Rockwool (India) Limited, Hyderabad V. Addl. CIT, Hyderabad

ITA 433/HYD/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66174 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 23-08-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 22-03-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAO
• Assessee Lawyers: V SIVA KUMAR
• Keywords: Business income; Depreciation; Rectification of order; Unabsorbed depreciation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO.433/HYD/2010 ASSESSMENT YEAR: 2006-07 ROCKWOOL (I) LTD., APPELLANT HYDERABAD (PAN AABCR0722N) VS. ADDL. COMMISSIONER OF INCOME-TAX, RESPONDEN T RANGE 3, HYDERABAD APPELLANT BY : SHRI V. SIVAKUMAR RESPONDENT BY : SHRI M.S. RAO DATE OF HEARING : 08/08/2012 DATE OF PRONOUNCEMENT : ORDER PER ASHA VIJAYARAGHAVAN, J.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF CIT(A)-IV, HYDERABAD, DATED 15/02/2010 FO R THE ASSESSMENT YEAR 2006-07. 2. THE ASSESSING OFFICER HELD THAT FOR THE ASSESSME NT YEAR 2004-05, THE ASSESSEE RETURNED AN INCOME OF RS. 98, 77,881/-. THIS IS ADJUSTED TO BUSINESS LOSS OF AY 1997-98. TH E BALANCE BUSINESS LOSS OF RS. 14,18,864/- I.E. RS. 1,12,96,7 45/- LESS RS. 98,77,881/- IS CARRIED FORWARD TO AY 2004-05, IN LI NE WITH THE 143(3) ORDER OF AY 2002-03, WHICH WAS CONFIRMED BY THE CIT(A). THE TOTAL LOSSES OF RS. 6,80,88,556/- ARE SET OFF A GAINST THE INCOME OF RS. 7,80,23,284/- FOR ASSESSMENT YEAR 200 5-06, ITA NO. 433/HYD/2010 ROCKWOOL (INDIA) LTD. 2 RESULTING IN EXHAUSTING OF ALL CARRY FORWARD LOSSES AVAILABLE. THERE ARE, THEREFORE, NO LOSSES AVAILABLE TO BE CARRIED F ORWARD TO AY 2006-07. 3. ON APPEAL, THE CIT(A) RELIED ON THE DECISION OF THE ITAT MADRAS BENCH IN THE CASE OF HARVEY HEART HOSPITALS LTD. VS. ACIT (2009-TIOL-402-ITAT-MAD. IN ITA NO. 1842/MDS./2008, DT. 30/01/2009 FOR AY 2005-06) WHEREIN IT WAS HELD THAT UNABSORBED DEPRECIATION RELATING ASST. YEAR 1997-98 TO 2000-01 IN THE SAID CASE COULD BE C/F AND SET OFF ONLY AGAINST BUSINESS INCOME AND THAT TOO FOR A LIMITED PERIOD OF EIGHT YEARS FROM T HE END OF THE ASSESSMENT YEAR. THE HONBLE ITAT HAD AFFIRMED THE NEGATION OF CLAIM OF SET OFF OF SUCH DEPRECIATION IN ASSESSMENT YEAR 2005-06. ACCORDINGLY, THE CIT(A) HELD THAT THERE IS NO MERIT IN THE CONTENTION OF THE ASSESSEE THAT IN VIEW OF THE PROV ISIONS STANDING ON THE STATUTE AS ON 01/04/2006, THE LIMIT OF EIGHT YEARS WOULD NOT APPLY. UPHOLDING THE VIEW TAKEN BY THE ASSESSIN G OFFICER THEREFORE IT IS TO BE HELD THAT THE ASSESSEE IS NOT ENTITLED TO SET OFF UNABSORBED DEPRECIATION RELATING TO ASSESSMENT YEAR 1997-98. 4. THE LEARNED COUNSEL FOR THE ASSESSEE SHRI SIVAKU MAR BROUGHT TO OUR NOTICE THAT THE ASSESSEE IS A SICK I NDUSTRIAL COMPANY U/S 17(1) OF SICA AND AS PER THE PROVISO TO SUB-CLAUSE (III) TO CLAUSE (2), THE TIME LIMIT OF 8 YEARS SHAL L NOT APPLY TO SICK COMPANIES FOR THE ASSESSMENT YEAR BEGINNING WITH TH E ASSESSMENT YEAR BEGINNING WITH THE RELEVANT PREVIOU S YEAR IN WHICH SUCH COMPANY BECAME SICK UNDER SICA AND ENDIN G WITH THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WH ICH THE ENTIRE NET WORTH OF SUCH COMPANY BECOMES EQUAL TO OR EXCEE DS THE ACCUMULATED LOSSES AND THEREFORE IF SUCH PERIOD IS EXCLUDED, THE ACCUMULATED DEPRECIATION UP TO ASSESSMENT YEAR 1997 -98 IS ELIGIBLE TO BE CARRIED FORWARD BEYOND ASSESSMENT Y EAR 2004-05 IN ITA NO. 433/HYD/2010 ROCKWOOL (INDIA) LTD. 3 THE ASSESSEES CASE. HENCE, IT WAS PRAYED THAT THE TRIBUNAL MAY DIRECT THE LOWER AUTHORITIES TO SET OFF OF UNABSORB ED DEPRECIATION OF RS. 8,05,16,759/- AGAINST THE INCOME DETERMINED IN THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2006-07. 