ITO 8(3)(3), MUMBAI V. TOLARAM INTERNATIONAL P.LTD, MUMBAI

ITA 5342/MUM/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0763 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2015
• Appeal Filed By: Department
• Bench Allotted: E
• Next Hearing Date: 04-06-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 01-08-2013
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Keywords: Depreciation; Unabsorbed depreciation
• Section: 143(3); 10; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E , BENCH MUMBAI . . , , BEFORE SHRI R.C.SHARMA , A M & MS. SUSHMA CHOWLA , J M ./ I TA NO. 5342 / MUM/20 1 3 ( / ASSESSMENT YEAR S : 20 10 - 1 1 ) ITO 8(3)(3), MUMBAI VS. M/S TOLARAM INTERNATIONAL PVT. LTD., B - 404, SAGARTECH PLAZA, SAKINAKA JUNCTION, ANDHERI KURLA ROAD, MUMBAI - 400072 ./ ./ PAN/GIR NO. : A AACT 64 43 K ( / APPELLANT ) .. ( / RESPONDENT ) /REVENUE BY : SHRI NEIL PHILIP /ASSESSEE BY : SHRI JITENDRA JAIN / DATE OF HEARING : 0 4 /0 6 / 2015 / DATE OF PRONOUNCEME NT 04 /06 /2015 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER CIT (A), FOR THE ASSESSMENT YEAR 20 10 - 11 , IN THE MATTER OF ORDER PASSED U/S.1 43 (3) OF THE INCOME TAX ACT, WHEREIN THE REVENUE IS AGGRIEV ED BY THE ACTION OF CIT(A) IN ALLOWING SET OFF OF THE UNABSORBED DEPRECIATION PERTAINING TO THE ASSESSMENT YEARS PRIOR TO ASSESSMENT YEAR 1996 - 97 AGAINST THE INCOME FOR A.Y.2010 - 11 UNDER CONSIDERATION. 2. AT THE OUTSET, LD. AR PLACED ON RECORD ORDER OF THE TRIBUNAL AS WELL AS ORDER OF GUJARAT HIGH COURT WHEREIN EXACTLY SIMILAR ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE. THE PRECISE OBSERVATION OF THE TRIBUNAL IN THE ITA NO. 5342 /1 3 2 CASE OF MILTONS PVT. LTD., ITA NO.3019/MUM/2012, ORDER DATED 22 - 5 - 2012 IS AS UNDER : - 3. VIDE GROUND NO.2 THE ASSESSEE CONTENDS THAT CONSEQUENT TO THE AMENDMENT BY THE FINANCE ACT, 2001, THE ASSESSEE IS ENTITLED TO CLAIM SET OFF OF UNABSORBED DEPRECIATION RELATING TO A.YS.1995 - 96, 1998 - 99, 2000 - 01 & 2001 - 02. IN THE EVENT OF NOT ACCEPTING THE A FOREMENTIONED CLAIM THE ASSESSEE COMPANY CONTENDS THAT BROUGHT FORWARD BUSINESS LOSSES OF EARLIER YEARS OUGHT TO HAVE BEEN SET OFF OF AGAINST THE SALE OF BUSINESS ASSET. 4. SIMILARLY IN GROUND NO.4 IT CONTENDS THAT LEARNED COMMISSIONER OF INCOME TAX ERRE D IN NOT ALLOWING SET OFF OF UNABSORBED DEPRECIATION AGAINST CAPITAL GAIN OF A.Y. 2007 - 08 BY OVERLOOKING THE FACT THAT THE ASSESSEE BECAME A SICK INDUSTRIAL COMPANY FROM A.Y. 2000 - 01 AND HENCE ENTITLED TO SET OFF OF UNABSORBED DEPRECIATION AGAINST CAPITAL GAIN OF A.Y. 2007 - 08. 5. AT THE TIME OF HEARING LEARNED COUNSEL SUBMITTED THAT IF GROUND NO. 2 IS TAKEN UP FOR CONSIDERATION THE MAIN ISSUE ON MERIT CAN BE CONSIDERED AND, IN THE EVENT OF TAKING A VIEW IN FAVOUR OF THE ASSESSEE ON THE SAID ISSUE, GROUND NO. 3&4 WOULD BECOME ACADEMIC AND EVEN GROUND NO. 1 WOULD BECOME ACADEMIC AND IF THE BENCH IS NOT INCLINED TO ACCEPT GROUND NO. 1 AS ACADEMIC IN NATURE IT CAN EVEN DISMISS AS NOT PRESSED IN THE EVENT OF ACCEPTING THE PLEA OF THE ASSESSEE WITH REGARD TO GRO UND NO. 2. ADVERTING OUR ATTENTION TO THE DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF GENERAL MOTORS INDIA PVT. LTD. VS. DCIT (SPECIAL CIVIL APPLICATION NO. 1773 OF 2012 DATED 23.8.2012); IT WAS CONTENDED THAT FROM A.Y. 1997 - 98 TO 2001 - 02 THERE W AS RESTRICTION WITH REGARD TO CARRY FORWARD OF UNABSORBED DEPRECIATION BUT THE LEGISLATURE, IN ITS WISDOM, WITHDREW SUCH RESTRICTION BY THE FINANCE ACT, 2001 WHEREIN THE PROVISIONS AS STOOD BEFORE 1997 - 98 WAS RESTORED IN WHICH EVENT, THE ASSESSEE WOULD BE ENTITLED TO CLAIM SET OFF OF UNABSORBED DEPRECIATION ALLOWANCE PERTAINING TO A.Y. 1995 - 96 ONWARDS AGAINST INCOME, IF ANY, OF THE CURRENT YEAR. HE FURTHER SUBMITTED THAT THE ITAT SPECIAL BENCH, MUMBAI IN THE CASE OF DCIT VS. TIMES GURANTY LTD. (2010) 131 TT J 257 (MUM)(SB) WAS OF THE OPINION THAT DEPRECIATION PERTAINING TO A.Y. 1997 - 98 TO 2001 - 02 CANNOT BE CARRIED FORWARD BEYOND 8 YEARS AS THE LAW STOOD AT THAT POINT OF TIME BUT SUBSEQUENT TO THE AFOREMENTIONED JUDGEMENT HON'BLE GUJARAT HIGH COURT HAD TAKEN A VIEW THAT INTENTION OF THE LEGISLATURE WAS TO ALLOW UNABSORBED DEPRECIATION ALLOWANCE FOR AN INDEFINITE PERIOD OF TIME SINCE IT WAS FOR ENABLING THE INDUSTRY TO CONSERVE SUFFICIENT FUNDS TO REPLACE PLANT AND MACHINERY AND, BEARING IN MIND THE INTENTION OF INCENTIVE, RESTRICTION OF 8 YEARS WAS DISPENSED WITH BY AN AMENDMENT. SUBSEQUENT TO THE DECISION OF HON'BLE GUJARAT HIGH COURT, ITAT 'K' BENCH, MUMBAI IN THE CASE OF HINDUSTAN UNILEVER LTD. (22 ITR 737) FOLLOWED THE DECISION OF HON'BLE GUJARAT HIGH COURT IN PREFERENCE TO THE DECISION OF THE SPECIAL BENCH; SINCE ITA NO. 5342 /1 3 3 THERE IS NO CONTRARY DECISION OF ANY OTHER HIGH COURT. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER IN PROCEEDINGS U/S. 143(3) OF THE ACT HAD ORIGINALLY ACCEPTED THE CLAIM O F SET OFF OF CARRIED FORWARD UNABSORBED DEPRECIATION WHICH IS IN CONSONANCE WITH THE VIEW TAKEN BY HON'BLE GUJARAT HIGH COURT AND, HENCE VIEW TAKEN BY THE ASSESSING OFFICER CANNOT BE SAID TO BE ERRONEOUS. AT ANY RATE, IN THE, LIGHT OF LATER DECISION OF THE ITAT, MUMBAI BENCH, GROUND NO. 2 DESERVES TO BE DECIDED IN FAVOUR OF THE ASSESSEE ON MERIT. 3. AS THE FACTS AND CIRCUMSTANCES DURING THE YEAR UNDER CONSIDERATION ARE SAME, RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL AS WELL AS ORDER OF THE HONBLE GUJARAT HIGH COURT DISCUSSED IN THE SAID ORDER, WE CONFIRM THE ACTION OF THE CIT(A) FOR ALLOWING SET OFF OF UNABSORBED DEPRECIATION PERTAINING TO ASSESSMENT YEARS PRIOR TO A.Y.1996 - 97 AGAINST THE INCOME FOR CURRENT ASSESSMENT YEAR 2010 - 2011. 4 . IN THE RESU LT, APPEAL OF THE REVENUE IS DISMISSED. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 04 /06 / 201 5 . SD/ - SD/ - ( ) ( SUSHMA CHOWLA ) ( . . ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 04 /06 /201 5 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY/