KMC Speciality Hospitals India Ltd., Trichy V. ACIT, Trichy

ITA 458/CHNY/2014

• Counselvise Citation: 45821714 RSA 2014
• Duration Of Justice: 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 21-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VASANTH KUMAR IRS
• Assessee Lawyers: K RAVI
• Keywords: Depreciation; Unabsorbed depreciation
• Section: 147; 148; 154; 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , . . !' , # '$ % BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENTAND SHRI S.S. GODARA, JUDICIAL MEMBER ./ ITA NO. 458/MDS/2014 # & '& / ASSESSMENT YEAR : 2007-08 M/S KMC SPECIALITY HOSPITALS INDIA LTD. (FORMERLY SEA HORSE HOSPITALS P. LTD.), NO.6, ROYAL ROAD, TRICHY, PAN : AADCS 0189 E V. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE I(1), TRICHY. ()*/ APPELLANT) (,-)*/ RESPONDENT) )* . / APPELLANT BY : SHRI K. RAVI, ADVOCATE ,-)* . / RESPONDENT BY : SHRI VASANTH KUMAR, IRS, CIT / . 01 / DATE OF HEARING : 5 TH MAY, 2014 2!' . 01 / DATE OF PRONOUNCEMENT : 5 TH MAY, 2014 / O R D E R PER DR.O.K.NARAYANAN, VICE-PRESIDENT THIS APPEAL FILED BY THE ASSESSEE RELATES TO ASSE SSMENT YEAR 2007-08. THE APPEAL IS DIRECTED AGAINST THE O RDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) AT TIRUCHIRAPA LLI, PASSED - - I.T.A. NO. 458/MDS/14 2 ON 30.12.2013. THE APPEAL ARISES OUT OF THE ASSESS MENT COMPLETED UNDER SECTION 143(3) READ WITH SECTION 14 7 OF THE INCOME-TAX ACT, 1961. 2. THE ASSESSEE-COMPANY HAS FILED ITS RETURN OF INC OME FOR THE IMPUGNED ASSESSMENT YEAR ADMITTING A BUSINESS L OSS OF ` 65,22,677/- AND BROUGHT FORWARD LOSS OF ` 18,39,06,826/-. THE BROUGHT FORWARD LOSS ALSO INCLUDED UNABSORBED DEPRE CIATION OF ` 17,73,84,149/-. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) ACCEPTING THE LOSS AS WELL AS DETERMINING TH E LOSS TO BE CARRIED FORWARD AS ADMITTED BY THE ASSESSEE-COMPANY . 3. THEREAFTER, THE ASSESSING AUTHORITY PROPOSED TO RECTIFY THE ASSESSMENT ORDER UNDER SECTION 154 SO AS TO WITHDRA W DEPRECIATION ALLOWED TO BE CARRIED FORWARD TO THE T UNE OF ` 13,71,60,209/-. THIS IS BECAUSE, ACCORDING TO ASSE SSING AUTHORITY, UNABSORBED DEPRECIATION RELATING TO THE EARLIER ASSESSMENT YEARS 1989-90 TO 1998-99 WERE NOT ELIGIB LE TO BE CARRIED FORWARD BEYOND A PERIOD OF EIGHT ASSESSMENT YEARS. IN THE LIGHT OF THE REPLY FILED BY THE ASSESSEE, THE P ROPOSED RECTIFICATION WAS DROPPED. - - I.T.A. NO. 458/MDS/14 3 4. THEREAFTER, THE ASSESSING OFFICER ISSUED A NOTIC E UNDER SECTION 148 AND COMPLETED THE ASSESSMENT UNDER SECT ION 143(3) READ WITH SECTION 147 OF THE INCOME-TAX ACT, 1961, WITHDRAWING A SUM OF ` 13,71,60,209/- FROM THE UNABSORBED DEPRECIATION ELIGIBLE FOR CARRY FORWARD AND SET OFF . 