The ACIT, Vapi Circle, Vapi V. M/s. Garnet Specialty Paper Ltd., Vapi

ITA 2705/AHD/2015

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 2312 (ITAT-SURAT)
• Duration Of Justice: 2 year(s) 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 24-09-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D D YADAV
• Keywords: Reopening of assessment; Depreciation; Retrospective amendment; Question of law; Tangible material; Difference of opinion; Reason to believe; Unabsorbed depreciation; Change of opinion; Reassessment proceedings
• Section: 32; 154; 143(3)

Judgement Text

ACIT VS. GARNET SPECIALITY PAPER LTD. /I.T.A. NO. 2705/AHD/2015/A.Y.2007 08 PAGE 1 OF 11 , , IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT . . , . . , BEFORE SHRI C.M.GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER . . ./I.T.A NO.2705/AHD/2015/SRT /ASSESSMENT YEAR : 2007-08 ASSISTANT COMMISSIONER OF INCOME TAX, VAPI CIRCLE, VAPI. VS. M/S.GARNET SPECIALITY PAPER LTD., SHED NO.A-2/19, 20,22 AND PLOT NO.329-330, GIDC, VAPI 396 195. PAN: AACCG 3565F APPELLANT /RESPONDENT /ASSESSEE BY NONE. /REVENUE BY SHRI D.D.YADAV SR.DR / DATE OF HEARING: 22.05.2018 /PRONOUNCEMENT ON 28.05.2018 /O R D E R PER O. P. MEENA, ACCOUTANT MEMBER: 1. THIS APPEAL FILED BY REVENUE DIRECTED AGAINST THE ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-1, [CIT(A)], RAJKOT DATED 29.06.2015 FOR THE ASSESSMENT YEAR 2007-08 UNDER SECTION 143(3) R.W.S. 147 OF THE ACT. ACIT VS. GARNET SPECIALITY PAPER LTD. /I.T.A. NO. 2705/AHD/2015/A.Y.2007 08 PAGE 2 OF 11 2. GROUND NO.1 STATES THAT THE CIT(A) HAS ERRED IN HOLDING THAT NOTICE U/S.148 IS INVALID IGNORING THE FACT THE ASSESSING OFFICER (AO) IN REASSESSMENT PROCEEDINGS WHILE DISPOSING OF OBJECTIONS FILED HAS BROUGHT ON RECORDS COGENT REASONS FOR INVOKING REASONS FOR SECTION 147 OF THE ACT. 3. BRIEF FACTS ARE THAT THE ORIGINAL ASSESSMENT WAS MADE U/S.143(3) OF THE ACT ON 11.12.2009 THEREBY ALLOWING CARRIED FORWARD OF BUSINESS LOSS OF RS.7,94,02,759/- AND UNOBSERVED DEPRECIATION OF RS.4,58,52,974/-. THESE ALLOWANCES WERE ALLOWED AFTER SCRUTINY OF DETAILS FILED BY THE ASSESSEE IN RESPONSE TO NOTICE U/S.142(1) DATED 09.10.2009 AND ALSO SPECIFIC REPLY DATED 26.10.2009. THE NOTICE U/S.148 WAS ISSUED WITHIN 4 YEARS FROM THE END OF THE ASSESSMENT YEAR. THE ORIGINAL ASSESSMENT CLEARLY MENTIONS THAT BUSINESS LOSS AND UNOBSERVED DEPRECIATION ARE ALLOWED TO BE CARRIED FORWARD. THERE IS ALSO AN ORDER U/S.154 OF THE ACT WHICH IS PLACED ON RECORD. THEREFORE, IT WAS CONTENDED BEFORE THE CIT(A) THAT NO NEW TANGIBLE MATERIAL HAS COME INTO THE POSITION OF THE AO SO AS TO LEAD TO REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. THE CIT(A) OBSERVED THAT DURING THE COURSE OF ORIGINAL ASSESSMENT THE APPELLANT SUBMITTED A DETAILED REPLY ACIT VS. GARNET SPECIALITY PAPER LTD. /I.T.A. NO. 2705/AHD/2015/A.Y.2007 08 PAGE 3 OF 11 VIDE LETTER DATED 26.10.2009 WHICH IS AT PAGE 77 OF THE PAPER BOOK ENCLOSING THEREWITH DOCUMENTS RELATING TO AMALGAMATION WHICH INCLUDED ORDER OF BIFR AND A SCHEME OF REHABILITATION/AMALGAMATION. THE QUERY DURING THE ORIGINAL ASSESSMENT PROCEEDINGS WAS SPECIFIC TO THE POINT OF FULFILLMENT OF CONDITIONS OF SECTION 72A FOR WHICH THERE WAS AN ELABORATE REPLY AND THEREFORE IT IS OBVIOUS THAT THE AO DEALT WITH THE SPECIFIC ISSUE AND ACCEPTED THE REPLY OF THE APPELLANT FILED AT THAT TIME AND ONLY THERE AFTER THE LOSS OF AMALGAMATING COMPANY WERE ALLOWED TO BE CARRIED FORWARD BY A SPEAKING ORDER. 4. NOW THE AO HAS FORMED A BELIEF THAT CONDITIONS OF SECTION 72A WERE NO SATISFIED BY THE COMPANY. HOWEVER, ON THE OTHER HAND, THE REASONS ARE COMPLETELY SILENT AS TO HOW AND WHICH CONDITIONS WERE NOT SATISFIED WITH REGARD TO SECTION 72A OF THE ACT. THE CIT(A) FURTHER OBSERVED THAT THERE IS NO OTHER TANGIBLE MATERIAL OR EVEN A DIFFERENT BASIS FOR NEW INTERPRETATION OF SECTION 72A OF THE ACT. THUS, THE REASONS CANNOT BE SAID TO BE VALID AS THEY ARE FOUND TO BE NOT ONLY VAGUE BUT BASED ON CHANGE OF VIEW AS HELD BY HON'BLE GUJARAT HIGH COURT IN THE CASE OF HEAVY METAL AND TUBES LTD. [2014] 364 ITR 609 IN WHICH IT WAS HELD THAT WHEN A ISSUE IS EXAMINED IN A SCRUTINY ACIT VS. GARNET SPECIALITY PAPER LTD. /I.T.A. NO. 2705/AHD/2015/A.Y.2007 08 PAGE 4 OF 11 ASSESSMENT AND THE OFFICER HAD PARTICULARLY RAISE A QUERY ON WITH ISSUE AND WHEN DETAILS ARE FURNISHED, REOPENING ON SAME GROUND COULD NOT BE PERMITTED EVEN WITHIN THE PERIOD OF 4 YEARS IN ABSENCE OF ANY TANGIBLE MATERIAL AND THEREFORE IN SUCH CASE, THE REOPENING WAS HELD TO BE BASED ON MERE CHANGE OF OPINION AND SUCH NOTICE WAS QUASHED BY THE HON'BLE HIGH COURT. SINCE THE FACTS OF THE PRESENT CASE ARE IDENTICAL, THEREFORE, THE ISSUE OF NOTICE U/S.148 WAS HELD TO BE INVALID. 5. BEING AGGRIEVED THE REVENUE HAS FILED THIS APPEAL BEFORE US. THE LD.SENIOR DEPARTMENTAL REPRESENTATIVE (SR.DR) RELIED ON THE AO BUT COULD NOT CONTROVERT THE FINDINGS OF THE LD.CIT(A). 6. WE HAVE HEARD THE LD.SENIOR DEPARTMENTAL REPRESENTATIVE AND FIND THAT WHILE MAKING ORIGINAL ASSESSMENT U/S.143(3) ON 11.12.2009, THE AO HAS RAISED A SPECIFIC QUERY VIDE NOTICE U/S.142(1) DATED 09.10.2009 AND AFTER CONSIDERING THE REPLY OF THE ASSESSEE, THE AO HAS ALLOWED THE LOSSES OF THE AMALGAMATED COMPANY TO BE CARRIED FORWARD BY A SPEAKING ORDER. THEREFORE, REOPENING OF ASSESSMENT EVEN WITHIN 4 YEARS FROM THE END OF THE ASSESSMENT YEAR IS NOT ALLOWED AS THERE WAS NO NEW TANGIBLE MATERIAL CAME INTO THE POSITION OF THE AO AND THERE ACIT VS. GARNET SPECIALITY PAPER LTD. /I.T.A. NO. 2705/AHD/2015/A.Y.2007 08 PAGE 5 OF 11 WAS A CHANGE OF OPINION FROM THE SAME SET OF FACTS, THEREFORE, THE LD.CIT(A) HAS RIGHTLY PLACED RELIANCE IN THE CASE OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF HEAVY METALS TUBES LTD. [2014] 364 ITR 609 OF HON'BLE GUJARAT HIGH COURT. SIMILARLY, HON'BLE SUPREME COURT IN THE CASE OF CIT VS. KELVINATOR INDIA LTD. [2010] HELD THAT WHERE NO NEW MATERIAL COME TO THE NOTICE OF THE AO AFTER COMPUTATION OF ASSESSMENT AND ASSESSMENT HAS BEEN REOPENED ON THE BASIS OF SAME MATERIAL IS NOT PERMISSIBLE. THEREFORE, WE DO NOT FIND ANY IRREGULARITY OR INFIRMITY IN THE ORDER OF CIT(A), ACCORDINGLY THIS GROUND OF APPEAL IS THEREFORE DISMISSED. 7. GROUND NO.2 RELATES TO ALLOWING CURRENT YEARS UNOBSERVED DEPRECIATION TO AMALGAMATING COMPANY OF RS.65,43,967/- AND UNOBSERVED DEPRECIATION OF AMALGAMATING COMPANY FOR ASSESSMENT YEAR 2000-01 OF RS.48,56,733/- IGNORING THE FACT THAT AMALGAMATED COMPANY DOES NOT HOLD 3/4 OF THE BOOK VALUE OF THE ASSET OF THE AMALGAMATING COMPANY AND THAT THE AMALGAMATING COMPANY EVEN AFTER MERGER IS STILL IN BUSINESS. ACIT VS. GARNET SPECIALITY PAPER LTD. /I.T.A. NO. 2705/AHD/2015/A.Y.2007 08 PAGE 6 OF 11 8. GROUND NO.3 RELATES TO ALLOWING CURRENT YEARS LOSS OF AMALGAMATING COMPANY OF RS.2,88,70,436/- AND CURRENT YEARS DEPRECIATION OF AMALGAMATING COMPANY OF RS.1,88,04,172/- IGNORED THE FACT THAT AMALGAMATING COMPANY DOES NOT HOLD OF THE BOOK VALUE OF THE ASSET OF THE AMALGAMATING COMPANY AND THAT THE AMALGAMATING COMPANY EVEN AFTER MERGE IS STILL IN BUSINESS. 9. FACTS APROPOSED OF THIS GROUND ARE THAT THE ASSESSEE HAS TAKEN OVER THE BUSINESS OF M/S.NATHANI PAPER MILLS LTD. DURING THE YEAR, HOWEVER, THE ASSESSEE BEING AMALGAMATING COMPANY HAS NOT COMPLIED WITH THE BASIC TWO CONDITIONS MENTIONED IN SUB-SECTION 72A(2)(A) SO AS TO MAKE ITSELF ELIGIBLE FOR THE BENEFIT OF CARRIED FORWARD BUSINESS LOSS FOR UNOBSERVED DEPRECIATION ALLOWANCES OF THE AMALGAMATING COMPANY. THEREFORE, CURRENT YEARS DEPRECIATION ALLOWANCE OF RS.1,88,04,172/- AND ALSO CLAIM OF CURRENT YEARS LOSS OF RS.2,88,70,436/- WAS DISALLOWED. SIMILARLY, UNOBSERVED DEPRECIATION OF RS.48,56,733/- OF THE FINANCIAL YEAR 1999-2000 PERTAINING TO THE AMALGAMATING COMPANY WAS ALSO