D.C.I.T Cir - 11,kolkata, Kolkata V. M/s Epcos India Pvt Ltd, Kalyani

ITA 2110/KOL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4701 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 10 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2016
• Appeal Filed By: Department
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 12-07-2013
• Court: TRIBUNAL
• Department Lawyers: NIRAJ KUMAR
• Assessee Lawyers: KRISHNA JAISWAL
• Keywords: Depreciation; Unabsorbed depreciation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA [BEFORE SHRI N. V. VASUDEVAN, JM & SHRI M. BALAGAN ESH, AM] I.T.A NO.2110/KOL/2013 ASSESSMENT YEAR: 2007-08 DEPUTY COMMISSIONER OF INCOME-TAX, VS. M/S. EPCOS INDIA PVT. LTD. CIRCLE-11, KOLKATA (PAN: AAACI6950Q) ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 19.05.2016 DATE OF PRONOUNCEMENT: 01.06.2016 FOR THE APPELLANT: SHRI NIRAJ KUMAR, CIT, DR FOR THE RESPONDENT: SMT. KRISHNA JAISWAL, AR ORDER PER SHRI M. BALAGANESH, AM: THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A)-XII, KOLKATA VIDE APPEAL NO. 522/CIT(A)-XII/11(1)/10-11 DATED 12.03.2 013. ASSESSMENT WAS FRAMED BY ITO, WARD-11(1), KOLKATA U/S. 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR AY 2007-08 VIDE HIS ORDER DATE D 31.12.2010. 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL OF REVENU E IS AS AGAINST THE ORDER OF CIT(A) IN ALLOWING THE CARRY FORWARD OF UNABSORBED DEPRECI ATION. FOR THIS, REVENUE HAS RAISED FOLLOWING GROUNDS: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E, LD. CIT(APPEAL) WAS NOT JUSTIFIED IN ALLOWING THE CARRY FORWARD OF UNABSORBED DEPRECI ATION FOR THE AY. 1994-95 TO 1999- 2000 AMOUNTING RS. 23,58,69,982/- WITHOUT APPRECIAT ING THE OBSERVATION PUT FORWARD BY THE ASSESSING OFFICER. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(APPEAL) WAS NOT JUSTIFIED IN ALLOWING THE CARRY FORWARD OF UNABSORBED DEPRECIATI ON FOR THE AY. 1994-95 TO 1999- 2000 AMOUNTING RS. 23,58,69,982/- IN VIEW OF THE AM ENDMENT BY THE FINANCE ACT, 2001 WITH EFFECT FROM 01.04.2002 SUBSTITUTING THE OLD SE CTION 32(2) OF THE I.T. ACT, 1961. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO IN VIEW OF AMENDED PROVISION OF LAW, THE UNABSORBED DEPRECIATION FOR A SSESSMENT YEAR 1994-95 TO 1996-97 WAS ELIGIBLE FOR SET OFF UPTO AY. 2004-05 AND FROM ASSESSMENT YEAR 1997-98 TO 2001-02 WAS ELIGIBLE FOR SET OFF ONLY AGAINST THE INCOME UN DER HEAD 'PROFIT AND GAINS OF BUSINESS OR PROFESSION' FOR A PERIOD NOT MORE THAN EIGHT ASS ESSMENT YEARS. 3. BRIEF FACTS OF THIS CASE ARE THAT THE ASSESSEE IS AN INDIAN COMPANY AND IS ENGAGED, INTER ALIA, IN THE BUSINESS OF MANUFACTURI NG AND SELLING SOFT FERRITE COMPONENTS. WITH REGARD TO THE ISSUE OF DISALLOWANCE OF CARRY F ORWARD OF SET OFF OF UNABSORBED DEPRECIATION OF RS.23,58,69,982/-, THE LD. AO IN HI S ASSESSMENT ORDER HAS GIVEN FINDING 2 ITA NO.2110/K/2013 EPCOS INDIA PVT. LTD. AY 2007-08 THAT THE UNABSORBED DEPRECIATION FOR AYS 1994-95 T O 1997-98 WAS ELIGIBLE FOR SET OFF UP TO AY 2004-05 AND THAT FOR AYS 1997-98 TO 2001-02 W AS ELIGIBLE FOR SET OF ONLY AGAINST THE INCOME UNDER THE HEAD PROFITS AND GAINS OF BUSI NESS OR PROFESSION FOR A PERIOD OF MORE THAN EIGHT ASSESSMENT YEARS. ON FIRST APPEAL, THE LD. CIT(A) BY PLACING RELIANCE ON THE ORDER PASSED BY HIM FOR THE AYS 2004-05 AND 2005-06 IN ASSESSEES OWN CASE ALLOWED THE CLAIM OF THE ASSESSEE. