DCIT 8(3)(2), MUMBAI V. VOLTAS LTD, MUMBAI

ITA 3414/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0399 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 13-04-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 04-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: B PURUSETH
• Keywords: Depreciation; Unabsorbed depreciation
• Section: 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D, MUMBAI BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI MANJUNATHA G, ACCOUNTANT MEMBER ITA NO.3414/M/2015 ASSESSMENT YEAR: 2007-08 DY. CIT 8(3)(2), ROOM NO.615, 6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 VS. M/S. VOLTAS LTD., VOLTAS HOUSE A, 4 TH FLOOR, DR. BABASAHEB AMBEDKAR ROAD, CHINCHPOKLI, MUMBAI 400 033 PAN: AAACV 2809D (APPELLANT) (RESPONDENT) ITA NO.3041/M/2015 ASSESSMENT YEAR: 2007-08 M/S. VOLTAS LTD., VOLTAS HOUSE A, DR. BABASAHEB AMBEDKAR ROAD, CHINCHPOKLI, MUMBAI 400 033 PAN: AAACV 2809D VS. DY. CIT, OLD RANGE 7(3), NEW RANGE 8(3)(2), AAYAKAR BHAVAN, MUMBAI - 400020 (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI B. PURUSETH, A.R. REVENUE BY : SHRI NITESH JOSHI, D.R. DATE OF HEARING : 16.05.2017 DATE OF PRONOUNCEMENT : 16.06.2017 O R D E R PER D.T. GARASIA, JUDICIAL MEMBER: THE ABOVE TITLED APPEALS ONE BY THE ASSESSEE AND T HE OTHER BY THE REVENUE HAVE BEEN PREFERRED AGAINST THE ORDER DATED 17.03.2015 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER R EFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT YEAR 2007-08. FIRST WE TAKE UP THE REVENUES APPEAL I.E. ITA NO.3414/M/2015. ITA NO.3414/M/2015 ITA NO.3041/M/2015 M/S. VOLTAS LTD. 2 ITA NO.3414/M/2015 (REVENUES APPEAL) 2. THE ASSESSEE COMPANY IS AN ENGINEERING, MANUFACT URING AND MARKETING ORGANIZATION. THE ASSESSEE COMPANY IS ENGAGED IN B USINESS OF MANUFACTURING OF AIR CONDITIONING AND REFRIGERATION EQUIPMENT, AI R-CONDITIONERS FOR SPECIALIZED APPLICATIONS, WATER COOLERS, REFRIGERATION & COMMER CIAL REFRIGERATION ETC. THE ASSESSEE HAD UNABSORBED DEPRECIATION TO THE TUNE OF RS.11,70,38,991/- PERTAINING TO A.Y. 1998-99. THE FINANCE ACT 1996 W .E.F. A.Y. 1997-98 RESTRICTED THE RIGHT TO CARRY FORWARD UNABSORBED DE PRECIATION FOR A PERIOD OF 8 YEARS FROM THE YEAR IN WHICH ORIGINAL DEPRECIATION COULD NOT BE SET OFF DUE TO INADEQUACY OF PROFITS. THIS PROVISION WAS INCORPOR ATED UNDER SECTION 32(2) OF THE ACT. IN THIS CASE, THE YEAR IN WHICH THE ORIGI NAL DEPRECIATION WAS LEFT TO BE UNABSORBED IS IN A.Y. 1998-99. HENCE, THE PROVISIO N GOVERNING RIGHT TO SET OFF OF DEPRECIATION FOR A.Y. 1998-99 WAS INVOKED. THE PROVISION OF SECTION 32(2) STANDS IN A.Y. 1998-99, THE RIGHT TO CARRY FORWARD UNABSORBED DEPRECIATION CANNOT BE EXTENDED BEYOND 8 YEARS. THE ASSESSEE VE STED THE RIGHT IN A.Y. 1998-99 IN RESPECT OF UNABSORBED DEPRECIATION CANNO T BE EXTENDED BEYOND EIGHT YEARS IN AS MUCH AS THE RIGHT TO CARRY FORWAR D AND SET OFF OF PROVISIONS RELATING TO DEPRECIATION BEYOND 8 YEARS DOES NOT PE RMIT AS PER PREVAILING PROVISIONS IN A.Y. 1998-99. DESPITE THE FACT THAT FINANCE ACT, 2001 HAS AMENDED PROVISIONS OF SECTION 32(2) WHEREIN THE RIG HT TO CARRY FORWARD UNABSORBED DEPRECIATION GETS MERGED WITH DEPRECIATI ON OF CURRENT YEAR AS PER PROVISIONS OF SECTION 32(1) OF THE ACT. THEREFORE, ASSESSEE IS NOT ENTITLED FOR DEPRECIATION FOR EARLIER YEARS. 