DISALLOWED ALONG WITH CURRENT YEARS UNOBSERVED DEPRECIATION OF RS.6,5,43,967/-. ACIT VS. GARNET SPECIALITY PAPER LTD. /I.T.A. NO. 2705/AHD/2015/A.Y.2007 08 PAGE 7 OF 11 10. THE ASSESSEE BEING AGGRIEVED, FILED APPEAL BEFORE THE LD.CIT(A). THE LD.CIT(A) OBSERVED THAT THE ASSESSEE HAS PLACED RELIANCE ON THE DECISION OF HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. TUBE INVESTMENT OF INDIA LTD. (2012) 341 ITR 199 (MAD) WHEREIN IT WAS HELD THAT THE ORDER OF BIFR UNDER THE SICK INDUSTRIAL COMPANIES ACT, SECTION 32 THEREOF HAS OVER RIDING EFFECT AND THERE IS SPECIFIC RELIANCE TO SECTION 72A OF THE ACT THEREIN. THE CIT(A) NOTED THAT IN THE SCHEME OF MERGER OF AMALGAMATING COMPANY INTO THE APPELLANT COMPANY, IN PARA 18 OF THE SCHEME IT IS STATED THAT THE APPELLANT COMPANY BEING THE AMALGAMATED COMPANY SHALL BE ELIGIBLE FOR THE BENEFIT U/S.72A OF THE ACT. PAGE 15 OF THE SCHEME ALSO PROVIDES THAT THE MERGER ENTITY CAN HAVE TAX ADVANTAGES OUT OF CURRIED FORWARD OF LOSSES OF TRANSFEROR COMPANY INCLUDING DEPRECIATION (PARA 18 OF THE SCHEME). SINCE THE SCHEME IS APPROVED BY BIFR, ITS ORDER AND THEREFORE IT CAN NO LONGER BE SAID THAT CONDITIONS OF SECTION 72A WERE NOT SPECIFIED BECAUSE THE BIFR ITSELF IN ITS ORDER HAS GRANTED THE BENEFIT OF SECTION 72A. IN THE LIGHT OF THE ABOVE FACTS, THE CIT(A) HAS ALLOWED THE APPEAL ON THE AFORESAID ISSUE. ACIT VS. GARNET SPECIALITY PAPER LTD. /I.T.A. NO. 2705/AHD/2015/A.Y.2007 08 PAGE 8 OF 11 11. BEING AGGRIEVED, THE REVENUE HAS FILED THIS APPEAL BEFORE US. THE LD.SENIOR DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE AO. HOWEVER, THE LD.SR.DR HAS POINTED OUT THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF INCOME TAX APPEAL TRIBUNAL, RAJKOT BENCH, RAJKOT IN ITA NOS. 524 & 525/RJT/2014 ASSESSMENT YEAR 2007-08 AND 2008-09 DATED 22.03.2017. 12. WE HAVE CONSIDERED THE FACTS AND CIRCUMSTANCES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE AO BEFORE ISSUING NOTICE U/S.148 HAS ALSO INVOKED THE PROVISIONS OF SECTION 154 OF THE ACT BY WHICH HE HAS DISALLOWED THE DEPRECIATION OF AMALGAMATING COMPANY FOR ASSESSMENT YEAR 2000-01 OF RS.48,56,733/- FOR THE YEAR UNDER CONSIDERATION AND ALSO UNOBSERVED DEPRECIATION AND BUSINESS LOSS CARRIED FORWARD. THE RELEVANT PARA OF THE ORDER OF THE TRIBUNAL REPRODUCED AS UNDER : 2. THE ONLY QUESTION INVOLVED IN THESE TWO APPEALS IS WHETHER THE UNABSORBED DEPRECIATION, WHICH REMAINED TO BE ADJUSTED BEYOND ASSESSMENT YEAR 2001-02, BE ALLOWED TO SET OFF IN PERPETUITY OR THE MAXIMUM PERIOD IS 8 YEARS. FOR THE SAKE OF CONVENIENCE, THE FACTS RELATING TO ASSESSMENT YEAR 2007-08 ARE TAKEN. 