5. THE FIRST APPEAL WAS DISMISSED BY THE COMMISSION ER OF INCOME TAX (APPEALS). THEREFORE, THE SECOND APPEAL BEFORE US. 6. THE ONLY ISSUE ON MERIT RAISED IN THE PRESENT AP PEAL IS WHETHER IT IS PROPER ON THE PART OF THE ASSESSING O FFICER TO DISALLOW A SUM OF ` 13,71,60,209/- FROM UNABSORBED DEPRECIATION ELIGIBLE TO BE CARRIED FORWARD AND SET OFF AGAINST FUTURE PROFITS OF THE ASSESSEE-COMPANY. 7. ON GOING THROUGH THE ORDERS OF THE ASSESSING OFF ICER AND THE COMMISSIONER OF INCOME TAX (APPEALS), WE FIND T HAT BOTH THE AUTHORITIES HAVE CONSIDERED DIFFERENT CASE LAWS NOT RELEVANT FOR THE ISSUE IN HAND. IT IS TRUE THAT FOR AN INTERREG NUM PERIOD, THE ELIGIBILITY OF UNABSORBED DEPRECIATION TO BE CARRIE D FORWARD WAS LIMITED FOR A PERIOD OF EIGHT YEARS. BUT, THE OLD POSITION THAT - - I.T.A. NO. 458/MDS/14 4 UNABSORBED DEPRECIATION BECOMES THE CURRENT DEPRECI ATION UNDER SECTION 32(2) AND THEREFORE ELIGIBLE FOR CARR Y FORWARD AND SET OFF WITHOUT ANY LIMITATION, WAS RESTORED BY THE AMENDMENT BROUGHT IN WITH EFFECT FROM THE ASSESSMENT YEAR 200 2-03. 8. THEREFORE, IT IS TO BE SEEN THAT WHEREVER UNABSO RBED DEPRECIATION WAS NOT ALLOWED TO BE SET OFF AGAINST THE PROFITS ARISING AFTER THE PERIOD OF EIGHT YEARS, SHOULD BE AGAIN CONSIDERED TO BE SET OFF, AFTER THE AMENDMENT. WHE N THE QUANTUM OF UNABSORBED DEPRECIATION IS COMPUTED AFTE R THE AMENDMENT, WHATEVER BALANCE OF UNABSORBED DEPRECIAT ION IS AVAILABLE TO THE CREDIT OF THE ASSESSEE, MUST BE DE TERMINED AS UNABSORBED DEPRECIATION ELIGIBLE FOR CARRY FORWARD AND SET OFF. THE INTERREGNUM RESTRICTION OF LIMITING OF THE CLAI M FOR EIGHT-YEAR PERIOD DOES NOT TAKE AWAY THE RIGHT OF AN ASSESSEE TO CLAIM THE BALANCE OF UNABSORBED DEPRECIATION, FOREVER. THE B ALANCE OF UNABSORBED DEPRECIATION REVIVES BACK INTO LIFE AND BECOMES ELIGIBLE FOR CARRY FORWARD AND SET OFF ALONG WITH T HE OTHER PART UNABSORBED DEPRECIATION AVAILABLE TO THE CREDIT OF THE ASSESSEE. - - I.T.A. NO. 458/MDS/14 5 9. THEREFORE, WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES ON THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO R E-DETERMINE THE UNABSORBED DEPRECIATION ELIGIBLE FOR CARRY FORWARD AND SET OFF IN THE ABOVE LINES. 10. AS THE APPEAL IS DECIDED ON MERIT OF THE ISSUE, WE ARE NOT INCLINED TO EXAMINE THE GROUND RAISED BY THE ASSESS EE REGARDING THE JUSTIFICATION OF ISSUING NOTICE UNDER SECTION 1 48 AND SUBSEQUENTLY, COMPLETING THE ASSESSMENT UNDER SECTI ON 147/143(3). 11. IN RESULT, THIS APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON MONDAY, THE 5 TH OF MAY, 2014 AT CHENNAI. SD/- SD/- (S.S. GODARA) (DR. O.K. NARAYANAN) ( . . !') ( . . . ) # '$ /JUDICIAL MEMBER /VICE-PRESIDENT /CHENNAI, 4' /DATED, THE 5 TH MAY, 2014. KRI. - - I.T.A. NO. 458/MDS/14 6 '5 . ,#067 87'0 /COPY TO: 1. )* /APPELLANT 2. ,-)* /RESPONDENT 3. / 90 () /CIT(A), TIRUCHIRAPPALLI 4. / 90 /CIT-I, TIRUCHIRAPPALI 5. 7: ,#0# /DR 6. & ; /GF.