3. THE MATTER CARRIED TO LD. CIT(A) AND THE LD. CIT (A) HAS ALLOWED THE CLAIM BY OBSERVING AS UNDER: 4.3 I HAVE DULY CONSIDERED FACTS AND SUBMISSIONS. IT IS NOTED THAT SIMILAR ISSUE CAME UP FOR ADJUDICATION IN APPELLANTS APPEAL FILE D FOR AY. 2006-07 IN APPEAL NO.CIT(A)-13/IT-25/12-13 WHEREIN THE ISSUE WAS DECI DED IN FAVOUR OF THE APPELLANT FOLLOWING THE RATIO OF DECISION GIVEN IN THE CASE O F GENERAL MOTORS INDIA PVT. LTD. BY HONBLE GUJARAT HIGH COURT AND THEN AGAIN BY HONBL E ITAT IN THE CASE OF HINDUSTAN UNILEVER LTD. VS. ADDL. CIT. IN VIEW OF THIS, THE AO IS DIRECTED TO GIVE SET OFF OF ITA NO.3414/M/2015 ITA NO.3041/M/2015 M/S. VOLTAS LTD. 3 UNABSORBED DEPRECIATION FOR THE AY. 1998-99 AGAINST THE INCOME AVAILABLE IN THE AY. 2006-07. THE GROUND NO.2 IS TREATED AS ALLOWED . 4. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT T HE LD. CIT(A) HAS HELD THAT THE HONBLE GUJARAT HIGH COURT HAS DECIDED IN THE C ASE OF GENERAL MOTORS WHEREIN THEY HAVE OVERRULED THE SPECIAL BENCH JUDGM ENT AND DECIDED THAT THE AMENDMENT IN SECTION 32 DISPENSES WITH RESTRICTION OF 8 YEARS FOR CARRYING FORWARD SAND SET OFF OF UNABSORBED DEPRECIATION. W E FOUND THAT THE AO HAS DENIED THE SET OF CARRY FORWARD UNABSORBED DEPRECIA TION FOR A.Y. 2008-09 BASED ON THE DECISIONS OF MUMBAI TRIBUNAL SPECIAL B ENCH IN THE CASE OF TIMES GUARANTEE LIMITED WHICH WAS PASSED ON JUNE 2010. T HE CBDT HAS, IN THIS CIRCULAR NO.14 OF 2001 AMENDING THE PROVISIONS OF S ECTION 32 OF INCOME TAX ACT CLARIFIED THAT AMENDMENT DISPENSES WITH THE RES TRICTION OF 8 YEARS FOR CARRY FORWARD AND SET OFF OF UNABSORBED DEPRECIATION WOUL D BE APPLICABLE FOR A.Y. 2002-03 AND SUBSEQUENT YEARS. THE CIT(A) HAS CONSI DERING THE CBDT CIRCULAR AND THE DECISION OF HONBLE GUJARAT HIGH C OURT WHEREIN IT WAS HELD THAT UNABSORBED DEPRECIATION AVAILABLE AS ON 01.04. 2002 WILL BE DEALT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 32(2) AS AMENDED THEREFORE FOLLOWING THIS JUDGMENT CIT(A) HAS ALLOWED THE CLAI M. DURING THE COURSE OF HEARING, THE LD. D.R. DID NOT BRING ANY CONTRARY DE CISION AGAINST THE DECISION OF HONBLE GUJARAT HIGH COURT. THEREFORE, WE CONFI RM THE ORDER OF LD. CIT(A) AND HENCE THE DEPARTMENTAL APPEAL IS DISMISS ED. 5. DURING THE COURSE OF HEARING, THE LD. A.R. HAS N OT PRESSED THE ASSESSEES APPEAL. THEREFORE, IT IS DISMISSED. 6. IN THE RESULT, REVENUES APPEAL AS WELL AS ASSES SEES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16.06.2017. SD/- SD/- (MANJUNATHA G) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 16.06.2017. * KISHORE, SR. P.S. ITA NO.3414/M/2015 ITA NO.3041/M/2015 M/S. VOLTAS LTD. 4 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.