DIVYARATH DEVELOPERS P.LTD, MUMBAI V. ITO 5(1)(3), MUMBAI

ITA 5231/MUM/2012

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9318 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 24-02-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 17-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHILENDA YADAV
• Assessee Lawyers: K SHIVARAM SHRI RAHUL K HAKANI
• Keywords: Depreciation; Unabsorbed depreciation
• Section: 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'D' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO. 5231/MUM/2012 (ASSESSMENT YEAR: 2009-10) M/S. DIVYARATH DEVELOPERS P. LTD. VS. INCOME TAX OFFICER-5(1)(3) TEJURA CHAMBERS 365-367 V.P. ROAD MUMBAI 400004 ROOM NO. 569 & 525 AAYAKAR BHAVAN, M.K. ROAD MUMBAI 400020 PAN - AABCD2154J APPELLANT RESPONDENT APPELLANT BY: SHRI K. SHIVARAM, SHRI RAHUL K. HAKANI & MS. NEELAM JADHAV RESPONDENT BY: SHRI AKHILENDA YADAV DATE OF HEARING: 24.02.2015 DATE OF PRONOUNCEMENT: 11.03.2015 O R D E R PER D. MANMOHAN, V.P. THIS APPEAL BY THE ASSESSEE-COMPANY IS DIRECTED AGA INST THE ORDER PASSED BY THE CIT(A)9, MUMBAI AND IT PERTAINS TO A. Y. 2009-10. 2. ASSESSEE IS ENGAGED IN THE BUSINESS OF DEALING IN T EXTILE, ETC. IN RESPECT OF A.Y. 2009-10 IT DECLARED NIL INCOME AFTER SETTIN G OFF BROUGHT FORWARD LOSSES/DEPRECIATION OF EARLIER YEARS TO THE TUNE OF ` 43,06,630/- HOWEVER, INCOME UNDER SECTION 115JB OF ` 39,46,877/- HAS BEEN DECLARED. THE CASE HAVING BEEN SELECTED FOR SCRUTINY THE AO NOTICED TH AT INCOME HAS TO BE COMPUTED UNDER SECTION 115JB OF THE ACT BUT THE UNA BSORBED DEPRECIATION OF ASSESSMENT YEARS 1998-99, 1999-2000 AND 2000-01 CAN NOT BE ALLOWED TO BE SET OFF AGAINST CURRENT YEARS INCOME SINCE THE UNU TILISED DEPRECIATION LOSSES OF THIS YEAR WOULD AUTOMATICALLY LAPSE AFTER THE EX PIRY OF EIGHT YEARS. 3. AGGRIEVED, ASSESSEE CONTENDED BEFORE THE CIT(A) THA T FOLLOWING UNABSORBED DEPRECIATION LOSSES ARE ALLOWED TO BE AD DED TO CURRENT YEARS DEPRECIATION, AS PER THE AMENDED PROVISIONS OF SECT ION 32(2) OF THE ACT AND ITA NO. 5231/MUM/2012 M/S. DIVYARATH DEVELOPERS P. LTD. 2 ACCORDINGLY THE SAME ARE ELIGIBLE FOR SET OFF IN TH E SUBSEQUENT YEARS, I.E. IN A.Y. 2009-10 AND THEREAFTER WITHOUT ANY TIME LIMIT: - ASSESSMENT YEAR UNABSORBED DEPRECIATION LOSS 1998-99 ` 20,04,885/- 1999-2000 ` 18,03,890/- 2000-01 ` 10,39,419 4. SECTION 32(2) WAS AMENDED W.E.F. 2002-03 WHEREBY TH E POSITION IN LAW RELATING TO CARRY FORWARD AND SET OFF OF UNABSORBED DEPRECIATION LOSSES WITHOUT ANY TIME LIMIT, AS PREVAILING UPTO A.Y. 199 6-97, WAS RESTORED W.E.F. 2002-03; UNABSORBED DEPRECIATION LOSSES OF ASSESSME NT YEARS 1998-99 TO 2000-01 WERE ELIGIBLE FOR SET OFF FOR EIGHT YEARS A ND BEFORE COMPLETION OF 8 YEARS, SECTION 32(2) HAVING BEEN AMENDED W.E.F. 200 2-03, THE SAME WOULD AUTOMATICALLY BECOME CURRENT YEARS DEPRECIATION WI THOUT ANY TIME LIMIT/EXPIRY LIMIT AND THE SAME CAN BE ALLOWED EVEN IN A.Y. 2009-10. LEARNED CIT(A) FOLLOWED THE DECISION OF THE HON'BLE SPECIAL BENCH OF THE ITAT, MUMBAI, IN THE CASE OF DCIT VS. TIMES GUARANT Y LTD. 40 SOT 14, AND DISMISSED THE APPEAL FILED BY THE ASSESSEE. 5. FURTHER AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. THE LEARNED COUNSEL FOR THE ASSESSEE CONTENDED BEFORE U S THAT IN THE LIGHT OF THE SUBSEQUENT VIEW TAKEN BY THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF GENERAL MOTORS INDIA (P) LTD. 354 ITR 244 THE DECIS ION OF THE ITAT SPECIAL BENCH NO LONGER HOLDS THE FIELD. HE ALSO RELIED UPO N THE FOLLOWING DECISIONS OF THE ITAT, MUMBAI BENCHES WHEREIN THE DECISION OF TH E HON'BLE GUJARAT HIGH COURT WAS TAKEN INTO CONSIDERATION TO HOLD THAT IN THE ABSENCE OF ANY CONTRARY DECISION OF ANY HIGH COURT, THE DECISION O F THE LONE HIGH COURT PREVAILS OVER THE ORDER PASSED BY THE ITAT SPECIAL BENCH AND ACCORDINGLY HELD THAT DEPRECIATION CAN BE CARRIED FORWARD BEYON D THE PERIOD OF EIGHT YEARS SO LONG AS IT WAS AVAILABLE FOR CARRY FORWARD BY TH E TIME THE AMENDED SECTION 32(2) HAS COME INTO EFFECT: - I. CIT VS. BAJAJ HINDUSTAN LTD. 149 ITD 709 (MUM) II. MINDA SAI LTD. VS. ITO ITA NO. 2974/DEL/2013 III. MILTONS PVT. LTD. VS. CIT ITA NO. 3019/MUM/2012 ITA NO. 5231/MUM/2012 M/S. DIVYARATH DEVELOPERS P. LTD. 3 6. ON THE OTHER HAND, THE LEARNED D.R. STRONGLY RELIED UPON THE ORDER PASSED BY THE LEARNED CIT(A) AND ALSO THE DECISION OF THE ITAT SPECIAL BENCH IN THE CASE OF TIMES GUARANTY LTD.. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND CAREFU LLY PERUSED THE RECORD. THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF GENERAL MOTORS HAD AN OCCASION TO CONSIDER THE QUESTION AS TO WHETHER THE UNABSORBED DEPRECIATION PERTAINING TO A.Y. 1997-98 COULD BE AL LOWED TO BE CARRIED FORWARD AND SET OFF AFTER A PERIOD OF EIGHT YEARS A ND IT WOULD BE GOVERNED BY SECTION 32(2) AS AMENDED BY FINANCE ACT, 2001. THE HON'BLE COURT OBSERVED THAT ANY UNABSORBED DEPRECIATION AVAILABLE TO AN AS SESSEE ON THE FIRST DAY OF APRIL, 2002 WILL BE DEALT WITH IN ACCORDANCE WITH T HE PROVISIONS OF SECTION 32(2) AS AMENDED BY FINANCE ACT, 2001. THIS VIEW WA S CONTRARY TO THE VIEW TAKEN BY THE ITAT SPECIAL BENCH IN THE CASE OF TIME S GUARANTY LTD. NO OTHER HIGH COURT HAS TAKEN A CONTRARY VIEW ON THIS MATTER. VARIOUS BENCHES OF ITAT, HAVING EXHAUSTIVELY REFERRED TO THE DECISI ON OF THE HON'BLE GUJARAT HIGH COURT, OBSERVED THAT IN THE HIERARCHY OF JUDIC IAL SYSTEM A VIEW TAKEN BY A HIGH COURT IS TO BE PREFERRED OVER THE VIEW TAKEN BY THE SPECIAL BENCH IF THERE IS NO CONTRARY VIEW OF ANY HIGH COURT ON THE SAID ISSUE. CONSISTENT WITH THE VIEW TAKEN BY THE ITAT MUMBAI BENCH AS WEL L AS DELHI BENCH (SUPRA) WHEREIN THE DECISION OF THE HON'BLE GUJARAT HIGH COURT WAS FOLLOWED, WE ARE OF THE VIEW THAT THE ASSESSEE IS E NTITLED TO CARRY FORWARD THE UNABSORBED DEPRECIATION AND SET OFF CAN BE CLAIMED IN A.Y. 2009-10. WE HOLD ACCORDINGLY. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH MARCH, 2015. SD/- SD/- ( D. KARUNAKARA RAO ) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATED: 11 TH MARCH, 2015 ITA NO. 5231/MUM/2012 M/S. DIVYARATH DEVELOPERS P. LTD. 4 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 9, MUMBAI 4. THE CIT 5, MUMBAI CITY 5. THE DR, D BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.