Dy.Commissioner of Income Tax, Circle-4(1)(2), Ahmedabad V. The Serendipity Apparels Pvt.Ltd., Ahmedabad

ITA 3429/AHD/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 6339 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 09-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K SINGH
• Keywords: Depreciation; Additional depreciation; Unabsorbed depreciation
• Section: 56(2); 115JB; 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D & C BENCH AHMEDABAD BEFORE, SHRI PRAMOD KUMAR , ACCOUNTANT MEMBER AND SHRI S. S. GODARA, JUDICIAL MEMBER ITA NO. 3345/AHD/2015 (ASSESSMENT YEAR: 2011-12) D.C.I.T., CIRCLE 4(1)(2), AHMEDABAD APPELLANT VS. THE SERENDIPITY APPARELS PVT. LTD. ARVIND MILL PREMISES, NARODA ROAD, AHMEDABAD RESPONDENT PAN: AAACT7017K & ITA NOS. 3429/AHD/2015 (ASSESSMENT YEAR: 2012-1 3) D.C.I.T., CIRCLE 4(1)(2), AHMEDABAD APPELLANT VS. THE SERENDIPITY APPARELS PVT. LTD. ARVIND MILL PREMISES, NARODA ROAD, AHMEDABAD RESPONDENT PAN: AAACT7017K / BY REVENUE : SHRI V. K. SINGH & SHRI PRASOON KABRA, SR. D.R. / BY ASSESSEE : BANDISH SOPARKAR, A.R. ITA NOS. 3345 & 3429/AHD/2015 (DCIT VS. THE SERENDI PITY APPARELS PVT. LTD.) A.YS. 2011-12 & 2012-13 - 2 - /DATE OF HEARING : 18.12.2017 & 01/01/2018 /DATE OF PRONOUNCEMENT : 03.01.2018 ORDER PER S. S. GODARA, JUDICIAL MEMBER THESE TWO REVENUES APPEALS FOR ASSESSMENT YEARS 20 11-12 & 2012-13 ARISE AGAINST THE CIT(A)-XIV & 8, AHMEDABADS ORDER DATED 18.09.2014 & 27.10.2015, IN CASE NOS. CIT(A)-XIV/DC.CIR.8(OSD)/3 33/2013-14 & CIT(A)- 8/179/14-15, REVERSING ASSESSING OFFICERS IDENTICA L ACTION DISALLOWING DEPRECIATION CLAIMS OF RS.54,57,582/- AND RS.46,96, 856/-; RESPECTIVELY ON THE GROUND THAT THE RELEVANT LEASED ASSETS COULD NOT BE TREATED AS TO HAVE BEEN USED IN ASSESSEES BUSINESS FOLLOWED BY HIS DIRECTIONS TO T HE ASSESSING OFFICER FOR ALLOWING CARRIED FORWARD MAT CREDIT PERTAINING TO E ARLIER YEARS (IN FORMER ASSESSMENT YEAR ONLY), IN PROCEEDINGS U/S.143(3) OF THE INCOME TAX ACT, 1961, HEREINAFTER THE ACT. HEARD BOTH THE PARTIES. CASE FILE(S) PERUSED. WE HEARD THESE TWO CASES IN D & C BENCH ON 18/12/2017 & 01/01/2018; RESPECT IVELY. THERE IS NO DISPUTE THAT SIMILAR ISSUES ARE INVOLVED IN BOTH CASES. TH EREFORE, WE DISPOSE OF THESE APPEALS BY THE INSTANT COMMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 2. WE COME TO THE FORMER ISSUE OF DEPRECIATION DISA LLOWANCE. THIS ASSESSEE IS A COMPANY EARNING INCOME FROM LEASE RENT PERTAINING TO ITS LEASED MOVABLE AND IMMOVABLE ASSETS. THE ASSESSEE HAD CHARACTERIZED I TS RELEVANT INCOME TO BE AS INCOME FROM OTHER SOURCES. IT ALSO RAISED ITS DEPR ECIATION CLAIMS IN THE TWO ASSESSMENT YEARS QUA THE LEASED ASSETS IN QUESTION. THE ASSESSING OFFICER WENT INTO A DETAILED DISCUSSION OF THE RELEVANT STATUTOR Y PROVISIONS ENSHRINED IN SECTION 32(I)& (II) R.W.S. 57 OF THE ACT TO CONCLUDE THAT O NCE THE ASSETS HAD BEEN LEASED OUT AND INCOME THEREFROM IS STATED TO BE UNDER OTHER SO URCES, IT WOULD NOT BE HELD THAT ITA NOS. 3345 & 3429/AHD/2015 (DCIT VS. THE SERENDI PITY APPARELS PVT. LTD.) A.YS. 2011-12 & 2012-13 - 3 - THE SAID ASSETS ARE BEING USED FOR ITS BUSINESS PUR POSES. HE THEREFORE DISALLOWED ASSESSEES ABOVE DEPRECIATION CLAIMS. 3. THE CIT(A) REVERSES ASSESSING OFFICERS ACTION I N FORMER ASSESSMENT YEAR AS UNDER: 5.1 GROUND NO. 1 TO 7 (GROUND NO. 1 TO 5 IN CONCIS E GROUND) ARE INTERLINKED AND AGAINST THE DISALLOWANCES OF DEPRECIATION OF RS. 54 ,57,582. (A) IN THE GROUNDS APPELLANT CONTENDED THAT (I) APPELLANT WAS OWNER OF THE ASSETS AND LEASI NG OUT OF SUCH ASSETS CANNOT BE HELD AS ASSETS NOT USED, FOR APPELLANT'S BUSINESS. (II) THE CONDITIONS OF PROVISION OF SECTION 32( 1) R.W.S. 38 AND SECTION 57(II) ARE FULFILLED BY APPELLANT. (III) THE DEPRECIATION BEING NOT A CLAIM BUT DEDU CTION TO BE PROVIDED FOR THE ASSETS OWNED AND USED AND SUCH DEDUCTION IS AVAILAB LE UNDER SECTION 57(II) OF THE ACT FOR THE INCOME UNDER THE HEAD 'INCOME FROM OTHER SO URCES' WHICH INTERALIA IS THE INCOME FROM LEASING OUT SUCH ASSETS. AS PER THE PUR POSE & SCHEME OF SECTION 57(11) OF THE ACT, FOR THE LEASE RENT INCOME AND LEASED OU T ASSETS, IT CANNOT BE HELD THAT ASSETS ARE NOT USED FOR THE PURPOSE OF BUSINESS OF APPELLANT. (IV) THE A.O. HAS NOT COMMENTED ON VARIOUS CASE LAWS RELIED ON BY APPELLANT. FURTHER A.O. RELIED ON IRRELEVANT CASE LAWS. THE AP PELLANT RELIED ON HON'BLE SUPREME COURT JUDGEMENT IN THE CASE OF MYSORE MINER ALS (SUPRA) (V) IN EARLIER YEARS, ON THE SAME ISSUE AND SIMIL AR FACTS & CONTENTION, DISALLOWANCES OF DEPRECIATION WERE MADE BUT LD. CIT (A) IN THE ORDER FOR A.Y. 09-10 & 10-11 ALLOWED SUCH DEDUCTION. THE APPELLANT IN GR OUNDS OF APPEAL SUBMITTED RELEVANT PARA OF LD. CIT(A) ORDER DT. 10.07.12 FOR A.Y. 09-10 IN THIS REGARD. (B) IT HAS BEEN EXAMINED AND VERIFIED THAT ISSUE OF DISALLOWANCES OF DEPRECIATION WITH FACTS & CONTENTIONS WERE SIMILAR IN PREVIOUS Y EAR WITH THAT OF EARLIER YEAR ASST. ORDER. IT IS IMPORTANT TO NOTE HERE THAT APPELLANT AFTER ESTABLISHING A TEXTILE WEAVING UNIT IN 2005, LEASED OUT THE FACTORY WITH PLANT AND MACHINERY TO M/S. ARVIND MILLS LTD. (AMI) FOR EIGHT YEARS AND REGULARLY REFLECTING LEASE RENT INCOME UNDER THE HEAD 'INCOME FROM OTHER SOURCES'. THE BOOKS OF ACCOUNTS ARE AUDITED AND APPELLANT SUBMITTED TAX AUDIT REPORT AS REQUIRED U/S.44AB OF THE ACT IN FORM 3CB & 3CD, WHERE TAX AUDITOR COMPUTED SUCH ELIGIBLE DEDUCTION OF DEPRECIATION. IT IS ONLY FROM A.Y. 2009-10 THAT DEPRECIATION SO CLAIMED WERE DISA LLOWED IN VIEW OF PROVISIONS OF SECTION 57(II) OF THE ACT. READ WITH SECTION 32 AND 38 OF THE ACT. THE MAJOR CONTENTION OF A.O. DURING PREVIOUS YEAR IS THE TWO FOLD I.E. T HE LEASE DEED ENTER INTO BY APPELLANT WITH M/S.AML WAS A FINANCE LEASE AND TRANSACTIONS W ERE IN THE NATURE OF 'SEAL AND LEASE BACK'. SECONDLY, THESE TRANSACTIONS ARE NOT E NTITLED FOR DEPRECIATION ON ASSETS SO LEASED OUT IN VIEW OF SECTION 38 OF THE ACT. REA D WITH SECTION 57 (II) OF THE ACT. BECAUSE LEASED ASSETS CANNOT BE TREATED AS USED FOR THE PURPOSE OF APPELLANT'S BUSINESS. THE A.O. AFTER REJECTING DETAILED EXPLANA TION FROM APPELLANT (ALREADY DISCUSSED AT PARA 4A ABOVE) HELD THAT THE ASSESSEE IS NOT THE REAL OWNER OF THE ASSETS WHICH HAS BEEN LEASED OUT BECAUSE ALL SUCH ASSETS W ERE INITIALLY OWNED/ PURCHASED BY M/S AMI AND M/S. AMI GIVEN FINANCE TO APPELLANT TO PURCHASE THESE ASSET AND TAKEN BACK ON LEASE IN THE FORM OF TRANSACTION OF 'SALE & LEASE BACK'. THE A.O. RELIED ON HON'BLE ITAT MUMBAI ORDER IN THE CASE OF M/S. INDUS IND BANK LTD (SUPRA) TO EMPHASIZE THAT LESSOR HAS TO PROVIDE ONLY FINANCE W HILE ALL OTHER THINGS ARE DICTATED BY LESSEE. THE A.O. THERE AFTER RELIED ON HON'BLE S UPREME COURT CASE OF LIQUIDATORS ITA NOS. 3345 & 3429/AHD/2015 (DCIT VS. THE SERENDI PITY APPARELS PVT. LTD.) A.YS. 2011-12 & 2012-13 - 4 - OF PURSA LTD. (SUPRA) AND HON'BLE GUJARAT HIGH COUR T IN THE CASE OF NEW INDIA INDUSTRIES LTD. (SUPRA) TO EMPHASIZE THAT WORD USED IN SECTION 32 AS 'USED FOR THE PURPOSE OF THE BUSINESS OR PROFESSION' MEANS 'USED FOR THE PURPOSE OF ENABLING THE OWNER TO CARRY ON THE BUSINESS OR PROFESSION AND EA RN PROFITS IN THE BUSINESS OR PROFESSION' AND NOT FOR LETTING OUT OF ASSETS. THE A.O. THEREAFTER CONSIDERED PROVISIONS OF SECTION 57(II) OF THE ACT AND SECTION 38 OF THE ACT AND DISALLOWED THE DEPRECIATION. (C) IN APPEAL PROCESSING'S, APPELLANT REITERATED CO NTENTION AS THAT WERE SUBMITTED BEFORE A.O( ALREADY DISCUSSED AT PARA 4B). SINCE DU RING PREVIOUS YEAR APART FROM THE CONTENTION TAKEN IN EARLIER YEARS AND ADJUDICAT ED IN APPEAL FOR THIS ISSUE, THERE WERE CONTENTION OF A.O. FOR TRANSACTION OF LEASE IN THE NATURE 'SALE & LEASE BACK', DETAILS WERE CALLED FROM APPELLANT AND SAME WERE SU BMITTED AS MENTIONED AT PARA 4C ABOVE. (D) AFTER EXAMINATION AND VERIFICATION OF THESE DET AILS FOLLOWING IMPORTANT FACT REQUIRED CONSIDERATION (I) AS PER LEASE DEED DT. 13/12/2005 BETWEEN APPELL ANT COMPANY BEING 'THE LESSOR' AND M/S ARVIND MILLS LTD. BEING 'THE LESSEE ' THE FIRST & FOREMOST PREFACE IS THE LESSEE (M/S ARVIND MILLS LTD.) HAD INITIATED CE RTAIN ACTION, DEEDS AND THINGS FOR SETTING UP A PROJECT IN THE NATURE OF TEXTILE PARK IN VILLAGE VADSAR, MR. KATHREJ CHOKDI, TAL. KALOL, DIST. GANDHINAGAR TO ATTRACT TH E INVESTMENT BY OTHER ENTREPRENEURS AND ENABLE THEM TO SETUP TEXTILE UNIT S WHO SHALL EXCLUSIVELY TAKE UP THE MANUFACTURING PROCESS EITHER ON JOB WORK BASIS FOR THE REQUIREMENT OF THE LESSEE (M/S ARVIND MILL LTD.) OR OFFER SUCH MANUFACTURING FACILITIES ON OPERATING LEASE BASIS TO BE UTILISED BY THE LESSEE.' THIS REFLECT THAT M/S ARVIND MILL LTD. BEING ONE OF THE LEADING TEXTILE MANUFACTURER AND PROCESSORS WAS INTERESTED TO DEVELOP ANCILLARY UNIT WHICH CAN FED THEM CONTINUOUSLY QUALIFY PRODUCTS SO TO UNSURE REGULAR SUPPLY AND UNIFORM QUALITY OF ULTIMATE PRODUCT. THIS WAS WITH THE OBJECT OF REDUC TION OF THE COST OF SUCH INTER MEDIATORY PRODUCTS OF UNIFORM QUALITY FOR WHICH M/S ARVIND MILLS LTD. WAS OTHERWISE DEPENDENT ON OTHER SUCH UNIT OUTSIDE AHMEDABAD. AS CLEARLY MENTIONED IN THIS PREFACE / PREAMBLE THAT CHOICE WAS GIVEN TO ENTREPR ENEUR WHO IS INTERESTED TO HAVE SUCH UNIT IN TEXTILE PARK THAT EITHER THEY MANUFACT URE FOR M/S ARVIND MILLS LTD. ON JOBS WORK BASIS OR LEASED OUT SUCH FACILITY ON 'OPE RATING LEASE BASIS'. IN THE SAID DEED, IT IS CLEAR THAT APPELLANT COMPAN Y WAS IN POSSESSION & OWNERSHIP OF FACTORY BUILDING, PLANT & MACHINERY, PIPES, FITTING, FURNITURE & FIXTURE WITH OTHER SUCH RIGHTS AS AVAILABLE FOR THE 'TEXTILE WEAVING UNIT'. (II) AS PER TERMS & CONDITIONS OF LEASE DEED, TH E DEED WAS FOR 8 YEARS FOR A MONTHLY RENT OF RS. 8,33,000/- PER MONTH FROM 01/10/2005 TO 30/09/2013. BUT, THERE WAS A PROVISION OF 'ADDITIONAL RENT' ON FULFILLING CERTAI N CONDITION OF UTILISATION OF SUCH FACTORY, MACHINERY ETC. AS PER CL. 2 OF THE AGREEM ENT REFLECTING TERMS & CONDITIONS FOR LEASE RENT, THESE PROVISIONS ARE MENTIONED. AT CL. 2 (C) IT IS CLARIFIED THAT 'IT IS CLEARLY UNDERSTOOD BY BOTH THE PARTIES THAT SOLELY WITH A VIEW TO ENABLE THE LESSOR TO DISCHARGE ITS LOAN REPAYMENT OBLIGATIONS, ON A PURELY PROVISIONAL AND ADHOC BASIS, THE LESSEE SHALL RELEASE AN 'ON ACCOUN T' MONTHLY ADDITIONAL RENT, IF ANY, ONLY IF THE PRECEDING MONTHS UTILISATION OF THE TEX TILE WEAVING UNIT HAD EXCEEDED 84 PERCENT USAGE.' (III) APPELLANT SUBMITTED A LETTER DT. 02/02/2006 F ROM EXPORT IMPORT BANK OF INDIA (REF. NO. EOU:D-18:33) FOR SANCTIONING OF LOAN (RUP EE TERM LOAN) OF RS. 7.68 CRORE UNDER TECHNOLOGY UPGRADATION FUNDS SCHEME (TU FS) TO THE SERENDIPITY APPARELS PVT. LTD. AHMEDABAD (SAPL) I.E. APPELLANT FOR PART FINANCING THE COST OF SETTING UP OF A DEDICATED WEAVING UNIT FOR ARVIND M ILLS LTD., AHMEDABAD UNDER LENDING PROGRAMME FOR EXPORT ORIENTED UNITS. ITA NOS. 3345 & 3429/AHD/2015 (DCIT VS. THE SERENDI PITY APPARELS PVT. LTD.) A.YS. 2011-12 & 2012-13 - 5 - IT IS THEREFORE APPELLANT BORROWED THE FUND FROM EX IM BANK TO SETUP SUCH UNIT AND IT IS ON THE BASIS OF ASSURANCE FROM M/S ARVIND MILL LTD. ABOUT REPAYMENT OF SUCH LOAN BEING THE UNIT SO SET UP AS EXPORT ORIENTED UN IT WILL BE DEDICATEDLY USED FOR M/S ARVIND MILL LTD. EXPORT. IT IS IN THIS REGARD, THE VIABILITY OF APPELLANT'S UNIT FOR THIS LOAN WAS LINKED TO LEASE RENT. FURTHER SUCH LOAN WA S SANCTIONED UNDER GOVT. PLAN & POLICY FOR TUF SCHEME AS WELL AS PROMOTION TO EXPOR T ORIENTED UNIT. AS PER SPECIAL CONDITIONS FOR SANCTION OF SUCH LOAN FOR IMPORTED WEAVING MACHINES (LOOSER), THE EXIM BANK REQUESTED TO HAVE A TRIPARTITE AGREEMENT BETWEEN APPELLANT, ARVIND MILLS LTD. AND EXIM BANK WHEREBY BOTH APPELLANT AND AML UNDER TAKE NOT TO TERMINATE THE LEASE DURING THE SUBSISTE NCE OF THE LOAN FACILITY AND ON REQUEST FROM EXIM BANK THE BASE RENTAL WILL BE PAID BY AML DIRECTLY TO EXIM BANK. THE OTHER CONDITION IS M/S AML HAS TO GIVE AN UNDER TAKING THAT UNSECURED LOAN OF RS. 1.91 CRORE GIVEN TO APPELLANT WILL NOT BE WITHD RAWN TILL THE CURRENCY OF EXIM BANK'S LOAN. (IV) THE APPELLANT SUBMITTED LIST OF MAJOR MACHINER Y PURCHASED, COPIES OF BILLS AND DETAILS FROM WHOM THE SAME IS PURCHASED. OUT OF TOT AL PLANT & MACHINERY OF RS. 6.95 CRORES, APPELLANT PURCHASED 24 SET OF GAMMEX LOOM C OSTING RS. 6.32 CR. FROM M/S ARVIND MILL LTD. AS HIGH SEA PURCHASE. OTHER PLANT & MACHINERY WERE PURCHASED BY APPELLANT FROM OTHER PARTIES. FROM THE ABOVE DETAILS IT CAN BE CONCLUDED THAT APP ELLANT ESTABLISHED ITS OWN WEAVING UNIT FOR WHICH IT HAS BORROWED THE MONEY FR OM EXIM BANK. BUT FOR VIABILITY OF THIS UNIT, THE EXIM BANK ENSURE THAT THERE BE LE ASING OUT OF THIS UNIT TO M/S ARVIND MILL LTD. SO THAT REALISATION OF LOAN CAN BE ENSURE D. ON THE OTHER HAND, FOR UPGRADATION OF TECHNOLOGY, M/S ARVIND MILL LTD. NEG OTIATED FOR IMPORTED LOOMS WHICH WERE SOLD TO APPELLANT WITH OTHER SUCH UNIT I N THE PARK. THIS ACT WAS TO ENSURE QUALITY MACHINE & QUALITY PRODUCT BY M/S ARVIND MIL LS. (E)(I) IT IS THEREFORE, I AM NOT INCLINED WITH A.O. THAT MERELY ON THE FACTS THAT MACHINERIES WERE PURCHASED FROM M/S ARVIND MILLS AS HIGH SEA PURCHASE, THE LEASE AGREEMENT BETWEEN APPELLANT & M/S ARVIND MILLS LTD. CAN BE TREATED AS FINANCE LEASE OR TRANSACTION OF 'SALE & LEASE BACK'. THE RATIO IN THE CASE OF INDUSAND BANK LTD. AS RELIED ON BY A.O. WAS INTER-ALIA BASED ON THE HON'B LE SUPREME COURT JUDGMENT IN THE CASE OF ASIAN BROWN BOVERI WHERE HON'BLE SUPREME CO URT OBSERVED THAT SUCH LEASE FIRST TO BE EXAMINED FROM THE VIEW POINT OF FINANCE LEASE OR OPERATION LEASE. IN THE CASE OF FIANCE LEASE OR TRANSACTION OF SALE & LEASE BACK, THE 'LESSEE' EITHER HAVING PLANT & MACHINERY (ASSETS) AS OWNERSHIP BUT FOR FIN ANCE SOLD THE SAME & TAKE BACK ON LEASE I.E. THE ASSETS ARE REMAINED WITH 'LESSEE' BUT ON ACCOUNT OF SALE, FINANCE COMES INTO THE STREAM. AS AGAINST THIS, THE 'LESSEE ' WHO WAS NOT REQUIRED THE DEDUCTION OF DEPRECIATION INTERALIA PAY THE LEASE R ENT IN THE FORM OF INTEREST ON SUCH FINANCE. IN OTHER SUCH FINANCE LEASE, THE LESSOR IS WELL SUFFICIENT OF FINANCES, TRANSFER OR SALE THE ASSETS FOR WHICH LEASE RENT RECEIVED TI LL THE TOTAL FINANCE COST REALIZED AND AFTER THAT SUCH ASSETS OWNERSHIP TRANSFER TO LESSEE . IN THE CASE OF APPELLANT BOTH THOSE TWO TYPES ARE MISSING. THE APPELLANT BORROWED THE M ONEY FOR PURCHASE OF ASSETS AND ESTABLISHED THE UNIT I.E. NOT HAVING FINANCE CAPACI TY. ON THE OTHER HAND M/S ARVIND MILLS LTD. WAS NOT THE OWNER OF SUCH ASSETS BUT INI TIATED CERTAIN ACTIONS, DEEDS AND THINGS FOR SETTING UP A PROJECT IN THE NATURE OF TE XTILE PARK SO THAT UNINTERRUPTED SUPPLY OF RAW MATERIAL AT CHEEPER COST IS AVAILABLE FOR ITS EXPORTS. AS DISCUSSED ABOVE, SUCH VERTICAL AND HORIZONTAL INTEGRATION OF ANCILLARY UNITS TO BOOST EXPORT AS WELL AS EFFICIENCY FOR QUALITY PRODUCT CANNOT BE VI EWED AS TAX PLANNING OF 'FINANCE LEASE' OR 'SALE & LEASE BACK' TRANSACTION. (II) AS POINTED OUT BY APPELLANT THAT MY PREDECESSO R VIDE ORDER NO.CIT(A)XIV/ DCIT(OSD)/CIR.8/ 150/2012-13 DATED 25.04.2013 IN AP PELLANT'S OWN CASE FOR A.Y.2010-11 HELD AS UNDER: ITA NOS. 3345 & 3429/AHD/2015 (DCIT VS. THE SERENDI PITY APPARELS PVT. LTD.) A.YS. 2011-12 & 2012-13 - 6 - 'I HAVE CAREFULLY PERUSED THE ASSESSMENT ORDER AND THE SUBMISSIONS GIVEN BY THE APPELLANT. THE ASSESSING OFFICER HAS DISALLOWED THE CLAIM OF DEPRECIATION FROM INCOME FROM OTHER SOURCES U/S. 56(2) (II) AS IT WAS HELD BY HIM THAT THE ASSETS WERE NOT USED FOR THE PURPOSE OF BUSINESS OF THE APPELLA NT AFTER APPLYING THE PROVISIONS OF SECTION 32(1) OF THE ACT R.W. SECTION 38(2) OF THE ACT. THE APPELLANT HAS SUBMITTED THAT THE APPELLANT HAS FAILED TO APPRECIATE THE CORRECT FACTUAL AND LEGAL POSITION. THE PROVISIONS OF SECTION 38(2) ARE NOT APPLICABLE IN T HE CASE OF THE APPELLANT AND ENTIRE DEPRECIATION CLAIM SHOULD BE ALLOWED. TO UNDERSTAND THE CONTROVERSY, IT WOULD BE APPROPRI ATE TO REPRODUCE THE PROVISIONS OF SECTION 57(II), 32(1) AND 38(2). SECTION 57(II) IN THE CASE OF INCOME OF THE NATURE REFERRED TO IN CLAUSES (II) AND (III) OF SUB- SECTION (2) OF SECTION 56, DEDUCTIONS, SO FAR AS MA Y BE, IN ACCORDANCE WITH THE PROVISIONS OF SUB-CLAUSE (II) OF CLAUSE (A) AND CLA USE (C) OF SECTION 30, SECTION 31 AND SUB-SECTIONS (1) AND (2) OF SECTION 32 AND SUBJECT TO THE PROVISIONS OF SECTION 38; SECTION 32(1) IN RESPECT OF DEPRECIATION OF (I) BUILDINGS, MACHINERY, PLANT OR FURNITURE, BEING TANGIBLE ASSETS; (II) KNOW-HOW, PATENTS, COPYRIGHTS, TRADEMARKS, LIC ENCES, FRANCHISES OR ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATU RE, BEING INTANGIBLE ASSETS ACQUIRED ON OR AFTER THE 1ST DAY OF APRIL, 1998, OW NED, WHOLLY OR PARTLY, BY THE ASSESSEE AND USED FOR THE PURPOSES OF THE BUSINESS OR PROFESSION, THE FOLLOWING DEDUCTIONS SHALL BE ALLOWED SECTION 38(2) WHERE ANY BUILDING, MACHINERY, PLANT OR FURNITURE I S NOT EXCLUSIVELY USED FOR THE PURPOSES OF THE BUSINESS OR PROFESSION, THE DEDUCTI ONS UNDER SUB-CLAUSE (II) OF CLAUSE (A) AND CLAUSE (C) OF SECTION 30, CLAUSES (I) AND ( II) OF SECTION 31 AND CLAUSE (II) OF SUB-SECTION (1) OF SECTION 32 SHALL BE RESTRICTED T O A FAIR PROPORTIONATE PART THEREOF WHICH THE ASSESSING OFFICER MAY DETERMINE, HAVING R EGARD TO THE USER OF SUCH BUILDING, MACHINERY, PLANT OR FURNITURE FOR THE PUR POSES OF THE BUSINESS OR PROFESSION. AN EXAMINATION OF PROVISIONS OF SECTION 56(2) (II) SHOW THAT THE INCOME FROM LETTING ON HIRE MACHINERY, PLANT OR FURNITURE WHICH IS NOT CHARGEABLE UNDER THE HEAD PROFIT AND GAINS OF BUSINESS OR PROFESSION SHALL BE CHARGED UNDER THE HEAD INCOME FROM OTHER SOURCES. FURTHER, THE PROVISIONS OF SECT ION 57(II) PROVIDES THAT IN CASE OF INCOME REFERRED TO IN 56(2)(II), THE DEDUCTIONS U/S . 32(1) SUBJECT TO THE PROVISION OF SECTION 38 SHALL BE ALLOWED. FURTHER EXAMINATION OF SECTION 32(1) SHOW THAT IT IS A DEDUCTION ON ACCOUNT OF DEPRECIATION ON CERTAIN ASS ETS OWNED BY THE ASSESSEE AND USED FOR THE PURPOSE OF BUSINESS OR PROFESSION. SEC TION 38 RESTRICT THE DEPRECIATION, IN CASE IT IS NOT EXCLUSIVELY USED FOR THE PURPOSE OF BUSINESS OR PROFESSION AND THE DEDUCTION ELIGIBLE AS PER THE PROVISIONS OF SECTION 32 SHALL BE RESTRICTED TO A FAIR PROPORTIONATE PART. THEREFORE, IF THE APPELLANT IS ABLE TO PROVE THAT THE MACHINERY IS OWNED BY HIM, IT IS LEASED OUT AND NONE OF THE PART OF THE MACHINERY IS USED BY HIM OR NOT USED FOR THE PURPOSE OF BUSINESS, THE CLAIM OF THE APPELLANT SHALL BE ALLOWED. THE FACTS SHOW THAT THE APPELLANT HAS LEASED OUT TH E PLANT AND MACHINERY TO SOME OTHER PERSON. THE INCOME IS NOT ASSESSED TO TAX UND ER THE HEAD BUSINESS OR PROFESSION AND THE ASSET HAS BEEN USED FOR THE PURPOSE OF BUSI NESS OR PROFESSION. THE CLAIM OF THE APPELLANT IS, THEREFORE, APPARENTLY ALLOWABLE. THE A. O. HAS INTERPRETED THE PROVISIONS OF SECTION 38 TO MEAN THAT THE ASSET MUST BE USED FOR THE PURPOSE OF ASSESSEE'S BUSINESS OF PROF ESSION. HE HAS INTERPRETED THAT THE DEPRECIATION CLAIMED WOULD BE ALLOWABLE, IF THE ASS ET IS OWNED BY THE APPELLANT AND USED FOR THE PURPOSE OF ASSESSEE'S BUSINESS OR PROF ESSION. IN MY OPINION, THE INTERPRETATION TAKEN BY THE A. O. IS NOT JUSTIFIED. BY INTERPRETING THE PROVISIONS OF ITA NOS. 3345 & 3429/AHD/2015 (DCIT VS. THE SERENDI PITY APPARELS PVT. LTD.) A.YS. 2011-12 & 2012-13 - 7 - SECTION 38 IN THIS MANNER, THE VERY PURPOSE OF BRIN GING THE INCOME FROM MACHINERY, PLANT AND FURNITURE UNDER THE HEAD INCOME FROM OTHE R SOURCES AND PROVIDING DEDUCTION ON ACCOUNT OF DEPRECIATION ON IT WILL BE DEFEATED. THE APPELLANT HAS LET OUT THE MACHINERY AND THE ASSET HAS BEEN USED FOR THE P URPOSE OF BUSINESS BY THE LESSEE AND NO PART OF THE LEASED OUT ASSETS HAVE BEEN USED BY THE ASSESSEE FOR HIS USE OR FOR NON - BUSINESS PURPOSE. IT IS EVIDENT THAT THE ASSE TS HAVE BEEN USED FOR THE PURPOSE OF HIRING BY THE ASSESSEE AND THE LESSER HAS USED IT F OR ITS BUSINESS. I AM INCLINED TO AGREE WITH THE EXPLANATION GIVEN BY THE APPELLANT F OR THE TERM 'SO FAR AS MAY BE' TO MEAN THAT THE PROVISIONS MAY BE GENERALLY FOLLOWED TO THE EXTENT POSSIBLE. IN CASE OF MACHINERY LEASED OUT, IT IS THE LESSOR WHO USES THE MACHINERY AND NOT THE LESSEE. IT WOULD, THEREFORE, BE INCORRECT TO APPLY THE PROVISI ONS OF SECTION 38 TO MEAN THAT THE ASSESSEE OR THE LESSOR SHOULD USE THE LEASED OUT MA CHINERY. THE PURPOSE OF SECTION 38 IS TO RESTRICT THE DEPRECIATION TO THE EXTENT IT WA S NOT USED FOR THE PURPOSE OF BUSINESS. IN PRESENT CASE, IT WOULD HAVE BEEN APPLICABLE IF I T WAS ESTABLISHED THAT THE MACHINERIES WERE USED BY THE LESSOR FOR SOME PURPOS E OTHER THAN BUSINESS. BY APPLYING THE PROVISIONS OF SECTION 38, THE A. O. HA S MADE THE PROVISIONS OF SECTION 57(II) REDUNDANT AS IN ACCORDANCE WITH THIS INTERPR ETATION, THE