DEPRECIATION TO THE TUNE OF .2,76,64,000/-. 2. THE ASSESSEE FILED ITS RETURN OF INCOME ON 30.09.2008 DECLARING A I.T.A. NO. 1902/CHNY/18 2 LOSS OF .8,11,38,952/-. THE RETURN WAS SUBSEQUENTLY REVISED ON 17.03.2009 REDUCING THE LOSS TO .4,02,38,952/-. THEREAFTER ANOTHER RETURN WAS FILED ON 01.10.2009 DECLARING NIL INCOME AFTER SETTING OFF OF BROUGHT FORWARD LOSSES AMOUNTING TO .7,05,33,527/-. THE ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 [ACT IN SHORT] WAS COMPLETED ON 29.11.2010 DETERMINING THE INCOME AT .1,22,91,307/-. SUBSEQUENTLY, THE ASSESSMENT WAS REOPENED UNDER SECTION 147 OF THE ACT. THE ASSESSMENT UNDER SECTION 143(3) R.W.S. 147 OF THE ACT WAS COMPLETED BY DETERMINING TAXABLE INCOME OF THE ASSESSEE AT .3,49,30,527/- BY DENYING THE SET OFF OF BROUGHT FORWARD DEPRECIATION FOR THE ASSESSMENT YEAR 1999-2000 AT .2,2,76,64,000/-. 3. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). BY FOLLOWING THE DECISION IN THE CASE OF FORD INDIA PVT. LTD. V. DCIT IN I.T.A. NOS. 2344 & 2345/MDS/2012 DATED 12.05.2017, THE LD. CIT(A) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. 4. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. THE LD. DR SUBMITTED THAT AGAINST THE ORDER OF THE TRIBUNAL, THE DEPARTMENT PREFERRED FURTHER APPEAL AND PLEADED FOR REVERSING THE APPELLATE ORDER. I.T.A. NO. 1902/CHNY/18 3 5. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE STRONGLY SUPPORTED THE ORDER PASSED BY THE LD. CIT(A). 6. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ASSESSING OFFICER DISALLOWED SET OFF OF CLAIM OF UNABSORBED DEPRECIATION BY STATING THAT IT CANNOT BE CARRIED OVER FOR BEYOND EIGHT YEARS. WE FIND THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY VARIOUS DECISIONS OF THE TRIBUNAL INCLUDING IN THE CASE OF DCIT V. TAMIL NADU STATE TRANSPORT CORPORATION (VILLUPURAM) LIMITED IN I.T.A. NO. 1713/MDS/2011 DATED 18.01.2012, WHEREIN, THE TRIBUNAL HAS OBSERVED AND HELD AS UNDER: IN VIEW OF THE ABOVE CIRCULAR, ARID ALSO IN VIEW OF THE DECISION OF THE JURISDICTIONAL HIGH COURT, IN THE CASE OF CIT VS S & S POWER SWITCHGEAR LTD., (218 CTR 701)(MAD) THE ENTIRE DEPRECIATION THAT WAS BROUGHT FORWARD TO THE A.Y. 1996- 97 AND THE NET UNABSORBED DEPRECIATION COMPUTED FOR THE A.Y. 1996-97 AND CARRIED FORWARD TO THE A.Y.1997-98 BECOMES THE DEPREDATION ALLOWANCE OF A.Y. 1997-98. THE UNABSORBED' DEPRECIATION ALLOWANCE AFTER SET OFF AGAINST THE INCOME OF THE CURRENT YEAR, WILL BECOME THE UNABSORBED DEPRECIATION ALLOWANCE OF A.Y. 1997-98 AND THE LIMITATION OF 8 YEARS, AS PER THE AMENDED PROVISIONS OF SEC.32(2), STARTS FROM THE A.Y.1997-98. THEREFORE, ALL THE DEPRECIATION ALLOWANCES THAT ARE BROUGHT FORWARD FROM THE EARLIER YEARS AND WERE AVAILABLE DURING THE A.Y. 1997-98 CAN BE CARRIED FORWARD FOR ANOTHER PERIOD OF 8 YEARS I.E., UP TO A.Y.2005-06. IN ANY CASE, WITH THE CHANGE IN THE PROVISIONS OF SEC.32(2) W.E.F. 01.04.2002 THE UNABSORBED DEPRECIATION ONCE AGAIN WAS MADE AVAILABLE TO THE ASSESSEE INDEFINITELY BY CLUBBING WITH THE CURRENT DEPRECIATION ALLOWANCE. I.T.A. NO. 1902/CHNY/18 4 6.1 FURTHER, IN THE CASE OF KMC SPECIALITY HOSPITALS INDIA LTD. [2014] 32 ITR(T) 149 (CHENNAI TRIBUNAL), WHEREIN, IT WAS HELD THAT THE INTERREGNUM RESTRICTION OF LIMITING THE CLAIM FOR AN EIGHT-YEAR PERIOD DOES NOT TAKE AWAY THE RIGHT OF AN ASSESSEE TO CLAIM THE BALANCE OF UNABSORBED DEPRECIATION, FOREVER. FURTHER, BY VIRTUE OF THE AMENDMENT BOUGHT OUT BY THE FINANCE ACT 2001, THE UNABSORBED DEPRECIATION FOR THE INTERREGNUM PERIOD (AY 1997-98 TO AY 2001-02) WOULD REVIVE BACK INTO LIFE AND BECOME ELIGIBLE FOR CARRY FORWARD AND SET OFF FOR AN INDEFINITE PERIOD. 6.2 MOREOVER, IN THE CASE OF CIT V. GUJARAT THEMIS BIOSYN LTD. 105 DTR 72, THE HONBLE GUJARAT HIGH COURT HAS HELD THAT AS PER CIRCULAR NO. 14 OF 2001, RESTRICTION OF 8 YEARS FOR CARRY FORWARD AND SET OFF OF UNABSORBED DEPRECIATION HAD BEEN DISPENSED WITH. THE UNABSORBED DEPRECIATION CONCERNING ASSESSMENT YEAR 1997-98 TO 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) OF THE ACT, 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 TIME LIMIT, WHATSOEVER. 6.3 BY FOLLOWING THE ABOVE DECISIONS, IN THE CASE OF FORD INDIA PVT. LTD. V. DCIT (SUPRA), THE TRIBUNAL HAS GIVEN SIMILAR DECISION AND THE LD. DR I.T.A. NO. 1902/CHNY/18 5 COULD CONTROVERT THE ABOVE FINDINGS OF THE TRIBUNAL. UNDER THE ABOVE FACTS AND CIRCUMSTANCES, WE FIND NO REASON TO INTERFERE WITH THE ORDER PASSED BY THE LD. CIT(A) ON THIS ISSUE. THUS, THE GROUND RAISED BY THE REVENUE IS DISMISSED. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON THE 27 TH NOVEMBER, 2018 AT CHENNAI. SD/ - SD/ - (ABRAHAM P. GEORGE) ACCOUNTANT MEMBER (DUVVURU RL REDDY) JUDICIAL MEMBER CHENNAI, DATED, THE 27.11.2018 VM/- /COPY TO: 1. / APPELLANT, 2. / RESPONDENT, 3. ( ) /CIT(A), 4. /CIT, 5. /DR & 6. /GF.