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 4. THE LD. DR VEHEMENTLY RELIED ON THE ORDER OF THE AO. 5. THE LD. AR STATED THAT THE ISSUE UNDER APPEAL IS COVERED BY THE COORDINATE BENCH DECISION OF THIS TRIBUNAL IN ASSESSEES OWN CASE FO R AYS 2004-05 AND 2005-06 IN ITA NOS. 815 & 816/KOL/2013 DATED 11.05.2016. 6. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ISSUE UNDER APPEAL IS SQUARELY COV ERED BY THE ORDER OF THIS TRIBUNAL, SUPRA WHEREIN IT WAS HELD THAT - 16. BEFORE CIT(A) THE ASSESSEE RELIED ON THE DECI SION OF THE GUJARAT HIGH COURT IN THE CASE OF.GENERAL MOTORS INDIA PVT. LTD. -VS.- DCIT ( GUJ.) (2013) 354 ITR 244 (GUJ.) WHEREIN, THE HON'BLE GUJARAT HIGH COURT HAS HELD TH AT UNABSORBED DEPRECIATION FROM AY. 1997-98 UP TO AY. 2001-02 GOT CARRIED FORWARD T O AY. 2002-03 AND BECAME PART THEREOF AND IT CAME TO BE GOVERNED BY THE PROVISION S OF SEC. 32(2) AS AMENDED BY THE FINANCE ACT, 2001 AND WERE AVAILABLE FOR CARRY FORW ARD AND SET OFF AGAINST INCOME OF SUBSEQUENT YEARS WITHOUT ANY LIMIT. THE RELEVANT EX TRACTS OF THE JUDGMENT IS AS UNDER: 'WE ARE OF THE CONSIDERED OPINION THAT ANY UNABSORB ED DEPRECIATION AVAILABLE TO AN ASSESSEE ON 1ST 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 ONCE THE CIRCULAR NO. 14 OF 2001 CLARIFIE D THAT THE RESTRICTION OF 8 YEARS FOR CARRY FORWARD AND SET OFF OF UNABSORBED D EPRECIATION 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 O F SECTION 32(2) AS AMENDED BY FINANCE ACT, 2001 AND WERE AVAILABLE FOR CARRY FORW ARD AND SET OFF AGAINST THE PROFITS AND GAINS OF SUBSEQUENT YEARS, WITHOUT ANY LIMIT WHATSOEVER. ' 17. IT WAS POINTED OUT THAT THE ABOVE DECISION IN THE CASE OF GENERAL MOTORS INDIA PVT. LTD. (SUPRA) HAS BEEN FOLLOWED BY THE HON'BLE GUJAR AT HIGH COURT IN THE CASE OF CIT -VS.- GUJARAT THEMIS BIOSYN LTD. (2014) 44 TAXMANN.COM 20 4 (GUJ.). IN THIS CASE THE HON'BLE HIGH COURT UPHELD THE VIEW TAKEN BY THE ITAT WHEREI N, FOLLOWING THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF GENERAL M OTORS LTD. (SUPRA), IT WAS HELD THAT CARRY FORWARD OF UNABSORBED DEPRECIATION CONCERNING AY. 2001-02 AND ASSESSMENT YEARS PRIOR THERETO CAN BE SET OFF IN SUBSEQUENT YEARS WI THOUT ANY SET TIME LIMIT. 18. REFERENCE WAS FURTHER MADE TO THE DECISION OF THE HON'BLE JURISDICTIONAL TRIBUNAL IN THE CASE OF BENGAL TEA & FABRICS LIMITED (ITA NO 46 7/KOLL2012) DATED 26TH JULY, 2012 FOR THE AY 2008-09, WHEREIN THE QUESTION AROSE AS T O WHETHER IN VIEW OF THE AMENDED PROVISIONS OF SECTION 32(2) OF THE ACT THE ASSESSEE WOULD BE ENTITLED TO SET OFF THE UNABSORBED DEPRECIATION FOR THE AYS 1997-98 AND 199 8-99 AGAINST THE INCOME OF THE AY 3 ITA NO.2110/K/2013 EPCOS INDIA PVT. LTD. AY 2007-08 2008-09 (I.E. BEYOND ASSESSMENT YEARS 2004-05/2005- 06). THE HON'BLE KOLKATA TRIBUNAL AFTER ANALYZING AND ACCEPTING THE PRINCIPLES OF THE DECISIONS OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF KARNATAKA COOPERATIVE MIL K PRODUCERS FEDERATION LTD. -VS.- DC IT (2011) 53 DTR 81 (KAR) AND HON'BLE AMRITSAR T RIBUNAL IN THE CASE OF ITO VS- SURAJ SOLVENT VANASPATI INDUSTRIES LTD. (2008) 16 D TR 492 (AMRITSAR) AND FURTHER ACCEPTING THE FACT THAT SINCE THERE IS NO CONTRARY DECISION OF THE HON'BLE CALCUTTA HIGH COURT ON THE AFORESAID ISSUE HAS HELD THAT THE ASSE SSING OFFICER HAD TAKEN A CORRECT VIEW OF THE AMENDED PROVISIONS OF THE SECTION 32(2) OF T HE ACT TO ALLOW THE ASSESSEE TO CARRY FORWARD THE DEPRECIATION ALLOWANCE FOR THE PREVIOUS YEAR 2004-05 AND 2005-06. RELIANCE WAS ALSO PLACED ON THE DECISION OF THE HON'BLE KAR NATAKA HIGH COURT IN THE CASE OF COOPERATIVE MILK PRODUCERS FEDERATION LTD. (SUPRA) HELD AS UNDER: ' ..... THE PROVISION U/S 32(2) OF THE ACT WHICH CA ME TO BE INTRODUCED LIMITING/EXTENDING THE PERIOD FROM EIGHT YEARS FOR AN UNLIMITED PERIOD. FURTHER, CARRYING FORWARD OF UNABSORBED DEPRECIATION FOR EVE RY YEAR HAS TO BE CALCULATED INDIVI ALLY BASED ON AUDIT REPORT AND TO ARRIVE AT THE EXACT AMOUNT TO BE CARRIED FORWARD. 