5. THE LEARNED COUNSEL FOR THE ASSESSEE POINTED OUT THAT THE ISSUE UNDER CONSIDERATION IS SQUARELY COVERED BY TH E DECISION OF THE ITAT IN ASSESSEES OWN CASE IN EARLIER YEARS IN ITA NOS. 439/HYD/06 AND OTHERS VIDE ORDER DATED 16/07/2009 W HEREIN THE TRIBUNAL HELD AS FOLLOWS:- 17. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL AVAILABLE ON RECORD. THE FIRST APPELLA TE AUTHORITY ADMITTED THAT THE CARRY FORWARD OF ACCUMU LATED UNABSORBED DEPRECIATION BEYOND EIGHT YEARS IN THE C ASE OF A COMPANY WHICH HAS BEEN DECLARED SICK UNDER S.17(1) OF THE SICA, IS SPECIFICALLY COVERED UNDER S.32 OF THE SIC A ACT, BUT AGREED WITH THE OBSERVATIONS OF THE ASSESSING OFFIC ER FOR THE REASON THAT ACCORDING TO HIM CARRY FORWARD OF UNABS ORBED DEPRECIATION IS NOT PERMISSIBLE IN THE CASE OF COMP ANIES DECLARED SICK UNDER S. 17(2) AND 17(3) AND 17(4) OF SICA. WE FIND THAT THE PROVISIONS OF S.17(2) AND S.17(3) OF SICA ALSO EMERGE FROM THE PROVISIONS OF S.17(1) ONLY OF THAT ACT, SINCE ANY ORDER PASSED BY BIFR DECLARING A COMPANY AS SICK, IS UNDER S. 17(1) ONLY, AND CONSEQUENTLY, AS FAR AS PERMISSIBILITY OF CARRY FORWARD OF THE UNABSORBED DEPRECIATION IS CONCERNED, THERE IS NO DISTINCTION BASED ON THE QUESTION WHETHER A SICK COMPANY IS SO DECLARED UNDER S. 17(1), 17(2) OR S. 17(3) OF SICA. WE ACCORDINGLY AC CEPT THE CONTENTIONS OF THE ASSESSEE AND HOLD THAT THE DISPU TED OBSERVATIONS OF THE ASSESSING OFFICER WITH REGARD T O THE CARRY FORWARD OF UNABSORBED DEPRECIATION ARE NOT LE GAL OR VALID AND HENCE CANNOT BIND THE REVENUE AUTHORITIES , WHILE CONSIDERING THE ASSESSEES CLAIM FOR CARRY FORWARD OF THE UNABSORBED DEPRECIATION BEYOND THE ASSESSMENT YEAR 2004- 05. 6. FURTHER, THE LEARNED COUNSEL FOR THE ASSESSEE FI LED THE COPY OF THE RECTIFICATION ORDER PASSED BY THE DCIT ON 09 /02/2012, WHICH READS AS FOLLOWS: ITA NO. 433/HYD/2010 ROCKWOOL (INDIA) LTD. 4 A CONSEQUENTIAL ORDER GIVING EFFECT TO THE ORDERS O F ITAT FOR THE EARLIER YEARS HAS RESULTED IN REVISING THE CARR Y FORWARD OF BUSINESS LOSS AS WELL AS DEPRECIATION LOSS. IN P ASSING A RECTIFICATION ORDER IN THIS REGARD VIDE ORDER DATED 13/01/2010 CERTAIN ERRORS HAVE OCCURRED IN QUANTIFY ING THE BUSINESS/DEPRECIATION AND EFFECT TO THE SAME. THE S AME IS RECTIFIED AS UNDER: FOR THE ASSESSMENT YEAR 2005-06, THE INCOME RETURNED BY THE ASSESSEE WAS RS. 7,80,23,284/-. THE LOSS AVAILABLE FOR AY 1997-98 WAS I) UNABSORBED DEPRECIATION OF RS. 8,05,16,759/- AND II) BUSINESS LOSS RS. 1,19,39,586/-. 7. BY THIS RECTIFICATION ORDER(SUPRA), THE ASSESSEE S CLAIM HAS BEEN ACCEPTED. THEREFORE, THE APPEAL FILED BY THE A SSESSEE BECOMES INFRUCTUOUS AS THE DCIT HAS PASSED THE CONS EQUENTIAL ORDER OF THE ITAT DATED 16/07/2009 (SUPRA). 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED AS INFRUCTUOUS. PRONOUNCED IN THE OPEN COURT ON 24 TH AUGUST, 2012. SD/- SD/- (D. KARNUKARA RAO) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBE R HYDERABAD, DATED: 24 TH AUGUST, 2012. KV COPY TO:- 1) M/S ROCKWOOL INDIA LTD., 6-3-1099/14 & 15, FLAT NO. 103, LATE MELODY, NEAR HOTEL KATRIYA, SOMAJIGUDA, HYDERABAD 500 082. 2) ADDL. CIT, RANGE 3, HYDERABAD 3) CIT(A)-IV, HYDERABAD 4) CIT-III, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. ITA NO. 433/HYD/2010 ROCKWOOL (INDIA) LTD. 5 S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON 08/08/12 SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER