Income Tax Officer-Ward-7(2), Kolkata, Kolkata V. Winsome Breweries Ltd., New Delhi

ITA 2659/KOL/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4495 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 9 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2016
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 24-08-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 26-11-2013
• Court: TRIBUNAL
• Assessee Lawyers: MANOJ KATARUKA
• Keywords: Business income; Depreciation; Unabsorbed depreciation

Judgement Text

ITA NO.2659 /KOL/2013 M/S. WINSOME BREWERIES LTD. 1 IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A, KOLKATA (BEFORE SHRI N.V.VASUDEVAN, J.M. &DR.A.L.SAINI, A.M .) ITA NO. 2659/KOL/2013 : ASSTT. YEAR : 2011- 12 I.T.O., WARD-7(2), P-7, CHOWRINGHEE SQUARE, (5 TH FLOOR), KOLKATA 700 069 VS WINSOME BREWERIES LTD. 62, COMMUNITY CENTRE, EAST OF KAILASH, NEW DELHI-110048 PAN: AAACW 0174E (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI SALLONG YADEN, ADDL.CIT, RESPONDENT BY: SHRI MANOJ KATARUKA, ADVOCATE DATE OF HEARING : 22.08.2016 DATE OF PRONOUNCEMENT :- 21/09/16 ORDER PER DR. A.L.SAINI, A.M .: THE CAPTIONED APPEAL FILED BY THE REVENUE PERTAININ G TO ASSESSMENT YEAR 2011-12, IS DIRECTED AGAINST THE ORDER PASSED BY TH E LD. COMMISSIONER OF INCOME- TAX (A) -VIII, KOLKATA IN APPEAL NO.62/CIT(A)-VIII/ KOL/12-13 DATED 13/09/2013, WHICH IN TURN ARISES OUT OF AN ORDER PASSED BY THE ACIT(CPC), BANGALORE, THE ASSESSMENT ORDER, UNDER SECTION 143(1) OF THE INCOM E TAX ACT, 1961 (IN SHORT, THE ACT), DATED 28/01/ 2012. 2. THE FACTS OF THE CASE ARE STATED IN BRIEF. THE R ETURN OF INCOME FOR THE ASSESSMENT YEAR 2011-12 FILED ONLINE BEFORE THE CPC, BANGALORE. THE ASSESSMENT COMPLETED UNDER SECTION 143(1) ON 28 .01.2012. THE PAN DATA BASE SHOWS THAT THE A.O. CODE OF THE ABOVE -MENTIONED ASSESSEE IS DELW483 AND IS ASSESSED WITH INCOME TAX OFFICER, WARD- ITA NO.2659 /KOL/2013 M/S. WINSOME BREWERIES LTD. 2 18(3)/DEL. IN THIS SITUATION AFTER HAVING TELEPHONI C CONVERSATION WITH THE CONCERNED I.T.O., THE ORDER (IN ORIGINAL) HAS B EEN SENT TO I.T.O., WARD-18(3)/DELHI, BY POST FOR NECESSARY ACTION. THE SAME HAS DULY BEEN ASSESSED BY HIM. 3. THE GROUND OF APPEAL TAKEN BY THE REVENUE READS AS UNDER: 1. THAT THE LD. CIT(APPEALS)-VIII, KOLKATA HAS ERRE D IN FACTS IN ALLOWING THE UNABSORBED DEPRECIATION FOR RS.2,55,26,918/-. 