3. FOR ASSESSMENT YEAR 2007-08, IN RESPECT OF THE ASSESSEE, BY ORDER 11.12.2009 THE ASSESSMENT WAS FINALIZED U/S 143(3} OF THE TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT') DETERMINING 'COME OF ASSESSEE AS NIL HOWEVER, SUBSEQUENTLY THE ASSESSING NOTICED FROM THE AUDIT REPORT THAT A SUM OF RS.2,30,23,769/- AS THE UNABSORBED DEPRECIATION CLAIMED BY THE ASSESSEE RELATES TO THE PERIOD UPTO 1999-2000 AND A SUM OF RS,48,56,733/- PERTAINED TO ASSESSMENT ACIT VS. GARNET SPECIALITY PAPER LTD. /I.T.A. NO. 2705/AHD/2015/A.Y.2007 08 PAGE 9 OF 11 YEAR 2000-01. ACCORDING TO THE ASSESSING OFFICER, W.E.F. 1997-98 TILL 2001-02 THE LAW WAS AMENDED WHEREBY THE UNABSORBED DEPRECIATION OF A PARTICULAR YEAR IS PERMISSIBLE TO BE CARRIED FORWARD FOR SET OFF AGAINST THE PROFITS & GAINS OF BUSINESS/PROFESSION ONLY FOR A PERIOD OF 8 YEARS. HOWEVER, BY FINANCE ACT, 2000 W.E.F. 1.4.2001, THE LAW EXISTING PRIOR TO ASSESSMENT YEAR 1997-98 WAS REINSTATED W.E.F. 2002-03. ON THIS, THE ASSESSING OFFICER ENTERTAINED THE OPINION THAT THE UNABSORBED DEPRECIATION FOR THE PERIOD BETWEEN 1997-98 AND 2001-02, WHICH REMAINED TO BE ADJUSTED BEYOND 2001-02, CAN BE SET OFF ONLY AGAINST THE INCOME UNDER THE HEAD 'PROFIT & GAINS OF BUSINESS/PROFESSION' FOR A MAXIMUM PERIOD OF 8 YEARS. ACCORDINGLY, THE ASSESSING OFFICER PASSED AN ORDER U/S 154 OF THE ACT RECTIFYING THE MISTAKE WHICH ACCORDING TO HIM WAS APPARENT ON THE FACE OF RECORD AND DISALLOWED THE UNABSORBED DEPRECIATING AMOUNT PERTAINING TO THE YEAR 1998-2000. 4. THE ORDER OF ASSESSING OFFICER WAS CHALLENGED BEFORE THE ID. CIT(A) STATING THAT THERE WAS NO MISTAKE APPARENT ON THE FACE OF RECORD WITHIN THE MEANING OF SEC. 154 OF THE ACT AND ALSO THAT THE UNABSORBED DEPRECIATION PERTAINING TO THE YEARS UPTO 1999-2000 WAS ALLOWABLE FOR FORWARD. BY WAY OF THE IMPUGNED ORDER, ID. CIT(A) HELD THAT THE DISALLOWANCE OF CARRY FORWARD OF UNABSORBED DEPRECIATION BEYOND 8 YEARS IS NOT A MISTAKE APPARENT FROM RECORD, AS SUCH ORDER U/S 154 OF ACT IS BAD IN LAW. HE FURTHER HELD, WHILE FOLLOWING THE DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF GENERAL MOTOR INDIA, 257 CTR 123 THAT ANY UNABSORBED DEPRECIATION AVAILABLE TO AN ASSESSEE ON 1.4.2002 WILL BE DEALT WITH IN ACCORDANCE WITH THE PROVISIONS OF SEC. 32(2) OF THE ACT (AS AMENDED BY THE FINANCE ACT, 2001) AND WAS AVAILABLE FOR CARRY FORWARD AND SET OFF AGAINST THE PROFITS & GAINS OF SUBSEQUENT YEARS WITHOUT ANY LIMIT WHATSOEVER. 