Assistant Commissioner of Income TAx Circle-4(1)(2), Bangalore V. M/s M M Rubber Company Ltd , Bangalore

ITA 2472/BANG/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1234 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 23-04-2019
• Assessment Year: 2007-2008
• Appeal Filed On: 22-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIMAL ANAND
• Assessee Lawyers: S V RAVISHANKAR
• Keywords: Depreciation; Reason to believe; Unabsorbed depreciation
• Section: 143(3); 143(1); 250; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, BENGALURU BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. 2472 /BANG/201 7 (ASSESSMENT YEAR: 2007-08) ASST. COMMISSIONER OF INCOME-TAX, CIRCLE 4(1)(2), BENGALURU. VS. APPELLANT M/S. M.M. RUBBER COMPANY LTD., EMPIRE INFANTRY, 3 RD FLOOR, INFANTRY ROAD, BENGALURU-560 001. PAN:AAACM 2611 E RESPONDENT APPELLANT BY : SHRI VIMAL ANAND, ADDL.CIT(DR) RESPONDENT BY : SHRI S.V.RAVISHANKAR, ADVOCATE DATE OF HEARING: 01/05/2019 DATE OF PRONOUNCEMENT: 04/06/2019 O R D E R PER PAVAN KUMAR GADALE, JM : THE REVENUE HAS FILED THE APPEAL AGAINST THE ORDER OF THE CIT(A), BENGALURU-2, BENGALURU, PASSED U/S 143(3 ) R.W.S. 147 AND 250 OF THE INCOME-TAX ACT,1961 ['THE A CT' FOR SHORT]. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUND S OF APPEAL: ITA NO.2472/BANG/2017 PAGE 2 OF 6 1. THE ORDER OF THE LD. CIT (A), IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE, IS OPPO SED TO LAW AND THE FACT AND CIRCUMSTANCES OF THE CASE. 2. ON FACTS OF THE CASE, WHETHER THE LD CIT (A) IS JUSTIFIED IN LAW AS WELL ON FACTS IN HOLDING THAT UNABSORBED DEPRECIATION IS COVERED BY THE PROVISIONS OF SECTION 32(2) OF THE ACT, AS AMENDED BY THE FINANCE ACT, 2001 AND THEREFOR6, THE ASSESSEE IS ENTITLED TO CARRY FORWARD AND SET OFF AGAINST PROFIT AND GAINS OF SUBSEQUENT YEAR? 3. ON FACTS OF THE CASE, WHETHER THE DECISION OF THE LD.CIT(A) IS RIGHT IN ALLOWING THE APPEAL OF THE ASSESSEE IGNORING THE AMENDMENTS TO THE FINANCE ACT AMENDED AS ON 01.04.1997, WHEREIN IT WAS MENTIONED THAT THE DEPRECIATION OUGHT TO BE ALLOWED UP TO 8 ASST. YEARS ONLY? 4. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE CIT (A) IN SO FAR AS IT RELATES TO THE ABOVE GROUNDS MAY BE REVERSED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND / OR DELETE ANY OF THE GROUNDS THAT MAY BE URGED. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND MARKETI NG OF FOAM PRODUCTS AND FILED THE RETURN OF INCOME ON 31/10/2007 WITH BUSINESS LOSS OF RS.1,82,38,966/- A ND CAPITAL LOSS OF RS.44,32,201/-. THE RETURN OF INCO ME WAS PROCESSED U/S 143(1) OF THE ACT. SUBSEQUENTLY, THE CA SE ITA NO.2472/BANG/2017 PAGE 3 OF 6 WAS SELECTED FOR SCRUTINY UNDER CASS AND ASSESSMENT ORDER WAS PASSED U/S 143(3) DATED 31/12/2009 DETERMINING THE BUSINESS LOSS OF RS.1,79,04,666/- AN D INCOME FROM CAPITAL GAINS OF RS.5,41,45,206/- AND TA XABLE INCOME DETERMINED AT RS.3,62,40,540/-. SUBSEQUENTLY THE AO HAVING REASON TO BELIEVE THAT THE INCOME HAS ESCAPED ASSESSMENT HAS ISSUED NOTICE U/S 148 OF THE AC T. IN RESPONSE, THE ASSESSEE FILED LETTER TO TREAT THE R ETURN OF INCOME FILED ON 31/10/2007 AS COMPLIANCE TO THE NO TICE. IN THE RE-ASSESSMENT PROCEEDINGS THE AO HAS CONSIDER ED THE OBSERVATIONS OF ORIGINAL ASSESSMENT PROCEEDINGS AND DEALT ON THE SET OFF OF BROUGHT FORWARD UNABSORBED DEPRECIATION OF EARLIER YEARS AT PARA 4 OF THE ORDE R AND FINALLY THE AO, ON VERIFYING THE DOCUMENTS, FOUND THAT THERE IS UNABSORBED DEPRECIATION FOR THE ASSESSMENT YEA RS 1997-98 AND 1998-99 AND CANNOT BE CARRIED FORWARD A ND MADE ADDITION OF RS.11,43,96,461/- TO THE TAXABLE IN COME AND ASSESSED THE TOTAL INCOME OF RS.3,56,93,133/- AND PASSED ORDER U/S 143 READ WITH 147 OF THE ACT DATED 30/03/2015. ITA NO.2472/BANG/2017 PAGE 4 OF 6 4. AGGRIEVED WITH THE AO ORDER, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A). IN APPELLATE PROCEEDINGS, THE CIT(A) CONSIDERED THE GROUNDS OF APPEAL AND GRANTED RELIEF IN RESPECT OF CARRIED FORWARD OF UNABSORBED DEPRECI ATION AND RELIED ON THE DECISION IN THE CASE OF GENERAL MOTORS INDIA P LTD. VS. DCIT (354 ITR 244) AND ALLOWED THE APPEAL. 5. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE TH E TRIBUNAL. THE LEARNED DR SUBMITTED THAT THE CIT(A) HAS ERRED IN GRANTING RELIEF AND CARRIED FORWARD UNABSOR BED DEPRECIATION WITHOUT CONSIDERING THE FACT THAT THE AMENDMENT IN FINANCE ACT, 2001 AND SUPPORTED THE ORDER OF THE AO. CONTRA, THE LEARNED AR SUPPORTED THE ORDER OF THE CIT(A) AND RELIED ON THE JUDICIAL DECISIONS. 6. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. THE SOLE CRUX OF THE DISPUTED ISSUE IS W ITH RESPECT TO THE DELETION OF ADDITION MADE ON ACCOUNT OF UNABSORBED DEPRECIATION. THE LEARNED DR SUBMITTED THA T UNABSORBED DEPRECIATION CANNOT BE CARRIED FORWARD FO R SET OFFWHEREAS THE LEARNED AR RELIED ON THE DECISION OF IN THE CASE OF GENERAL MOTORS INDIA P LTD. (SUPRA) AND WE FOUND ITA NO.2472/BANG/2017 PAGE 5 OF 6 THAT THE CIT(A) HAS MADE OBSERVATIONS AT PAGE 5, PARA.3 .6 WHICH READ AS UNDER: 3.6 IN THE CASE OF THE APPELLANT, THE ISSUE IS WIT H REGARD TO SET OFF PERTAINING TO CARRY FORWARD OF DEPRECIAT ION OF ASST. YEAR 1997-98, 1998-99 AND SUBSEQUENT YEARS I.E., AS ST. YEAR 2000-01 AND ASST. YEAR 20R1-2002 TO BE ALLOWED IN A SST. YEAR 2007-08. AS 8 YEARS HAD NOT ELAPSED AS ON 1.4. 2002 (THE DATE BY WHICH THE AMENDMENT IS APPLICABLE) IN RESPECT OF DEPRECIATION FOR ASST. YEAR 1997-98 AND 1998-99 AND SUBSEQUENT YEARS INVOLVED, THE APPELLANT CANNOT BE DENIED THE SAID CLAIM. THIS VIEW HAS ALSO BEEN UPHELD BY G UJARAT HIGH COURT IN THE CASE OF GENERAL MOTORS INDIA P LT D., VS. DCIT 354 ITR 244. UNDER SUCH POSITION OF LAW, THE ADDITION MADE BY THE AO OF RS. 1,43,96,461 IN THIS REGARD IS UNWARRANTED AND IS HEREBY DELETED. WE FIND THE DISPUTED ISSUE DECIDED BY THE CIT(A) RELY ING ON THE JUDICIAL DECISION AND FACTS OF THE CASE. THE L EARNED DR COULD NOT CONTROVERT WITH ANY COGENT EVIDENCE OR MATERIAL EXCEPT RELYING ON THE ORDER OF THE AO. ACCORDINGLY, WE ARE THE SUBSTANTIVE OPINION THAT THE CIT(A) HAS CONSIDERED THE FACTS AND THE PROVISIONS OF LAW AND THE JUDICIAL DECISION AND PASSED A REASONED ORDE R WHICH CANNOT BE INTERFERE. ACCORDINGLY, WE UPHOLD THE SAME AND THE GROUNDS OF APPEAL OF THE REVENUE ARE DISMISSED. 7. IN THE RESULT, THE REVENUES APPEAL IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON 04 TH JUNE, 2019. SD/- SD/- (B.R. BASKARAN) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER PLACE : BENGALURU D A T E : 04/06/2019 SRINIVASULU, SPS ITA NO.2472/BANG/2017 PAGE 6 OF 6 COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A)- 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL BANGALORE