ASST CIT CIR 6(1), MUMBAI V. BHARAT BARREL & DRUM MFG. CO.LTD, MUMBAI

ITA 5527/MUM/2013

• Counselvise Citation: 552719914 RSA 2013
• Duration Of Justice: 1 year(s) 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 18-06-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 22-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: HARI S RAHEJA
• Keywords: Depreciation; Unabsorbed depreciation
• Section: 143(3); 154

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO.5527/MUM/2013 ASSESSMENT YEAR: 2008-09 ASST. COMMISSIONER OF INCOME TAX,CIR.6(1), RO. NO.506, 5 TH FLOOR, AYAKAR BHAWAN, M.K. ROAD, MUMBAI-400020 / VS. BHARAT BARREL & DRUM MFG. CO. LTD. 1 ST FLOOR, APSARA CINEMA LAMMINGTON ROAD, MUMBAI-400007 ( / REVENUE) ( !' # /ASSESSEE) P.A. NO.AAA CB2227M / REVENUE BY DR. YOGESH KAMAT-DR !' # / ASSESSEE BY SHRI HARI S. RAHEJA $ % & # ' / DATE OF HEARING : 18/06/2015 & # ' / DATE OF ORDER: 30/06/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DAT ED 28/05/2013 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI, ON THE GROUND THE LD. COMMISSIONER OF INCOME TAX BHARAT BARREL & DRUM MFG. CO. LTD ITA NO.5527/MUM/2013 2 (APPEALS) WAS JUSTIFIED IN ALLOWING SETTING OFF OF UNABSORBED DEPRECIATION FOR ASSESSMENT YEAR 2000-01 AND 2001-0 2 IN ASSESSMENT YEAR 2008-09 AGAINST INCOME FROM CAPITA L GAINS BY HOLDING THAT AFTER AMENDMENT IN SECTION 3 2(2) OF THE ACT FROM AY 2002-03 ONWARDS, RESTRICTION FROM S ETTING OFF UNABSORBED DEPRECIATION WITHIN A PERIOD OF EIGH T YEARS HAVE BEEN DONE AWAY BY THE LEGISLATURE WITHOUT FOLL OWING THE SPECIAL BENCH DECISION IN THE CASE OF TIMES GUA RANTEE LTD. (ITA NO.4917 & 4918/MUM/2008) AND THUS FAILED TO CONFIRM THE ORDER U/S 154 DATED 17/01/2012 AND FURT HER FOLLOWING THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF GENERAL MOTORS INDIA PVT. LTD. (257 CTR 123) (GUJ.). 2. DURING HEARING OF THIS APPEAL, THE LD. DR, DR. YOGESH KAMAT, DEFENDED THE CONCLUSION ARRIVED AT IN THE ASSESSMENT ORDER BY ADVANCING ARGUMENTS WHICH ARE IDENTICAL TO THE GROUND RAISED. ON THE OTHER HAND, SHRI HARI S.RAHEJA, LD. COUNSEL FOR THE ASSESSEE, DEFEND ED THE CONCLUSION ARRIVED AT IN THE IMPUGNED ORDER. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSI NESS OF MANUFACTURING OF DRUMS, METAL CONTAINERS AND FABRIC ATIONS OF JOB WORK. THE ASSESSEE DISCLOSED TOTAL INCOME O F RS.15,79,18,230/- IN ITS RETURN FILED ON 31 ST OCTOBER, 2009. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE INCO ME TAX ACT, 1961 (HEREINAFTER THE ACT), DETERMINING TH E TOTAL BHARAT BARREL & DRUM MFG. CO. LTD ITA NO.5527/MUM/2013 3 INCOME AT RS.22,12,98,750/-, ON 29/03/2010, DISALLO WING THE CLAIM OF UNABSORBED DEPRECIATION AMOUNTING TO RS.6,33,80,521/- FROM AY 2000-01 TO 2006-07 BY HOLD ING THAT THE ENTIRE AMOUNT OF BROUGHT FORWARD DEPRECIAT ION WAS ADJUSTED AGAINST THE ASSESSED INCOME FOR AY 2006-07 . SUBSEQUENTLY, THE APPEAL FOR AY 2006-07 WAS ALLOWED BY THE LD. FIRST APPELLATE AUTHORITY. THE LD. ASSESSI NG OFFICER WHILE GIVING EFFECT TO THE ORDER OF THE LD. COMMISS IONER OF INCOME TAX (APPEALS) (FOR AY 2006-07) DETERMINED TH E INCOME AT RS.(-)5,70,93,077/-. IN THAT ORDER, THE BROUGHT FORWARD DEPRECIATION OF RS.4,74,00,660/- (AYS 2000- 01 TO 2005-06) ALONG WITH DEPRECIATION OF RS.1,59,79,861/ - (FOR AY 2006-07) WAS ALLOWED TO BE CARRY FORWARD. THE AS SESSEE THEREAFTER FILED RECTIFICATION APPLICATION CLAIMING SET OFF OF BROUGHT FORWARD UNABSORBED DEPRECIATION FROM AY 200 0-01 TO AY 2006-07 AGAINST THE ASSESSED INCOME OF THE IMPUGNED ASSESSMENT YEAR. THE ASSESSING OFFICER PA SSED ORDER U/S 154/143 OF THE ACT SETTING OFF UNABSORBED DEPRECIATION AMOUNTING TO RS.4,81,17,284/- FOR ONLY FOUR YEARS I.E. 2002-03, 2003-04, 2005-06 AND 2006-07. THE ASSESSING OFFICER DID NOT SET OFF UNABSORBED DEPREC ATION FOR AYS 2000-01 AND 2001-02 AMOUNTING TO RS.78,28,558/- AND RS.74,34,679/- AGAINST CAPITAL GAIN INCOME CO MPUTED FOR AY 2008-09 AS UNABSORBED DEPRECIATION UP TO AY 2002- 03 CAN ONLY BE SET OFF AGAINST THE INCOME ARISING U NDER THE HEAD PROFIT & GAINS OF BUSINESS OR PROFESSION ONL Y AND NOT FOR THE INCOME EARNED UNDER THE HEAD CAPITAL GAINS BY FOLLOWING THE DECISION OF THE SPECIAL BENCH IN DCIT VS BHARAT BARREL & DRUM MFG. CO. LTD ITA NO.5527/MUM/2013 4 TIMES GUARANTEE LTD. (ITA NOS. 4917 & 4918/MUM/2008 ). THE AGGRIEVED ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS), WHERE IN, IT WAS HELD THAT THE WHOLE OF THE UNABSORBED CARRIED F ORWARD DEPRECIATION AMOUNTING TO RS.6,33,80,521/- (WHICH INCLUDES THE DEPRECIATION OF RS.78,28,558/- AND RS.74,34,679/- FOR AY 2000-01 AND 2001-02 RESPECTIV ELY) SHALL BE ALLOWED TO BE CARRIED FORWARD TO SUCCEEDIN G YEARS FROM 2006-07 TILL THE CURRENT YEAR. THE REVENUE IS AGGRIEVED AND IS IN APPEAL BEFORE THIS TRIBUNAL. 2.2. IF THE OBSERVATION MADE IN THE ASSESSMENT ORD ER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCL USION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSEL, IF K EPT IN JUXTAPOSITION AND ANALYZED, WE FIND THAT UNDER THE FACTS ELABORATELY DISCUSSED HEREINABOVE, BROADLY, WE ARE IN AGREEMENT WITH THE CONCLUSION DRAWN IN THE IMPUGNED ORDER BECAUSE AS PER SECTION 71(2) OF THE ACT WHER EIN RESPECT OF ANY ASSESSMENT YEAR, THE NET RESULT OF T HE COMPUTATION UNDER ANY HEAD OF INCOME, OTHER THAN CAPITAL GAIN IS A LOSS AND THE ASSESSEE HAS INCOME ASSESSAB LE INCOME UNDER THE HEAD CAPITAL GAIN, SUCH LOSS , MAY , SUBJECT TO THE PROVISIONS OF THIS CHAPTER, BE SET O FF AGAINST HIS INCOME, IF ANY, ASSESSABLE FOR THAT ASSESSMENT YEAR UNDER ANY HEAD OF INCOME INCLUDING THE HEAD CAPITA L GAINS, THUS, THE ASSESSEE IS ALLOWED TO SET OFF AL L OF THE UNABSORBED DEPRECIATION OF RS.6,33,80,521/- AGAINST THE INCOME UNDER ANY HEAD OF INCOME INCLUDING CAPITAL G AINS BHARAT BARREL & DRUM MFG. CO. LTD ITA NO.5527/MUM/2013 5 AS HAS BEEN PROVIDED IN SUB-SECTION (2) OF SECTION 71 OF THE ACT. THUS, WE ARE IN AGREEMENT WITH THE CONCLUSION DRAWN BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IN HOLDING THAT THE ASSESSEE SHALL BE ALLOWED TO BE SET OFF UN ABSORBED DEPRECIATION OF RS.6,33,80,521/-, AGAINST ITS INCOM E UNDER ANY HEAD OF INCOME INCLUDING CAPITAL GAINS. THE AP PEAL OF THE REVENUE, IS THEREFORE, HAVING NO MERIT, CONSEQU ENTLY, DISMISSED. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 30/06/2015. SD/ - (RAJENDRA) SD/ - (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER $ % MUMBAI; ( DATED : 30/06/2015 F{X~{T? P.S/. . . %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. *+,- / THE APPELLANT 2. ./,- / THE RESPONDENT. 3. 0 0 $ 1# ( *+ ) / THE CIT, MUMBAI. P4. 0 0 $ 1# / CIT(A)- , MUMBAI 5. 34 . # , 0 *+' * 5 , $ % / DR, ITAT, MUMBAI 6. 6! 7% / GUARD FILE. / BY ORDER, /3+# .# //TRUE COPY// / (DY./ASSTT. REGISTRAR) , $ % / ITAT, MUMBAI