5. CHALLENGING THE SAID FINDING OF ID. CIT(A), REVENUE IS IN APPEAL BEFORE US URGING THAT THE ISSUE OF CARRY FORWARD OF UNABSORBED DEPRECIATION BEYOND 8 YEARS WAS A MISTAKE APPARENT FROM THE RECORD, AS SUCH AVAILABLE TO THE ASSESSING OFFICER FOR RECTIFICATION U/S 154 OF THE ACT AND THE ID. CIT(A) WAS WRONG IN HOLDING THAT ANY UNABSORBED DEPRECIATION AVAILABLE TO AN ASSESSEE AS ON 1.4.2002 WILL BE DEALT WITH IN ACCORDANCE WITH THE PROVISIONS OF SEC. 32(2} OF THE ACT (AS AMENDED BY THE FINANCE ACT, 2001) AND ON THAT PREMISE TO ALLOW THE SAME FOR CARRY FORWARD AND SET OFF AGAINST THE PROFITS & GAINS OF SUBSEQUENT YEARS WITHOUT ANY LIMIT WHATSOEVER. 6. PER CONTRA, IT IS THE ARGUMENT OF THE ID. AR THAT THE ISSUE INVOLVED IN THIS MATTER REQUIRES DELIBERATIONS, ARGUMENTS AND DISCUSSIONS AND THERE IS POSSIBILITY OF MORE THAN ONE VIEW, AS SUCH IT IS NOT AVAILABLE TO BE RECTIFIED U/S 154 OF THE ACT. HE SUBMITS THAT WHAT IS RELEVANT TO BE CONSIDERED IS NOT THE ILLEGALITY OR OTHERWISE OF THE STAND TAKEN BY THE ASSESSING OFFICER, BUT THE ASSUMPTION OF JURISDICTION U/S 154 OF THE ACT. 7. WE HAVE CAREFULLY CONSIDERED THE CONTENTIONS OF EITHER SIDE. IT BE SEEN FROM THE ORDER OF THE ID. CIT(A) THAT IT WAS ARGUED BEFORE M THAT IN VIEW OF THE DECISION OF THE HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. HISTORIC RESORT HOTELS, 253 ITR 608 AND THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF T.S. BALRAM VS WOCKHARDT BROTHERS, 82 ITR 50 (SC) AND MACCO INDUSTRIES LTD. VS CIT; 319 ITR 208 (SC) THE PRINCIPLE IS CLEAR THAT WHETHER OR NOT THE AMENDMENT TO SEC. 32 OF THE ACT IN ACIT VS. GARNET SPECIALITY PAPER LTD. /I.T.A. NO. 2705/AHD/2015/A.Y.2007 08 PAGE 10 OF 11 THE YEAR 2002-03 IS OF PROSPECTIVE OR RETROSPECTIVE EFFECT ON THE APPLICATION OF DEPRECIATION FOR THE CURRENT YEAR AND UNABSORBED BUSINESS LOSS AND DEPRECIATION FOR THE PURPOSE OF COMPUTATION OF INCOME TAX, IS A DISPUTABLE ISSUE AND DOES NOT FAIL IN THE CATEGORY OF 'MISTAKE APPARENT FROM RECORD', THEREFORE, THAT SHOULD NOT HAVE BEEN DEALT WITH U/S 154 OF THE ACT. THE ID. CIT(A) ACCEPTED THE SAME AND WHILE FOLLOWING THE BINDING PRECEDENTS, ALLOWED SUCH A CONTENTION OF THE ASSESSEE. HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF HISTORIC RESORT HOTELS (SUPRA) HELD THAT WHETHER OR NOT THE AMENDMENT TO SEC. 32 OF THE ACT, WHICH IS RELEVANT FOR OUR PURPOSE, HAS PROSPECTIVE OR RETROSPECTIVE EFFECT ON THE APPLICATION OF THE CURRENT YEARS DEPRECIATION AND UNABSORBED BUSINESS LOSS AND DEPRECIATION FOR THE PURPOSE OF COMPUTATION OF INCOME TAX, IS A DISPUTED QUESTION OF LAW AND THE HON'BLE SUPREME COURT IN THE CASE OF T.S.BALRAM VS WOCKHARDT BROTHERS (SUPRA) AND MACCO INDUSTRIES LTD. (SUPRA) HAS HELD THAT SUCH DISPUTED QUESTIONS DO NOT FALL IN THE CATEGORY OF MISTAKE APPARENT FROM RECORD, AS SUCH, SUCH MATTERS WILL NOT BE AVAILABLE FOR RECTIFICATION U/S. 154 OF THE ACT. NEXTLY, WHILE PLACING RELIANCE ON THE DECISION OF THE JUR ISDICTIONAL HIGH COURT IN THE CASE OF GENERAL MOTOR INDIA (SUPRA) VIDE PARAGRAPHS 37 AND 38, THE ID, CIT(A) HELD THAT ANY UNABSORBED DEPRECIATING AVAILABLE TO THE ASSESSEE ON DAY OF APRIL 2002 (A.Y.2002 -03) WILL BE DEALT WITH IN ACCORDANCE WITH THE PROVISIONS OF SECTION (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 DEPRECIATION 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 EARN/ FORWARD AND SET OFF AGAINST THE PROFITS AND GAINS OF SUBSEQUENT YEARS, WITHOUT ANY LIMIT WHATSOEVER. REVENUE HAS NOT ESTABLISHED BEFORE US AS TO WHERE THE LEARNED CIT(A) WENT WRONG AND WHY THIS APPROACH OF THE ID. CIT(A) CANNOT BE ACCEPTED. IN THESE CIRCUMSTANCES, WE FIND THAT THE ID. CIT(A) WAS PERFECT IN HIS REASONING BASING ON THE BINDING PRECEDENTS END WE DO NOT SEE ANY ILLEGALITY OR IRREGULARITY IN THE FINDING REACHED BY ID. CIT(A) ON THIS ASPECT, SINCE THE REASONING ADOPTED BY THE ID. CIT(A) IS IMPECCABLE. WE, THEREFORE, SEE NO REASON TO INTERFERE WITH THE ORDER OF LD.CIT(A) AND, ACCORDINGLY, CONFIRM THE SAME. 8. IN THE RESULT, BOTH APPEALS OF THE REVENUE ARE DISMISSED. 13. IN THE LIGHT OF ABOVE FACTS AND RESPECTFULLY FOLLOWING THE ABOVE DECISION, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE IS ENTITLED THE BENEFIT OF UNOBSERVED DEPRECIATION AS WELL AS UNOBSERVED BUSINESS LOSS AS CLAIMED BY THE ASSESSEE. WE FURTHER NOTE THAT AS PER PARAS OF AMALGAMATION IT IS CLEARLY MENTIONED THAT TRANSFEROR COMPANY WILL ACIT VS. GARNET SPECIALITY PAPER LTD. /I.T.A. NO. 2705/AHD/2015/A.Y.2007 08 PAGE 11 OF 11 TRANSFER ALL ITS ASSETS. FURTHER, PARA 18 IT IS MENTIONED THAT THE ASSESSEE COMPANY SHALL BE ELIGIBLE TO THE BENEFIT OF SET OFF CARRIED FORWARD LOSSES / UNABSORBED DEPRECIATION OF NATHANI PAPER MILLS LTD. THEREFORE, THE CONTENTION OF THE REVENUE THAT THE ASSESSEE DOES NOT HOLD 3/4 OF BOOK ASSET IS NOT TENABLE. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A), ACCORDINGLY GROUND NO.2 AND 3 ARE DISMISSED. 14. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. 15. THE ORDER PRONOUNCED IN THE OPEN COURT ON 28-05.2018. SD/- SD/- ( . . ) /(C.M. GARG) ( . . ) /(O.P.MEENA) /JUDICIAL MEMBER / ACCOUNTANT MEMBER / SURAT: / DATED : 28 TH MAY, 2018/SGR COPY SENT TO- ASSESSEE/AO/PR. CIT/ CIT (A)/ ITAT (DR)/GUARD FILE OF ITAT. BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR, SURAT