Dy. Commissioner of Income Tax, Lucknow V. M/s U.P Project Corp. Ltd., Lucknow

ITA 479/LKW/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4603 (ITAT-LUCKNOW)
• Duration Of Justice: 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 04-02-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 09-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R C JAIN F
• Keywords: Business income; Depreciation; Unabsorbed depreciation
• Section: 32; 154

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.479/LKW/2015 ASSESSMENT YEAR:2005-06 M/S U.P. PROJECT CORP. LTD. GOMTI BARRAGE, GOMTI NAGAR, LUCKNOW. PAN:AAACU3393F VS DY.CIT, RANGE-6, LUCKNOW. (RESPONDENT) (APPELLANT) DR. A. K. SINGH, CIT, D.R. APPELLANT BY SHRI R. C. JAIN, F.C.A. RESPONDENT BY 05/02/2016 DATE OF HEARING 15 /03/2016 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THIS IS REVENUES APPEAL DIRECTED AGAINST THE OR DER PASSED BY LEARNED CIT(A)-II, LUCKNOW DATED 26/02/2015 FOR THE ASSESSMENT YEAR 2005-06. 2. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLO WING GROUND: 1. THE CIT(A) HAS ERRED IN LAW AND ON FACT IN ALLO WING THE SET OFF OF UNABSORBED DEPRECIATION FOR THE ASSESSME NT YEAR 1988-89 AND 1989-90 FROM THE INCOME ASSESSED F OR THIS YEAR AS INCOME FROM OTHER SOURCES IGNORING THE FACTS THAT UNABSORBED DEPRECIATION CAN BE SET OFF ONLY AG AINST BUSINESS INCOME. 3. LEARNED D. R. OF THE REVENUE SUPPORTED THE ORDER PASSED BY ASSESSING OFFICER U/S 154 OF THE ACT WHEREAS LEARNE D A. R. OF THE ASSESSEE SUPPORTED THE ORDER OF CIT(A). 2 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT IN THE PRESENT CASE, THE ONLY DISPUTE IS REGARDING SET OFF OF BROUGHT FORWARD UNABSORBED DEPRECIATION IN THE PRESENT YEAR. IT IS THE STAND OF THE ASSESSING OFFICER AS PER THE ORDER PASSED BY HIM U/ S 154 OF THE ACT THAT SINCE THE ASSESSED INCOME IS INCOME FROM OTHER SOUR CES, SET OFF OF BROUGHT FORWARD UNABSORBED DEPRECIATION IS NOT ALLOWABLE BE CAUSE THE SAME CAN BE SET OFF AGAINST BUSINESS INCOME ONLY. NOW WE REPRO DUCE THE PROVISIONS OF SUB SECTION (2) OF SECTION 32 AS UNDER BECAUSE THES E PROVISIONS ARE RELEVANT FOR DECIDING THE ISSUE: (2) WHERE, IN THE ASSESSMENT OF THE ASSESSEE, FULL EFFECT CANNOT BE GIVEN TO ANY ALLOWANCE UNDER SUB-SECTION (1) IN ANY PREVIOUS YEAR, OWING TO THERE BEING NO PROFITS OR G AINS CHARGEABLE FOR THAT PREVIOUS YEAR, OR OWING TO THE PROFITS OR GAINS CHARGEABLE BEING LESS THAN THE ALLOWANCE, THE N, SUBJECT TO THE PROVISIONS OF SUB-SECTION (2) OF SECTION 72 AND SUB-SECTION (3) OF SECTION 73, THE ALLOWANCE OR THE PART OF THE ALLOWANCE TO WHICH EFFECT HAS NOT BEEN GIVEN, AS THE CASE MAY BE , SHALL BE ADDED TO THE AMOUNT OF THE ALLOWANCE FOR DEPRECIATI ON FOR THE FOLLOWING PREVIOUS YEAR AND DEEMED TO BE PART OF TH AT ALLOWANCE, OR IF THERE IS NO SUCH ALLOWANCE FOR THA T PREVIOUS YEAR, BE DEEMED TO BE THE ALLOWANCE FOR THAT PREVIO US YEAR, AND SO ON FOR THE SUCCEEDING PREVIOUS YEARS. 4.1 FROM THE ABOVE PROVISIONS OF SUB SECTION (2) OF SECTION 32 OF THE ACT, IT CAN BE SEEN THAT AS PER THESE PROVISIONS, UNABSO RBED DEPRECIATION, IF ANY, IS REQUIRED TO BE ADDED TO THE AMOUNT OF DEPRECIATI ON OF THE FOLLOWING YEAR. NOW WE EXAMINE THE FACTS OF THE PRESENT CASE. WE F IND THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/ S 147/143(3) ON 30/03/2013 IS AVAILABLE ON PAGES 37 TO 41 OF THE PA PER BOOK. AS PER THE SAME, WE FIND THAT AFTER EXCLUDING INTEREST ON BANK DEPOSIT OF RS.1,98,89,860/-, WHICH IS ASSESSED BY THE ASSESSIN G OFFICER AS INCOME FROM OTHER SOURCES, BUSINESS LOSS HAS BEEN COMPUTED BY A SSESSING OFFICER AT RS.8,51,046/- AND WHILE DOING SO, HE HAS ALLOWED DE DUCTION ON ACCOUNT OF DEPRECIATION IN THE PRESENT YEAR OF RS.11,22,210/- AND THE BUSINESS LOSS SO 3 ASSESSED BY HIM AT RS.8,51,046/- HAS BEEN SET OFF A GAINST THE INCOME ASSESSED BY THE ASSESSING OFFICER UNDER THE HEAD IN COME FROM OTHER SOURCES AT RS.1,98,89,860/-, AND IN THIS MANNER, HE ASSESSED THE NET TAXABLE INCOME AT RS.1,90,38,814/-. HENCE, THIS IS NOT IN DISPUTE THAT THE ASSESSEE IS HAVING CLAIM OF DEPRECIATION IN THE CUR RENT YEAR WHICH IS ALLOWED BY ASSESSING OFFICER ALSO AND AFTER ALLOWING SUCH C LAIM OF DEPRECIATION FOR THE CURRENT YEAR AT RS.11,22,210/-, HE HAS ASSESSED THE BUSINESS LOSS AT RS.8,51,046/-. UNDER THESE FACTS, IN OUR CONSIDERE D OPINION, AS PER SUB SECTION (2) OF SECTION 32 OF THE ACT, BROUGHT FORWA RD UNABSORBED DEPRECIATION HAS TO BE ADDED TO THE DEPRECIATION OF THE PRESENT YEAR AND ONCE WE DO SO, THE ASSESSED BUSINESS LOSS WILL INCR EASE BY THE AMOUNT OF UNABSORBED DEPRECIATION SET OFF IN THE PRESENT YEAR AND SAME WILL BE ALLOWABLE FOR SET OFF AGAINST INCOME FROM OTHER SOU RCES OF THE CURRENT YEAR BECAUSE ONCE THE BROUGHT FORWARD UNABSORBED DEPRECI ATION BECOMES DEPRECIATION OF THE CURRENT YEAR, THE ASSESSED BUSI NESS LOSS BECOMES BUSINESS LOSS OF THE CURRENT YEAR WHICH IS ELIGIBLE TO BE SET OFF AGAINST INCOME FROM ANY SOURCE. HENCE, UNDER THESE FACTUAL AND LEGAL POSITION, WE DECLINE TO INTERFERE IN THE ORDER OF CIT(A). 5. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GAROD IA ) JUDICIAL MEMBER ACCOUNTANT ME MBER DATED:15/03/2016 *SINGH COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR