Fiem Sung San (India) Ltd., New Delhi V. DCIT, New Delhi

ITA 3826/DEL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 9552 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 22-12-2009
• Assessment Year: 2006-2007
• Appeal Filed On: 08-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANISH GUPTA
• Assessee Lawyers: V SACHDEVA
• Keywords: Depreciation; Unabsorbed depreciation
• Section: 143(3); 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B : NEW DELHI BEFORE SHRI I.P.BANSAL, JM AND SHRI R.C.SHARMA, AM ITA NO.3826/DEL/2009 ASSESSMENT YEAR : 2006-07 M/S FIEM SUNG SAN (INDIA) LTD., (NOW AMALGAMATED WITH FIEM IND.LTD.), D-34, DSIDC PACKAGING COMPLEX, KIRTI NAGAR INDUSTRIAL AREA, NEW DELHI 110 015. PAN NO.AAACF1461H. VS. DY.COMMISSIONER OF INCOME TAX, CIRCLE-11(1), NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI V.SACHDEVA, CA. RESPONDENT BY : SHRI MANISH GUPTA, DR. ORDER PER R.C.SHARMA, AM : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF CIT(A) DATED 3.7.2009 FOR THE AY 2006-07, IN THE MATTER OF ORDER PASSED U/S 143(3) READ WITH SECTION 115JB. 2. THE ONLY GRIEVANCE OF THE ASSESSEE PERTAINS TO C OMPUTATION OF BOOK PROFIT U/S 115JB AFTER REDUCING THE AMOUNT OF CONSOLIDATED LOSS/CONSOLIDATED CARRY FORWARD OF DEPRECIATION, WHICHEVER IS LOWER. 3. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND GON E THROUGH THE ORDERS OF THE AUTHORITIES BELOW. AS PER THE PROVISIONS OF SE CTION 115JB SUB-SECTION (2), THE BOOK PROFIT WHICH IS LIABLE TO BE TAXED IS ARRIVED AT AFTER REDUCING THE AMOUNT OF LOSS BROUGHT FORWARD OR UNABSORBED DEPRECIATION, WH ICHEVER IS LESS AS PER BOOKS OF ACCOUNT. HOWEVER, THE AO DID NOT ACCEPT THE ASSESS EES CONTENTION AND HE HAS TAKEN CARRY FORWARD OF BUSINESS LOSS/DEPRECIATION O F INDIVIDUAL YEAR AND AFTER ITA-3826/D/2009 2 POINTING OUT THE LOWER AMOUNT IN INDIVIDUAL YEARS, HE WORKED OUT THAT ASSESSEE IS ELIGIBLE TO SET OFF AN AMOUNT OF RS.1.28 CRORES IN STEAD OF RS.1.53 CRORES WHICH WAS THE ACTUAL BROUGHT FORWARD BUSINESS LOSS/ UNABS ORBED DEPRECIATION AS PER THE BOOKS OF ACCOUNT. BY THE IMPUGNED ORDER, CIT(A) CO NFIRMED THE ACTION OF THE AO. 4. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND GON E THROUGH THE ORDERS OF THE AUTHORITIES BELOW. CLAUSE (III) OF EXPLANATION (I) OF SECTION 115JB PROVIDES THAT AMOUNT OF LOSS BROUGHT FORWARD OR UNABSORBED D EPRECIATION, WHICHEVER IS LESS AS PER THE BOOKS OF ACCOUNT IS TO BE REDUCED FROM T HE NET PROFIT. AS PER THE LANGUAGE USED IN THE PROVISION, THE WORD EMPLOYED I N THE PROVISIONS IS THE AMOUNT AND NOT THE AMOUNTS OF LOSS BROUGHT FORW ARD OR UNABSORBED DEPRECIATION, WHICHEVER IS LOWER. THE REFERENCE TO THE AMOUNT OF BROUGHT FORWARD LOSS OR UNABSORBED DEPRECIATION, WHICHEVER IS LESS SHOWS THE INTENTION OF THE LEGISLATURE FOR CONSIDERING ONE CONSOLIDATED FI GURE OF BROUGHT FORWARD LOSS OR UNABSORBED DEPRECIATION OF THE EARLIER YEARS IN TOT ALITY AND NOT ON YEAR TO YEAR BASIS. WE THEREFORE DO NOT FIND ANY MERIT IN THE C ONTENTION OF LOWER AUTHORITIES TO THE EFFECT THAT UNABSORBED DEPRECIATION OR BUSINESS LOSS WHICHEVER IS LESS IS TO BE TAKEN ON YEARLY BASIS I.E. LESSER OF THE TWO FOR EV ERY YEAR WOULD BE AVAILABLE FOR SET OFF IN THE SUBSEQUENT YEAR. ACCORDINGLY, BEING AGR EEING WITH THE CONTENTION OF THE LEARNED AR, WE REVERSE THE ORDERS OF THE LOWER AUTH ORITIES AND DIRECT THE AO TO ALLOW SET OFF OF BROUGHT FORWARD BUSINESS LOSS/ UNA BSORBED DEPRECIATION AMOUNTING TO RS.1,53,46,235/- INSTEAD OF RS.1,28,83,738/- AS TAKEN BY THE AO. SIMILAR VIEW HAS BEEN TAKEN BY THE ITAT MUMBAI BENCH IN THE CASE OF AMLINE TEXTILES (P) LTD. 27 SOT 152. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. DECISION PRONOUNCED IN THE OPEN COURT ON 22 ND DECEMBER, 2009. SD/- SD/- (I.P.BANSAL) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 22.12.2009. VK. ITA-3826/D/2009 3 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT DEPUTY REGISTRAR