The DCIT, Circle-4(1)(1), Ahmedabad V. Sarvottam Industries Ltd., Ahmedabad

ITA 291/AHD/2020

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 1416 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 02-06-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RITA DOKANIA
• Keywords: Depreciation; Unabsorbed depreciation
• Section: 154; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “B” BENCH Before: Ms. Annapurna Gupta, Accountant Member And Ms. Suchitra Kamble, Judicial Member The DCIT, Circle-4(1)(4), Ahmedabad (Appellant) Vs Sarvottam Industries Ltd. 6, Vasukanna, Nr. Lotus Flats, B/h Navgujarat College, Ashram Road, Ahmedabad PAN: AACCS6727P (Respondent) Appellant by : Shri Mahesh Chhajed, A.R. Respondent by : Ms. Rita Dokania, CIT/DR Date of hearing : 23-06-2022 Date of pronouncement : 30-06-2022 आदेश/ORDER PER : ANNAPURNA GUPTA, ACCOUNTANT MEMBER:- The present appeal has been filed by the Revenue against the order passed by the Commissioner of Income Tax (Appeals)-8, Ahmedabad, (in short referred to as CIT(A)), dated 20-02-2020, u/s. 250(6) of the Income Tax Act, 1961(hereinafter referred to as the “Act”) pertaining to Assessment Year (A.Y) 2009-10. ITA No. 291/Ahd/2020 Assessment Year 2009-10 I.T.A No. 291/Ahd/2020 A.Y. 2009-10 Page No DCIT vs. Sarvottam Industries Ltd. 2 2. The Registry has marked the appeal as delayed by 32 days having been filed on 03/06/2020.We have however noted that due to the pandemic of Covid-19, the limitation prescribed for filing appeals was extended till further orders’ by the Hon’ble Supreme Court vide its order dated 23/03/2020 in Suo Moto Writ Petition (Civil) No.(s) 3/2020.And the same was ultimately extended upto 28th February 2022 in M.A No.21 of 2022 dated 10th January 2022. Therefore, there is no delay as such in the filing of the appeal. 3. Grounds raised by the Revenue reads as under: I. Whether the Ld. CIT(A) has erred in allowing the unabsorbed depreciation of Rs. 643.33 lakhs pertaining to the A.Y. 2000-01 and A.Y. 2001-02 to be carried forward in future years and treating the same as current depreciation. 3.1 The solitary grievance of the revenue is against the allowance of carry forward to future years of unabsorbed depreciation pertaining to A.Y. 2000-01 & 2001-02 and its treatment as current depreciation. 4. Brief facts relevant to issue are that the assessee had returned loss for the impugned assessment year i.e. A.Y. 2009-10 amounting to Rs. 1,36,99,616 which was assessed u/s. 143(3) at a loss of Rs. 85,83,194/- vide order dated 25.08.2011. Subsequently, the Assessing Officer passed an order u/s. 154 for rectification of a mistake pertaining to allowance of carry forward of unabsorbed depreciation for A.Y. 2000-01 and 2001-02 totalling 643.33 lakhs as under: I.T.A No. 291/Ahd/2020 A.Y. 2009-10 Page No DCIT vs. Sarvottam Industries Ltd. 3 A.Y. 2000-01 Rs. 308.13 lakhs A.Y. 2001-02 Rs. 335.20 lakhs 5. The AO held that as per law, section 32(2)(iii)(b) of the Act amended by Finance Act 1996, unabsorbed depreciation pertaining to these years could be carried forward for 8 years only i.e. upto AY 2008-09 & AY 2009-10 resp. That further unabsorbed depreciation pertaining to AY 1997-98 to AY 2001- 02 was not eligible for relief granted by the amended section 32(2) in AY 2002-03. 6. The assessee carried the matter in appeal before the ld. CIT(A) who allowed carry forward of the impugned unabsorbed depreciation following decision of the Hon’ble Jurisdictional High Court in the case of General Motors India Pvt. Ltd. vs. DCIT noting that it clearly stated that the unabsorbed depreciation of A.Y. 2000-01 & 2001-02 should also be allowed to be carried forward in the future years as part of current depreciation brought forward in accordance with the provisions of Section 32(2) of the Act. The relevant portion of the ld. CIT(A) at para 7 is as under: 7. Ground No.2 of the appeal raised by the appellant against the AO restricting the carry forward of unabsorbed depreciation by an amount of Rs.643.33 lakh that pertained to A.Y.2000-01 & 2001-02 vide its order u/s.143(3)/154 dated 29.01.2016 as against earlier allowing the same in its order u/s.143(3). The submission of the appellant is considered. In view of the provisions of law as well as the judgement of the Hon'ble Gujarat High Court in the case of General Motors India (P.) Ltd. v. Deputy Commissioner of Income-tax supra it is clear that the unabsorbed depreciation for A.Y.2000-2001 and 2001-02 shall also be allowed to be carried forward in future years as it becomes part of the current I.T.A No. 291/Ahd/2020 A.Y. 2009-10 Page No DCIT vs. Sarvottam Industries Ltd. 4 depreciation brought forward. The relevant part of the order of the Hon'ble Gujarat High Court is reproduced as-below: "38. Therefore, it can be said that, current depreciation is deductible in the first place from the income of the business to which it relates. If such depreciation amount is larger than the amount of the profits of that business, then such excess comes for absorption from the profits and gains from any other business or business, if any, carried on by the assessee. If a balance is left even thereafter, that becomes deductible from out of income from any source under any of the other heads of income during that year. In case there is still a balance left over, it is to be treated as unabsorbed depreciation and it is taken to the next succeeding year. Where there is current depreciation for such succeeding year the unabsorbed depreciation is added to the current depreciation for such succeeding year and is deemed as part thereof. If, however, there is no current depreciation for such succeeding year, the unabsorbed depreciation becomes the depreciation allowance for such succeeding year. We are of the considered opinion that any unabsorbed 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 clarified that the restriction of 8 years for carry forward and set off of depreciation from A,Y," 1997-98 upto the A.Y, 2001-$2 got carried forward fa 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 carry forward and set off against the profits and gains of subsequent years, without any limit whatsoever." (emphasis mine)" 7.1 Since the issue is squarely covered by the decision of the Hon'ble jurisdictional High Court, the same is decided in favour of the appellant. The ground of appeal is allowed. 7. The ld. D.R. was unable to distinguish the decision of the Hon’ble Gujarat High Court in the case of General Motors (supra) which was followed by the ld. CIT(A) while allowing the claim of unabsorbed depreciation pertaining to A.Y. 2000-01 and 20001-02, before us. Ld. D.R. also was unable to draw our attention to any contrary decision of the Jurisdictional High Court or the Hon’ble Apex Court on the issue. I.T.A No. 291/Ahd/2020 A.Y. 2009-10 Page No DCIT vs. Sarvottam Industries Ltd. 5 8. In view of the above, we see no reason to interfere in the order of the ld. CIT(A) allowing the carry forward of unabsorbed depreciation pertaining to AY 200-01 and 2001-02 following the decision of the Hon’ble jurisdictional High court in the case of General Motors India .P. Ltd(supra). The ground of appeal raised by the Revenue is dismissed. 9. In effect, appeal filed by the Revenue is dismissed. Order pronounced in the open court on 30-06-2022 Sd/- Sd/- (SUCHITRA KAMBLE) (ANNAPURNA GUPTA) JUDICIAL MEMBER True Copy ACCOUNTANT MEMBER Ahmedabad : Dated 30/06/2022 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलȣय अͬधकरण, अहमदाबाद