DCIT, CHENNAI V. M/s. Island Hotels Maharaj Ltd., CHENNAI

ITA 2993/CHNY/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5920 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 14-06-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 21-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AWIJIT RAKSHIT
• Assessee Lawyers: N V BALAJI
• Keywords: Business income; Depreciation; Unabsorbed depreciation

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: CHENNAI . . . , , % BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NO.2993/MDS/2016 & & /ASSESSMENT YEAR: 2010-11 THE DY. COMMISSIONER OF- INCOME TAX, CORPORATE CIRCLE-2(1), CHENNAI-600 034. VS. M/S.ISLAND HOTELS MAHARAJ- LTD., (SUCCESSOR-EIH ASSOCIATED HOTELS LTD.), 1/24,GST ROAD, MEENAMBAKKAM, CHENNAI-600 027. [PAN: AAACI 8157 M] ( ) /APPELLANT) ( *+) /RESPONDENT) ) , / APPELLANT BY : MR.AWIJIT RAKSHIT, JCIT *+) , /RESPONDENT BY : MR.N.V.BALAJI, ADV. , /DATE OF HEARING : 28.08.2017 , /DATE OF PRONOUNCEMENT : 31.10.2017 / O R D E R PER S. JAYARAMAN , ACCOUNTANT MEMBER : THE REVENUE FILED THIS APPEAL AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-6, CHENNAI, IN ITA NO.33/CIT(A )-6/2012-13 DATED 01.08.2016 FOR THE AY 2010-11. ITA NO.2993/MDS/2016 :- 2 -: 2. M/S. ISLAND HOTELS MAHARAJ LTD., (SUCCESSOR-EIH ASSOCIATED HOTELS LTD.) IS ENGAGED IN THE HOSPITALITY BUSINESS. IN T HE ASSESSMENT MADE FOR THE AY 2010-11, THE AO HAS REFUSED TO ALLOW THE ASSESSEES CLAIM OF CREDIT FOR BROUGHT FORWARD DEPRECIATION PERTAINING TO A Y 2000-01 BASED ON THE ITAT SPECIAL BENCH, MUMBAI DECISION IN THE C ASE OF TIMES GUARANTY LTD. IN ITA NO.4917/M/2008 (TIOL 340 ITAT MUM SB) D ATED 30.06.2010. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE TH E CIT(A). THE CIT(A) BY FOLLOWING THE JUDGMENT OF THE HONBLE GUJARAT H IGH COURT IN THE CASE OF GENERAL MOTORS INDIA PVT. LTD. VS. DCIT (2013) 3 54 ITR 244 (GUJ) ALLOWED THE APPEAL. AGGRIEVED AGAINST THAT ORDER, T HE REVENUE FILED THIS APPEAL WITH THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS ) IS CONTRARY TO THE LAW AND FACTS OF THE CASE. 2.1 THE CIT(A) ERRED IN ALLOWING THE ASSESSEE TO CARRY F ORWARD THE BROUGHT FORWARD DEPRECIATION PERTAINING TO A.Y.2000-01 TO BE SET OF F BEYOND THE PERIOD OF EIGHT YEARS. 2.2 THE CIT(A) OUGHT TO HAVE APPRECIATED THAT AS PER SEC TION 32(2) OF THE ACT THE UNABSORBED DEPRECIATION FOR THE A.YS.1997-98 TO 200 1-02 WHICH IS CARRIED FORWARD CAN BE SET OFF AGAINST BUSINESS INCOME ONLY AND CAN BE CARRIED FORWARD ONLY UP TO 8 YEARS AND ONLY UNABSORBED DEPRECIATION FOR A.Y.2002 -03 ONWARDS CAN BE CARRIED FORWARD WITHOUT TIME LIMIT AND CAN BE SET OFF AGAIN ST ALL INCOME. 2.3 THE CIT(A) FAILED TO APPRECIATE THE SUPREME COURTS DECISION IN THE CASE OF PEERLESS GENERAL FINANCE AND INVESTMENT CO. LTD. (73 TAXMANN .COM 258)(SC) WHEREIN IT WAS OBSERVED THAT THE UNABSORBED DEPRECIATION AS ON 1ST APRIL, 1997 CAN BE SET OFF AGAINST THE INCOME FROM ANY HEAD FOR THE IMMEDIATE ASSESSMENT YEAR FOLLOWING 1ST APRIL, 1997 AND THEREAFTER IF THERE STILL IS ANY UN ABSORBED DEPRECIATION THE SAME CAN BE SET OFF ONLY AGAINST THE BUSINESS INCOME FOR A P ERIOD OF EIGHT (08) ASSESSMENT YEARS. 3. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE COMMISSIONER OF INCOME TAX (AP PEALS) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. ITA NO.2993/MDS/2016 :- 3 -: 3. THE D R PRESENTED THE CASE ON THE LINES OF GR OUNDS OF APPEAL , SUPRA. THE AR RELIED ON THE DECISION OF THE HONBLE HIGH COURT OF GUJARAT, BASED ON WHICH THE CIT(A) ALLOWED THE APPE AL. FURTHER, HE RELIED ON THE DECISION OF THIS TRIBUNAL IN THE CASE OF AC IT VS. M/S. TAMIL NADU CEMENTS CORPORATION LTD., FOR THE A Y 2008-09 IN IT A NO.420/MDS/2017 DATED 29.06.2017. THE RELEVANT PORTION IS EXTRACTE D AS UNDER: THE LD.DR PLACED HIS RELIANCE ON THE JUDGME NT OF THE APEX COURT IN PEERLESS GENERAL FINANCE AND INVESTMENT CO . LTD. VS. COMMISSIONER OF INCOME TAX, (2016) 380 ITR 165. 3. ON THE CONTRARY, MS. S.SRINIRANJANI, THE LD. COU NSEL FOR THE ASSESSEE SUBMITTED THAT SECTION 32(2) WAS AMENDED W.E.F. 01. 04.2002 BY FINANCE ACT, 2001. AFTER THE AMENDMENT, THE CARRY FORWARD DEPRE CIATION HAS TO BE TREATED AS DEPRECIATION FOR THE CURRENT YEAR AND IT HAS TO BE SET OFF FOR THE SUCCEEDING PREVIOUS YEARS. THE GUJARAT HIGH COURT IN GENERAL MOTORS INDIA PVT. LTD. EXAMINED THIS ISSUE AND FOUND THAT AFTER THE AMENDM ENT IT CAN BE CARRY FORWARD EVEN AFTER 8 ASSESSMENT YEARS. THIS JUDGMENT OF TH E GUJARAT HIGH COURT WAS FOLLOWED BY THIS TRIBUNAL IN ACIT VS. M/S. SRI RAMA KRISHNA MILLS (COIMBATORE) LTD., ITA 2468/MDS/2014 VIDE ORDER DATED 10.07.2015. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. SECTION 32(2) WAS AME NDED W.E.F. 01.04.2002. THE AMENDED SECTION 32(2) READS AS FOLLOWS: WHERE, IN THE ASSESSMENT OF THE ASSESSEE, FULL EFF ECT CANNOT BE GIVEN TO ANY ALLOWANCE UNDER SUB-SECTION (1) IN ANY PREVIOUS YEA R, OWING TO THERE BEING NO PROFITS OR GAINS CHARGEABLE FOR THAT PREVIOUS YEAR, OR OWING TO THE PROFITS OR GAINS CHARGEABLE BEING LESS THAN THE ALLOWANCE, THEN, SUB JECT TO THE PROVISIONS OF SUB- SECTION(2) OF SECTION 72 AND SUB-SECTION (3) OF SEC TION 73, THE ALLOWANCE OR THE PART OF THE ALLOWANCE TO WHICH EFFECT HAS NOT BEEN GIVEN, AS THE CASE MAY BE, SHALL BE ADDED TO THE AMOUNT OF THE ALLOWANCE FOR D EPRECIATION FOR THE FOLLOWING PREVIOUS YEAR AND DEEMED TO BE PART OF THAT ALLOWAN CE, OR IF THERE IS NO SUCH ALLOWANCE FOR THAT PREVIOUS YEAR, BE DEEMED TO BE T HE ALLOWANCE FOR THAT PREVIOUS YEAR, AND SO ON FOR THE SUCCEEDING PREVIOUS YEARS. IN VIEW OF THE LATEST PROVISIONS OF SEC. 32(2), TH E DEPRECIATION WHICH CANNOT BE ALLOWED SHALL BE ADDED TO THE AMOUNT OF D EPRECIATION FOR THE FOLLOWING YEAR AND THE SAME SHALL BE TREATED AS INCOME OF THE PREVIOUS YEAR AND DEEMED TO BE ALLOWANCE FOR THAT YEAR. ACCORDINGLY, IT CAN B E CARRY FORWARD EVEN FOR THE SUCCEEDING PREVIOUS YEARS WITHOUT ANY RESTRICTION. SINCE THE PARLIAMENT HAS REMOVED THE RESTRICTION OF 8 SUCCEEDING YEARS W.E.F . 01.04.2002, THE LD.CIT(APPEALS) HAS RIGHTLY PLACING HIS RELIANCE ON THE JUDGMENT OF THE GUJARAT HIGH COURT AND THIS TRIBUNAL DECISION, ALLOWED THE CLAIM OF THE ASSESSEE. THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE W ITH THE ORDER OF THE LOWER AUTHORITY. ACCORDINGLY THE SAME IS CONFIRMED. ITA NO.2993/MDS/2016 :- 4 -: 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. SINCE THE FACTS AND POSITION OF LAW REMAIN SAME, FOLLOWING THE ABOVE DECISIONS, WE HOLD THAT DECISION OF THE CIT (A) DOES NOT REQUIRE ANY I NTERFERENCE AND HENCE DISMISS THE REVENUES APPEAL. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON OCTOBER 31, 2017, AT CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( ) ( S. JAYARAMAN ) /ACCOUNTANT MEMBER /CHENNAI, 2 /DATED: OCTOBER 31, 2017. TLN , *34 54 /COPY TO: 1. ) /APPELLANT 4. 6 /CIT 2. *+) /RESPONDENT 5. 4 * /DR 3. 6 ( ) /CIT(A) 6. & /GF