4. THE FACTS OF THIS ISSUE ARE STATED IN BRIEF. THE SOLITARY GROUND OF APPEAL IS REGARDING THE DISALLOWANCE OF CLAIM OF SE T OFF OF UNABSORBED DEPRECIATION LOSS OF EARLIER YEARS TO THE EXTENT OF RS. 255,26,918 EQUIVALENT TO BUSINESS INCOME DETERMINED AT RS.255, 26,918/- AFTER ADJUSTING CURRENT DEPRECIATION. THIS PROBLEM CAN ONLY BE UNDERSTOOD BY CO-RELATING THE CLAIM OF UNABSORBED DEPRECIATION FROM THE A.Y.2008-09 FROM W HICH YEAR THE PROBLEM STARTED. IT IS SUBMITTED THAT THERE WAS ACC UMULATED UNABSORBED DEPRECIATION LOSS FOR TOTAL AMOUNT OF RS .100,190,139/- UP TO A.Y. 2007-08 AS PER STATEMENT CONTAINED IN THE P APER BOOK. THE SAID ACCUMULATED LOSS WAS FOR SEVERAL YEARS STARTIN G FROM A.Y. 1998- 99 TO A.Y. 2004-05. (IT APPEARS THAT DUE TO SOFTWAR E DEFECT BROUGHT FORWARD UNABSORBED DEPRECIATION LOSS FOR ASST. YEAR 1998-99 IS SHOWN AT RS. 19,696,049/- IN THE STATEMENT BUT THE SAME S HOULD BE AT RS. 32,434,262/-. HOWEVER CORRECT AMOUNT MAY BE ALLOWED AS PER I.T.DEPT'S RECORD.) ITA NO.2659 /KOL/2013 M/S. WINSOME BREWERIES LTD. 3 THE ASSESSEE IN THE RETURN FOR ASSESSMENT YEAR 2008 -09 SET OFF ONLY A PART OF UNABSORBED DEPRECIATION OF RS. 12738 215/- OF A.Y 1998-99 TO THE EXTENT OF TOTAL INCOME. FURTHER, IN THE RETURN FOR A.Y 2009-10 ALSO, THE BALANCE PART OF UNABSORBED DEPREC IATION OF 1998-99 OF RS. 6957834/- AND RS. 107,01,208/- (BEING A PART OF UNABSORBED DEPRECIATION OF A.Y. 1999-2000) TOTALING TO RS. 176 ,59,042/- TO THE EXTENT OF TOTAL BUSINESS INCOME WAS ADJUSTED. IN THE ASSESSMENT OF THE PETITIONER U/S 143(2) FOR A.Y.2008-09 THE I.T.O DISALLOWED CLAIM OF SET OFF OF B/F UNABSO RBED DEPRECIATION LOSS FOR A.Y 1998-99 AND 1999-2000 HOLDING THAT THE SAME COULD ONLY BE CARRIED FORWARD FOR 8 SUBSEQUENT YEARS BY VIRTUE OF AMENDMENT IN SECTION 32(2) BY THE FINANCE ACT.NO.2 OF. 1996 FROM THE A.Y. 1997-98. THE UNABSORBED DEPRECIATION LOSS FOR BOTH THE YEARS TAKEN TOGETHER COMES TO RS.45473969/-. HOWEVER, SECTION 32(2) WAS FURTHER AMENDED BY FINAN CE ACT.2001 FROM A.Y. 2002-03. BY THIS AMENDMENT THE R ESTRICTION OF 8 YEARS FOR CARRY FORWARD AND SET OFF OF B/F UNABSORB ED DEPRECIATION HAS BEENDISPENSED WITH. THIS AMENDMENT IS APPLICABLE FR OM A.Y.2002-03. FURTHER, CIRCULAR NO. 14 OF 2001 HAD CLARIFIED THAT UNDER SECTION 32(2) IN COMPUTING THE PROFITS AND GAINS OF BUSINESS OR P ROFESSION FOR ANY PREVIOUS YEAR, DEDUCTION OF DEPRECIATION SHALL BE M ANDATORY. THIS AMENDMENT BY FINANCE ACT, 2001 IMPLIES THAT ANY UNA BSORBED DEPRECIATION AVAILABLE TO ASSESSEE WILL BE CARRIED FORWARD WITHOUT LIMITATION TILL IT IS FULLY SET OFF. FURTHER CIRCUL AR NO. 762 DT. 18.2.1998 ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES (CBDT) IN THE FORM OF ITA NO.2659 /KOL/2013 M/S. WINSOME BREWERIES LTD. 4 EXPLANATORY NOTES CATEGORICALLY PROVIDED, THAT THE UNABSORBED DEPRECIATION ALLOWANCE FOR ANY PREVIOUS YEAR TO WHI CH FULL EFFECT CANT BE GIVEN IN THAT PREVIOUS YEAR SHALL BE CARRIED FOR WARD AND ADDED TO THE DEPRECIATION ALLOWANCE OF THE NEXT YEAR AND BE DEEMED TO BE PART THEREOF. 5. THE LD. DEPARTMENTAL REPRESENTATIVE HAS PRIMARIL Y RELIED ON THE INTIMATION UNDER SECTION 143(1) OF THE INCOME TAX A CT, 1961, WHICH WE HAVE ALREADY NOTED IN OUR EARLIER PARA AND IS NO T BEING REPEATED FOR THE SAKE OF BREVITY. 6. THE LD. AR FOR THE ASSESSEE HAS SUBMITTED THAT T HE UNABSORBED DEPRECIATION LOSS OF RS.2,55,26,918/- RELATES TO EA RLIER ASSESSMENT YEAR AND THEREFORE, THE ASSESSEE IS ENTITLED TO CLAIM TH E SAME. IN THIS CONTEXT, THE LD. AR FOR THE ASSESSEE HAS RELIED ON THE ORDER OF THIS TRIBUNALS ORDER DATED 16.12.2015 IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2009-10 IN ITA NO.622/KOL/2013.THE LD. AR FOR THE ASSESSEE HAS ALSO SUBMITTED THAT SECTION 32(2) WAS AMENDED BY FINANCE ACT, 2001 FROM ASSESSMENT YEAR 2002-03. BY THIS AMENDMENT, THE RESTRICTION OF 8 YEARS FOR CARRY FORWARD AND SE T OFF OF BROUGHT FORWARD OF UNABSORBED DEPRECIATION HAS BEEN DISPENS ED WITH. THIS AMENDMENT IS APPLICABLE FROM ASSESSMENT YEAR 2002-0 3. FURTHER CIRCULAR NO.14 OF 2001 HAS CLARIFIED THAT UNDER SEC TION 32(2) IN COMPUTING THE PROFITS AND GAINS OF BUSINESS OR PROF ESSION FOR ANY PREVIOUS YEAR, DEDUCTION OF DEPRECIATION SHALL BE M ANDATORY. 7. HAVING HEARD THE RIVAL SUBMISSIONS, WE NOTICED T HAT THERE IS MERIT IN THE SUBMISSIONS OF THE ASSESSEE AS IT IS CLEAR FROM THE FACTS THAT SECTION 32(2) WAS ITA NO.2659 /KOL/2013 M/S. WINSOME BREWERIES LTD. 5 AMENDED BY FINANCE ACT, 2001 W.E.F. ASSESSMENT YEAR 2002-03 WHERE THE RESTRICTION OF 8 YEARS FOR CARRY FORWARD AND SET OF F OF BROUGHT FORWARD UNABSORBED DEPRECIATION HAS BEEN DISPENSED WITH. THIS AMENDMEN T IS APPLICABLE TO THE ASSESSEE UNDER CONSIDERATION. THEREFORE, IN THIS SE T OF FACTS AND CIRCUMSTANCES, WE DO NOT HESITATE TO CONFIRM THE ORDER OF THE LD. CIT (A). 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21.09.2016 SD/- SD/- (N.V.VASUDEVAN) (DR. A.L.SAINI) JUDICIALMEMBER ACCOUNTANT MEMBER DATED: 21/09/2016 TALUKDAR (SR.PS) COPY OF THE ORDER FORWARDED TO: 1. REVENUE 2 ASSESSEE 3. THE CIT-I, 4. THE CIT (A)-I, 5. DR, KOLKATA BENCHES, KOLKATA TRUE COPY, BY ORDER, ASST. REGISTRAR , ITAT, KOLKATA BENCHES