CLAIM OF DEPRECIATION CANNOT BE ALLOWED, IF THE ASSETS ARE USED FOR HIRE OR LEASED OUT. THE RELIANCE PLACED BY THE APPELLANT ON THE JUDGMEN T OF HONOURABLE ITAT, PUNE IN THE CASE OF KASAT TEXTILES PVT. LTD. [61 TTJ 724] A ND THE DECISION OF ITAT, CHENNAI BENCH IN THE J. FARM HOUSE [ITA NO.310 TO 313/MDS/2 011] ALSO SUPPORTS THE ABOVE VIEW. RELIANCE IS ALSO PLACED ON JURISDICTIONAL ITA T ORDER DATED 08/08/2012 IN THE CASE OF ACIT (OSD), CIRCLE - 4, AHMEDABAD VS. JAY I NFA TRADE PVT. LTD. SIMILAR RATIO IS LAID DOWN IN THE CASES OF:- 1. CIT VS KOTAK MAHINDRA FINANCE LTD 227 CTR (BOM) 596 2. CIT VS SUNDARAM FINANCE LTD (2012) 205 TAX MAN 37 (MAD) IN VIEW OF THE ABOVE DISCUSSION, THE CORRECT INTERP RETATION OF SECTION 57(II) WOULD BE THAT, TO THE EXTENT, ASSETS ARE LEASED AND WHOLLY U SED BY THE ASSESSEE, DEPRECIATION ON SUCH ASSETS WOULD BE FULLY ALLOWABLE AND ONLY IF SU CH ASSETS ARE ALSO PARTLY USED BY THE ASSESSEE FOR PERSONAL PURPOSES OTHER THAN THE P URPOSE OF HIRING, A PORTION OF DEPRECIATION CAN BE DISALLOWED. THEREFORE, THE APPE LLANT IS ENTITLED FOR DEPRECIATION AS CLAIMED BY IT. IN VIEW OF THESE FACTS AND RESPEC TFULLY FOLLOWING THE DECISION OF MY PREDECESSOR FOR A. Y. 2009-10, THE DISALLOWANCE MAD E BY THE A.O. IS DELETED. THE GROUNDS OF APPEAL ARE ACCORDINGLY ALLOWED . (III) IT IS THEREFORE, I AM NOT INCLINED WITH A.O. THAT DEPRECIATION DEDUCTION AS CLAIMED BY APPELLANT FROM LEASED OUT ASSETS TO M/S. AML ARE REQUIRED TO BE DISALLOWED U/S 57(II) R.W.S. 38 OF THE ACT. AND IN VIEW OF' SALE & LEASE BACK' KIND OF TRANSACTION. THE APPELLANT WAS ALLOWED SUCH DEDUCTI ON SINCE A.Y. 06-07 CONSISTENTLY BY THE DEPARTMENT AND IN APPEAL ORDER BY MY PREDECE SSOR IN A.Y. 09-10 & A.Y. 10-11 ALLOWED SUCH DEDUCTION. THE DISTINGUISHING FACTS AB OUT LEASE DEED HAD ALREADY EXAMINED BY ME WITH FACTS & EVIDENCES, WHERE IT CAN NOT BE HELD THAT M/S. AML IS DEFACTO OWNER OF THESE ASSETS. IT IS THEREFORE, SUC H DISALLOWANCES OF RS. 54,57,582 ARE DIRECTED TO BE ALLOWED. THE A.O. IS DIRECTED TO DEL ETE THE ADDITION SO MADE. ALL THE GROUNDS ARE TREATED AS ALLOWED. 4. WE HAVE HEARD BOTH THE PARTIES REITERATING THEIR RESPECTIVE STANDS AND IN SUPPORT OF THE CIT(A)S ORDER DELETING THE IMPUGNED DEPRECIATION DISALLOWANCE AS REPRODUCED HEREINABOVE. THERE IS NO DISPUTE THAT T HE VERY ISSUE HAD ARISEN IN THE ITA NOS. 3345 & 3429/AHD/2015 (DCIT VS. THE SERENDI PITY APPARELS PVT. LTD.) A.YS. 2011-12 & 2012-13 - 8 - PAST AS WELL IN ASSESSMENT YEARS 2009-10 AND 2010-1 1. A CO-ORDINATE BENCH HAS ALREADY REJECTED REVENUES IDENTICAL ARGUMENTS IN A SSESSMENT YEARS 2006-07, 2009-10 & 2010-11 IN ITA NOS. 2438 & 2501/AHD/2010 AS WELL AS ITA NOS. 2211/AHD/2012 AND 1885/AHD/2013 THEREBY HOLDING THE ASSESSEE TO BE ENTITLED FOR THE IMPUGNED DEPRECIATION AS FOLLOWS: 9. IT IS NOT IN DISPUTE THAT THE LEASE RENTAL INCO ME HAS BEEN TAXED UNDER THE HEAD INCOME FROM OTHER SOURCES. THE RELEVANT PROVISION INVOKED BY THE A.O. IS SECTION 56(II) AND (III) OF THE ACT, WHICH READS AS UNDER:- (II) INCOME FROM MACHINERY, PLANT OR FURNITURE BELO NGING TO THE ASSESSEE AND LET ON HIRE, IF THE INCOME IS NOT CHARGEABLE TO INC OME-TAX UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION; (III) WHERE AN ASSESSEE LETS ON HIRE MACHINERY, PLA NT OR FURNITURE BELONGING TO HIM AND ALSO BUILDINGS, AND THE LETTING OF THE BUIL DING IS INSEPARABLE FROM THE LETTING OF THE SAID MACHINERY, PLANT OR FURNITURE, THE INCOME FROM SUCH LETTING, IF IT IS NOT CHARGEABLE TO INCOME-TAX UNDER THE HEA D PROFITS AND GAINS OF BUSINESS OR PROFESSION. 10. SECTION 57 ALLOWS CERTAIN DEDUCTIONS FROM SUCH INCOME. UNDER CLAUSE (II) OF SECTION 57 IT IS PROVIDED THAT ONLY IN CASES FALLING UNDER CLAUSES (II) AND (III) OF SUB-SECTION 2 OF SECTION 56, DEDUCTIONS U/S. 30, 31 AND 32 OF THE ACT WOULD BE ALLOWED. 11. THE MAIN CONTENTION OF THE REVENUE IN DISALLOWI NG THE CLAIM OF DEPRECIATION IS THAT SECTION 30, 31 & 32 FALL UNDER PART B OF THE ACT WH ICH DEAL WITH THE COMPUTATION OF INCOME UNDER THE HEAD PROFITS AND GAINS OF BUSINES S OR PROFESSION. 12. WE FIND THAT UNDER CLAUSES (II) AND (III) OF SE CTION 57 IN CASES OF INCOME ARISING OUT OF HIRING OF MACHINERY, PLANT AND FURNITURE, THE LE GISLATURE INTENDED TO CONFER THE SAME BENEFIT ON THE SAME TERMS AS WAS AVAILABLE IN RESPECT OF INCOME UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION ON AC COUNT OF CERTAIN SPECIFIED ITEMS OF EXPENDITURE OR DEDUCTION. THE SCHEME APPEARED TO B E NOT TO ALLOW ALL DEDUCTIONS AVAILABLE FOR COMPUTING THE INCOME UNDER THE HEAD ' PROFITS AND GAINS OF BUSINESS OR PROFESSION' IN RESPECT OF INCOME ARISING OUT OF LET TING OUT OF PLANT, MACHINERY AND FURNITURE BUT TO ALLOW DEDUCTIONS UNDER CERTAIN SPE CIFIED HEADS WHICH HAD A DIRECT RELATIONSHIP WITH PLANT, MACHINERY, ETC. THE DEDUCT IONS ALLOWED WERE IN THE NATURE OF EXPENDITURE ON ACCOUNT OF REPAIRS, INSURANCE AND AL SO DEDUCTION IN RESPECT OF DEPRECIATION ON THE PLANT AND MACHINERY. WHETHER TH E INCOME FROM SUCH PLANT AND MACHINERY AROSE UNDER THE HEAD 'PROFITS AND GAINS O F BUSINESS OR PROFESSION' OR 'INCOME FROM OTHER SOURCES', THE INTENTION OF THE L EGISLATURE WAS TO CONFER THE SAME BENEFITS ON ACCOUNT OF EXPENDITURE DIRECTLY CONNECT ED WITH THE PLANT AND MACHINERY. UNDER SECTION 57, THE APPLICABILITY OF SECTION 32 W AS NOT RESTRICTED TO SUB-SECTION (I) OF THE SAID LATTER SECTION. SUB-SECTION (2) OF SECT ION 32 WAS ALSO SPECIFICALLY INCLUDED. BY REASON OF THE EXPRESS PROVISION OF SECTION 57, T HE CONTENTION OF THE REVENUE THAT UNABSORBED DEPRECIATION RELATING TO PLANT AND MACHI NERY FOR THE EARLIER YEARS CANNOT BE ALLOWED WOULD BE CONTRARY TO THE EXPRESS PROVISI ONS OF SECTION 57 AND WOULD RENDER THE INCLUSION OF SECTION 32(2) IN SECTION 57 REDUNDANT. THIS INTERPRETATION SHOULD NOT BE FOLLOWED. ITA NOS. 3345 & 3429/AHD/2015 (DCIT VS. THE SERENDI PITY APPARELS PVT. LTD.) A.YS. 2011-12 & 2012-13 - 9 - 13. THE HONBLE SUPREME COURT IN THE CASE OF SMT. T ARULATA SHYAM AND OTHERS 108 ITR 345 HAS LAID DOWN THE RATIO THERE IS NO SCOPE FOR IMPORTING INTO THE STATUTE W ORDS WHICH ARE NOT THERE. SUCH IMPORTATION WOULD BE NOT TO CONSTRUE, BUT TO A MEND, THE STATUTE. EVEN IF THERE BE A CASUS OMISSUS THE DEFECT CAN BE REMEDIED ONLY BY LEGISLATION AND NOT BE JUDICIAL INTERPRETATION. 14.THE HONBLE SUPREME COURT IN THE CASE OF PADMASU NDARA RAO AND OTHERS IN 255 ITR 147 HAS HELD THE COURT CANNOT READ ANYTHING INTO A STATUTORY PR OVISION WHICH IS PLAIN AND UNAMBIGUOUS. A STATUTE IS THE EDICT OF THE LEGI SLATURE. THE LANGUAGE EMPLOYED IN A STATUTE IS THE DETERMINATIVE FACTOR O F LEGISLATIVE INTENT. THE FIRST AND PRIMARY RULE OF CONSTRUCTION IS THAT THE INTENT ION OF THE LEGISLATION MUST BE FOUND IN THE WORDS USED BY THE LEGISLATURE ITSEL F. THE COURT ONLY INTERPRETS THE LAW AND CANNOT LEGISL ATE. IF A PROVISION OF LAW IS MISUSED AND SUBJECTED TO THE ABUSE OF THE PROCESS O F LAW, IT IS FOR THE LEGISLATURE TO AMEND, MODIFY OR REPEAL IT, IF DEEME D NECESSARY. LEGISLATIVE CASUS OMISSUS CANNOT BE SUPPLIED BY JUDICIAL INTERP RETATIVE PROCESS. 15. THE HONBLE SUPREME COURT IN THE CASE OF HINDU STAN BULK CARRIERS 259 ITR 449 PP 465 HAS HELD THE PROVISION OF ONE SECTION OF THE STATUTE CANNOT BE USED TO DEFEAT THOSE OF ANOTHER UNLESS IT IS IMPOSSIBLE TO EFFECT RECONCILI ATION BETWEEN THEM. THUS A CONSTRUCTION THAT REDUCES ONE OF THE PROVISIONS TO A USELESS LUMBER OR DEAD LETTER IS NOT A HARMONIZED CONSTRUCTION. TO HARMONISE IS NOT TO DESTROY. 16. COMING BACK TO THE ALLOWABILITY OF DEPRECIATION FROM THE INCOME TAXED UNDER THE HEAD INCOME FROM OTHER SOURCES IN THE LIGHT OF TH E AFORE-STATED DISCUSSIONS, IN OUR CONSIDERED OPINION, THE A.O. OUGHT TO HAVE ALLOWED DEPRECIATION AS PER THE PROVISIONS OF THE LAW. 17. SECTION 32 (1) (IIA) CONTAINS THE PROVISIONS FO R THE ALLOWABILITY OF ADDITIONAL DEPRECIATION. AS MENTIONED ELSEWHERE, U/S. 57(II) D EDUCTIONS ARE ALLOWED AS PROVIDED IN SECTIONS 30, 31 & 32 OF THE ACT AND SINCE THE LEGIS LATURE HAS NOT SPECIFIED ANY PROVISION IN RESPECT OF ANY SUB-CLAUSE IN THESE SECTIONS, ALL THE DEDUCTIONS PROVIDED IN THESE SECTIONS HAVE TO BE ALLOWED ACCORDINGLY. THE RATIOS LAID DOWN BY THE HONBLE SUPREME COURT MENTIONED ELSEWHERE SQUARELY APPLY TO THIS IS SUE ALSO. WE ACCORDINGLY HELD THAT THE ASSESSEE IS ENTITLED FOR ADDITIONAL DEPRECIATIO N AND THE A.O. IS DIRECTED ACCORDINGLY. LEARNED DEPARTMENTAL REPRESENTATIVE FAILS TO DISPUT E ALL THESE INTERVENING DEVELOPMENTS DURING THE PENDENCY OF INSTANT LIS. W E THEREFORE ADOPT CONSISTENCY TO AFFIRM CIT(A)S FINDINGS UNDER CHALLENGE IN BOTH THESE ASSESSMENT YEARS HOLDING THE ASSESSEE ENTITLED FOR DEPRECIATION RELA TING TO ITS LEASED ASSETS. THE ITA NOS. 3345 & 3429/AHD/2015 (DCIT VS. THE SERENDI PITY APPARELS PVT. LTD.) A.YS. 2011-12 & 2012-13 - 10 - RELEVANT ISSUE IS ADJUDICATED IN ASESSEES FAVOUR A CCORDINGLY. REVENUES LATTER APPEAL ITA NO.3429/AHD/2015 RAISING THIS SOLE SUBST ANTIVE GROUND IS DECLINED. 5. WE REVERT BACK TO THE REVENUES FORMER APPEAL R AISING SECOND SUBSTANTIVE GROUND CHALLENGING CORRECTNESS OF CIT(A)S DIRECTIO N TO THE ASSESSING OFFICER TO ALLOW THE ASSESSEE CARRY FORWARD MAT CREDIT OF EARL IER YEARS. ITS CASE IS THAT ASSESSEES TAX PAYABLE UNDER NORMAL PROVISIONS ALRE ADY TURNS OUT TO BE MORE THAN ITS MAT LIABILITY. IT IS EVIDENT IN THIS BACKDROP THAT THE CIT(A)S DIRECTIONS UNDER CHALLENGE READ AS UNDER: 5.2 GROUND NO. 8 IS (GROUND NO. 6 IN CONCISE GROUN D) IS IN RESPECT OF NON GRANTING OF BROUGHT FORWARD MAT CREDIT FOR A.Y. 07- 08 TO A.Y. 10-11 IN VIEW OF THE PROVISIONS OF SECTION 115 JAA OF THE IT. ACT CLAIME D BY THE APPELLANT IN IT. RETURN. THE IMPUGNED ASSTT.ORDER IS SILENT ON THIS ISSUE BE CAUSE AFTER COMPUTING TOTAL INCOME AT RS. 1,36,56,9007- UNDER NORMAL PROVISIONS , THE A.O. HAS NOT COMPUTED BOOK PROFIT U/S 115JB OF THE ACT AND DEALT WITH PROVISIONS OF M AT. BUT AS MENTIONED AT FIRST PARA OF IMPUNGED ASSTT.ORDER THAT APPELLANT FILED A RETU RN OF INCOME AT TOTAL INCOME NIL, THE RETURN MUST BE HAVING COMPUTATION OF BOOK PROFI T U/S 115JB OF THE ACT. FURTHER, THE A.O. AT PARA 5 OF IMPUGNED ORDER DISALLOWED BRO UGHT FORWARD UNABSORBED DEPRECIATION CLAIM OF RS. 1,05,92,473/-. THE A.O. W HILE COMPUTING TOTAL INCOME UNDER NORMAL PROVISION STARTED WITH TOTAL INCOME OF RS. 81,99,320/- BEFORE SET OFF OF B/F. DEPRECIATION ALLOWANCE. THE APPELLANT IN COMPUTATION OF INCOME FOR PREVIOUS YEAR (COPY FILED) REFLECTED BOOK PROFIT U/S 115JB OF THE ACT AT RS. 81,49,154/-. IT IS THEREFORE CONSIDERING THE FACT THAT NO SET OFF OF UNAB. DEP. FOR A.Y. 06-07 AVAILABLE T O APPELLANT AND RELIEF GRANTED AT PARA 5.1 ABOVE, THE TOTAL INCOME UNDER NORMAL PROVI SIONS AS WELL AS BOOK PROFIT U/S 115JB OF THE ACT WILL BE AT RS. 81,99,320/- AND RS. 81,49,154/- RESPECTIVELY. THEREFORE TOTAL INCOME UNDER NORMAL PROVISIONS ARE REQUIRED TO BE TAKEN AS ASSESSED INCOME. THE INCOME TAX COMPUTATION FORM AS ATTACHED BY APPELLANT IN APPEAL MEMO REFLECT THAT NO SUCH MAT CREDIT IS GIVEN. AS PER PR OVISIONS OF SECTION 115JAA OF THE ACT, SUCH CREDIT IS TO BE GRANTED. THE A.O. IS DIRE CTED TO GRANT SUCH CREDIT AFTER VERIFICATION OF EARLIER YEAR CASE RECORD FOR SUCH C ARRY FORWARD MAT CREDIT FROM THE TAX SO DETERMINED IN PREVIOUS YEAR. THIS GROUND IS TREATED AS ALLOWED. 6. HEARD BOTH THE PARTIES. IT IS CLEAR FROM THE ABO VE EXTRACTED LOWER APPELLATE FINDINGS THAT THE CIT(A) HAS DIRECTED THE ASSESSING OFFICER TO GRANT MAT CREDIT TO THE ASSESSEE SUBJECT TO FACTUAL VERIFICATION OF EAR LIER YEARS RECORDS. WE DO NOT SEE ANY INJUSTICE OR PREJUDICE CAUSED TO THE REVENUE MO RE PARTICULARLY IN VIEW OF THE FACT THAT BOTH PARTIES HAVE BEEN LITIGATING IN PREC EDING ASSESSMENT YEAR AS WELL (SUPRA) QUA VARIOUS ISSUES. WE THEREFORE AFFIRM CI T(A)S FINDINGS UNDER ITA NOS. 3345 & 3429/AHD/2015 (DCIT VS. THE SERENDI PITY APPARELS PVT. LTD.) A.YS. 2011-12 & 2012-13 - 11 - CHALLENGE QUA THE INSTANT LATTER ISSUE AS WELL. RE VENUES FORMER APPEAL ITA NO.3345/AHD.2015 IS ALSO REJECTED BEING DEVOID OF M ERIT. 7. THESE TWO REVENUES APPEALS ARE ACCORDINGLY DISM ISSED. [PRONOUNCED IN THE OPEN COURT ON THIS THE 3 RD DAY OF JANUARY, 2018.] SD/- SD/- ( PRAMOD KUMAR ) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEM BER AHMEDABAD: DATED 03/01/2018 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )*+ ,--. . /0 / DR, ITAT, AHMEDABAD 1 +23 / GUARD FILE. BY ORDER / . // . /0