19. THE CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE. THE FOLLOWING WERE THE RELEVANT OBSERVATIONS OF THE CIT(A): 8 . APPEAL ON GROUND NO. 4 AND 5 ARE AGAINST THE DISA LLOWANCE OF CARRY FORWARD OF UNABSORBED DEPRECIATION OF RS. 8,77,48,743/-. TH E A.O. IN HIS ASSESSMENT ORDER HAS CLEARLY MENTIONED THAT UNABSORBED DEPRECI ATION OF ASSESSMENT YEAR 1994-95 TO 1996-97 WAS TO BE CLAIMED / SET OFF UPTO ASSESSMENT YEAR 2004-05 ONLY IT COULD NOT BE CARRIED FORWARD AND SET OFF BE YOND THAT. DURING THE APPELLATE PROCEEDING THE A.R. HAS SUBMITTED A COPY OF THE ORD ER OF THE JURISDICTIONAL HON'BLE KOLKATA TRIBUNAL IN THE CASE OF BENGAL TEA & FABRICS LTD. VS. DCLT CIR-4, KOLKATA (ITA NO. 467/KOL/2012 DT. 26-07-2012 ) WHEREIN THE TRIBUNAL HAS CATEGORICALLY GIVEN ITS FINDING THAT THE ASSESSEE C OMPANY WOULD BE ENTITLED TO SET OFF UNABSORBED DEPRECIATION .OR THE A.YS. 1997-98, 1998-99 AGAINST THE INCOME OF A.Y. 2008-09 (I.E. BEYOND THE A.YS.2004-05/2005-06) . THE HON'BLE KOLKATA TRIBUNAL HAS ALSO DISCUSSED, ANALYZED AND ACCEPTED THE PRINCIPLES OF THE DECISIONS OF HON'BLE KARNATAKA HIGH COURT IN THE CA SE OF KARNATAKA COOPERATIVE MILK PRODUCERS FEDERATIONS LTD. VS. DCL T 53 DTR 81 (KARNATAKA) ON THE SAME ISSUE. I HAVE CONSIDERED THE FINDING OF THE A.O. IN THE ASSESSMENT ORDER DT. 16-12-2011 AND THE WRITTEN SUBMISSION AND CASE LAWS FILED BY THE A.R. DURING THE APPELLATE PROCEEDING. I FIND THAT THIS C ASE IS SQUARELY COVERED BY THE KOLKATA TRIBUNALS DECISION IN THE CASE OF BENGAL T EA & FABRICS LTD. (SUPRA). THUS., RESPECTFULLY FOLLOWING THE RATIO DECIDED BY THE JURISDICTIONAL APPELLATE TRIBUNAL, ASSESSEES APPEAL ON GROUND NO.4 AND 5 AR E ALLOWED. 20. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVE NUE HAS PREFERRED THE PRESENT APPEALS BEFORE THE TRIBUNAL. 21. WE HAVE HEARD THE SUBMISSIONS OF THE LEARNED D R WHO RELIED ON THE ORDER OF THE AO. THE LEARNED COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF THE CIT(A). 22. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND A RE OF THE VIEW THAT IN THE LIGHT OF THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE C ASE OF GENERAL MOTORS INDIA PVT. LTD. (SUPRA) WHICH HAS THE EFFECT OF OVERRULING THE DECI SION OF THE SPECIAL BENCH IN THE CASE OF TIMES GURANTEE (SUPRA) AND ALSO ON THE BASIS OF OTH ER DECISIONS REFERRED BY THE ASSESSEE BEFORE CIT(A), THE ORDER OF THE CIT(A) DOES NOT CAL L FOR ANY INTERFERENCE. ACCORDINGLY, THE APPEALS BY THE REVENUE ARE DISMISSED. 4 ITA NO.2110/K/2013 EPCOS INDIA PVT. LTD. AY 2007-08 RESPECTFULLY FOLLOWING THE SAME, WE HOLD THAT THE O RDER PASSED BY LD. CIT(A) DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, THE GROUND S RAISED BY THE REVENUE ARE DISMISSED. 7. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSE D. 8. ORDER IS PRONOUNCED IN THE OPEN COURT ON 01.06.2 016 SD/- SD/- (N. V. VASUDEVAN) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTAN T MEMBER DATED : 1 ST JUNE, 2016 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT DCIT, CIR-11, KOLKATA 2 RESPONDENT M/S. EPCOS INDIA PVT. LTD., KULIA, KANC HRAPARA ROAD, KALYANI, KALYANI-741251 3 . THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .