ASST CIT CIR 6(1), MUMBAI V. ANIL PRINERS LTD, MUMBAI

ITA 5859/MUM/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3631 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 14-03-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 03-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M MURLIDR
• Keywords: Depreciation; Period of limitation; Scheme of amalgamation; Unabsorbed depreciation; Capital expenditure
• Section: 142(1); 32

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO.5859/MUM/2013 ASSESSMENT YEAR-2009-10 ACIT, CIRCLE-6(1), R. NO.506, 5 TH FLOOR, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 / VS. ANIL PRINTERS LTD. 2, KAKAD INDUSTRIAL ESTATE, MATUNGA WEST, MUMBAI-400016 PA N NO. AACCA6914C ( / APPELLANT) ( / RESPONDENT) / REVENUE BY SHRI M.MURLI-DR !' / ASSESSEE BY SHRI MAYUR KISNADWALA # $ % '& / DATE OF HEARING : 14/03/2016 % '& / DATE OF ORDER: 14/03/2016 ITA NO.5859/MUM/2013 ANIL PRINTERS LTD. 2 / O R D E R THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATED 23/07/2013 OF THE LD. FIRST APPELLATE AUTHORI TY, MUMBAI, ON THE GROUND WHETHER THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DIRECTING THE ASSESSI NG OFFICER TO ALLOW CARRY FORWARD AND SET OFF OF DEPRE CIATION RELATING TO A.Y. 2009-10 WITHOUT APPRECIATING THAT THE ASSESSEE FILED THE RETURN AFTER EXPIRY OF TIME PRES CRIBED U/S 139(1), HENCE NOT ELIGIBLE TO CARRY FORWARD AND SET OFF OF SUCH UNABSORBED DEPRECIATION AS PER SECTION 139(3) AND SECTION 80 OF THE ACT. 2. DURING HEARING, THE LD. DR, SHRI M. MURLI, ADVANCED ARGUMENTS, WHICH ARE IDENTICAL TO THE GROU ND RAISED. ON THE OTHER HAND, SHRI MAYUR KISHNADWALA, LD. COUNSEL FOR THE ASSESSEE, DEFENDED THE CONCLUSION A RRIVED AT IN THE IMPUGNED ORDER BY CONTENDING THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY PLACING RELIAN CE UPON THE DECISION IN CIT VS SHRI SUBHU LAXMI MILLS LTD. 249 ITR 795(SC), CIT VS GOVIND NAGAR SUGAR LTD. 334 ITR 13 (DEL.), CIT VS HARYANA HOTELS LTD. 276 ITR 521 (P & H). THI S CLAIM OF THE ASSESSEE WAS NOT CONTROVERTED BY THE LD. DR AND HE RELIED UPON THE ASSESSMENT 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 BUSINESS OF MANUFACTURING OF COMPUTERS STATIONARY, ATM CARDS, I TC ITA NO.5859/MUM/2013 ANIL PRINTERS LTD. 3 CARDS, PIN MAILERS, SCRATCH CARDS, SMART CARDS, RFI D TAGS AND LABELS, ETC, DECLARED LOSS OF RS.4,45,13,818/- IN ITS RETURN FILED ON 01/10/2009. HOWEVER, THE ASSESSEE P AID THE TAX ON BOOK PROFIT U/S 114JB AMOUNTING TO RS.5,72,44,278/-. THE RETURN WAS PROCESSED U/S 143 (1) OF THE ACT. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY UNDER CASS, THEREFORE, NOTICE U/S 143(2) AND 142(1) WERE SERVED UPON THE ASSESSEE. THE ASSESSEE COMPLIED WIT H THE NOTICES AND DULY ATTENDED THE ASSESSMENT PROCEEDING S. THE ASSESSEE FILED THE RETURN ON 01/10/2009 I.E. AFTER THE DUE DATE OF FILING OF RETURN OF INCOME. THE ASSESSEE S OUGHT CARRIED FORWARD OF ENTIRE LOSS, WHICH WAS ON ACCOUN T OF UNABSORBED DEPRECIATION U/S 32(2) OF THE ACT. SUCH CLAIM OF THE ASSESSEE OF CARRY FORWARD OF SUCH UNABSORBED DEPRECIATION WAS DENIED BY THE ASSESSING OFFICER ON THE PLEA THAT SECTIONS 80 OF THE ACT RESTRICT THE SAME. ON APPEAL, BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS), THE ISSUE WAS DECIDED IN FAVOUR OF THE A SSESSEE AGAINST WHICH. THE REVENUE IS AGGRIEVED AND IS IN A PPEAL 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, UNDER THE FACTS DISCUSS ED HEREINABOVE, FIRST OF ALL, WE ARE REPRODUCING HEREU NDER THE ITA NO.5859/MUM/2013 ANIL PRINTERS LTD. 4 RELEVANT PROVISION OF SECTION 32OF THE ACT FOR READ Y REFERENCE AND ANALYSIS:- 32. (1) IN RESPECT OF DEPRECIATION OF ( I ) BUILDINGS, MACHINERY, PLANT OR FURNITURE, BEING TANGIBLE ASSETS; ( II ) KNOW-HOW, PATENTS, COPYRIGHTS, TRADE MARKS, LICEN CES, FRANCHISES OR ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE, BEING INTANGIBLE ASSETS ACQUIRED ON OR AFTER THE 1ST DAY OF APRIL, 1998, OWNED, WHOLLY OR PARTLY, BY THE ASSESSEE AND USED F OR THE PURPOSES OF THE BUSINESS OR PROFESSION, THE FOLLOWING DEDUCTION S SHALL BE ALLOWED ( I ) IN THE CASE OF ASSETS OF AN UNDERTAKING ENGAGED IN GENERATION OR GENERATION AND DISTRIBUTION OF POWER, SUCH PERCENTA GE ON THE ACTUAL COST THEREOF TO THE ASSESSEE AS MAY BE PRESCRIBED 10 ; ( II ) IN THE CASE OF ANY BLOCK OF ASSETS, SUCH PERCENT AGE ON THE WRITTEN DOWN VALUE THEREOF AS MAY BE PRESCRIBED 11 : PROVIDED THAT NO DEDUCTION SHALL BE ALLOWED UNDER THIS CLAU SE IN RESPECT OF ( A ) ANY MOTOR CAR MANUFACTURED OUTSIDE INDIA, WHERE SUCH MOTOR CAR IS ACQUIRED BY THE ASSESSEE AFTER THE 28TH DAY OF FEBR UARY, 1975 BUT BEFORE THE 1ST DAY OF APRIL, 2001, UNLESS IT IS USED ( I ) IN A BUSINESS OF RUNNING IT ON HIRE FOR TOURISTS ; OR ( II ) OUTSIDE INDIA IN HIS BUSINESS OR PROFESSION IN A NOTHER COUNTRY ; AND ( B ) ANY MACHINERY OR PLANT IF THE ACTUAL COST THEREO F IS ALLOWED AS A DEDUCTION IN ONE OR MORE YEARS UNDER AN AGREEMENT E NTERED INTO BY THE CENTRAL GOVERNMENT UNDER SECTION 42 : PROVIDED FURTHER THAT WHERE AN ASSET REFERRED TO IN CLAUSE ( I ) OR CLAUSE ( II ) OR CLAUSE ( IIA ) 12 [ OR THE FIRST PROVISO TO CLAUSE ( IIA ) ] , AS THE CASE MAY BE, IS ACQUIRED BY THE ASSESSEE DURING THE PREVIOUS YEAR AND IS PUT TO USE FOR THE PURPOSES OF BUSINESS OR PROFESSION FOR A PERIOD OF LESS THAN ONE HUNDRED AND EIGHTY DAYS IN THAT PREVIOUS YEAR, THE DEDUCTION UNDER THIS SUB-SECTION IN RESPECT OF SUCH ASSET SHALL BE RESTRICTED TO FIFTY PER CENT OF THE AMOUNT CALCULATED AT THE PERCENTAGE PRE SCRIBED FOR AN ASSET UNDER CLAUSE ( I ) OR CLAUSE ( II ) OR CLAUSE ( IIA ), AS THE CASE MAY BE : FOLLOWING THIRD PROVISO SHALL BE INSERTED AFTER THE SECOND PROVISO TO CLAUSE ( II ) OF SUB-SECTION (1) OF SECTION 32 BY THE FINANCE A CT, 2015, W.E.F. 1-4-2016 : PROVIDED ALSO THAT WHERE AN ASSET REFERRED TO IN CLAUSE ( IIA ) OR THE FIRST PROVISO TO CLAUSE ( IIA ) , AS THE CASE MAY BE, IS ACQUIRED BY THE ASSESSEE DURING THE PREVIOUS YEAR AND IS PUT TO USE FOR THE PURPOSES OF BUSINESS FOR A PERIOD OF LESS THAN ONE HUNDRED AND EIGHTY DAYS IN THAT ITA NO.5859/MUM/2013 ANIL PRINTERS LTD. 5 PREVIOUS YEAR, AND THE DEDUCTION UNDER THIS SUB-SEC TION IN RESPECT OF SUCH ASSET IS RESTRICTED TO FIFTY PER CENT OF THE A MOUNT CALCULATED AT THE PERCENTAGE PRESCRIBED FOR AN ASSET UNDER CLAUSE ( IIA ) FOR THAT PREVIOUS YEAR, THEN, THE DEDUCTION FOR THE BALANCE FIFTY PER CENT OF THE AMOUNT CALCULATED AT THE PERCENTAGE PRESCRIBED FOR SUCH AS SET UNDER CLAUSE ( IIA ) SHALL BE ALLOWED UNDER THIS SUB-SECTION IN THE IMME DIATELY SUCCEEDING PREVIOUS YEAR IN RESPECT OF SUCH ASSET: PROVIDED ALSO THAT WHERE AN ASSET BEING COMMERCIAL VEHICLE IS ACQUIRED BY THE ASSESSEE ON OR AFTER THE 1ST DAY OF OCTOBER, 1998 BUT BEFORE THE 1ST DAY OF APRIL, 1999 AND IS PUT TO USE BEFORE THE 1ST DAY OF APRIL, 1999 FOR THE PURPOSES OF BUSINESS OR PROFESS ION, THE DEDUCTION IN RESPECT OF SUCH ASSET SHALL BE ALLOWED ON SUCH PERC ENTAGE ON THE WRITTEN DOWN VALUE THEREOF AS MAY BE PRESCRIBED. EXPLANATION. FOR THE PURPOSES OF THIS PROVISO, ( A ) THE EXPRESSION 'COMMERCIAL VEHICLE' MEANS 'HEAVY GOODS VEHICLE', 'HEAVY PASSENGER MOTOR VEHICLE', 'LIGHT M OTOR VEHICLE', 'MEDIUM GOODS VEHICLE' AND 'MEDIUM PASSENGER MOTOR VEHICLE' BUT DOES NOT INCLUDE 'MAXI-CAB', 'MOTOR-CAB', 'TRAC TOR' AND 'ROAD- ROLLER'; ( B ) THE EXPRESSIONS 'HEAVY GOODS VEHICLE', 'HEAVY PA SSENGER MOTOR VEHICLE', 'LIGHT MOTOR VEHICLE', 'MEDIUM GOODS VEHI CLE', 'MEDIUM PASSENGER MOTOR VEHICLE', 'MAXI-CAB', 'MOTOR-CAB', 'TRACTOR' AND 'ROAD ROLLER' SHALL HAVE THE MEANINGS RESPECTIVELY AS ASSIGNED TO THEM IN SECTION 2 OF THE MOTOR VEHICLES ACT, 1988 ( 59 OF 1988): PROVIDED ALSO THAT, IN RESPECT OF THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR COMMENCING ON THE 1ST DAY OF APRIL, 1991, THE DEDUCTION IN RELATION TO ANY BLOCK OF ASSETS UNDER THIS CLAUSE SHALL, IN THE CASE OF A COMPANY, BE RESTRICTED TO SEVENTY-FIV E PER CENT OF THE AMOUNT CALCULATED AT THE PERCENTAGE, ON THE WRITTEN DOWN VALUE OF SUCH ASSETS, PRESCRIBED UNDER THIS ACT IMMEDIATELY BEFOR E THE COMMENCEMENT OF THE TAXATION LAWS (AMENDMENT) ACT, 1991: PROVIDED ALSO THAT THE AGGREGATE DEDUCTION, IN RESPECT OF DEPRECI ATION OF BUILDINGS, MACHINERY, PLANT OR FURNITURE, BEING TANGIBLE ASSETS OR KNOW-HOW, PATENTS, COPYRIGHTS, TRADEMARKS, LICENCES , FRANCHISES OR ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATU RE, BEING INTANGIBLE ASSETS ALLOWABLE TO THE PREDECESSOR AND THE SUCCESS OR IN THE CASE OF SUCCESSION REFERRED TO IN CLAUSE ( XIII ), CLAUSE ( XIIIB ) AND CLAUSE ( XIV ) OF SECTION 47 OR SECTION 170 OR TO THE AMALGAMATING COMPANY AND THE AMALGAMATED COMPANY IN THE CASE OF AMALGAMATION, OR TO THE DEMERGED COMPANY AND THE RESULTING COMPANY IN THE C ASE OF DEMERGER, AS THE CASE MAY BE, SHALL NOT EXCEED IN ANY PREVIOU S YEAR THE DEDUCTION CALCULATED AT THE PRESCRIBED RATES AS IF THE SUCCES SION OR THE AMALGAMATION OR THE DEMERGER, AS THE CASE MAY BE, H AD NOT TAKEN ITA NO.5859/MUM/2013 ANIL PRINTERS LTD. 6 PLACE, AND SUCH DEDUCTION SHALL BE APPORTIONED BETW EEN THE PREDECESSOR AND THE SUCCESSOR, OR THE AMALGAMATING COMPANY AND THE AMALGAMATED COMPANY, OR THE DEMERGED COMPANY AND TH E RESULTING COMPANY, AS THE CASE MAY BE, IN THE RATIO OF THE NU MBER OF DAYS FOR WHICH THE ASSETS WERE USED BY THEM. EXPLANATION 1. WHERE THE BUSINESS OR PROFESSION OF THE ASSESSEE I S CARRIED ON IN A BUILDING NOT OWNED BY HIM BUT IN RE SPECT OF WHICH THE ASSESSEE HOLDS A LEASE OR OTHER RIGHT OF OCCUPANCY AND ANY CAPITAL EXPENDITURE IS INCURRED BY THE ASSESSEE FOR THE PUR POSES OF THE BUSINESS OR PROFESSION ON THE CONSTRUCTION OF ANY STRUCTURE OR DOING OF ANY WORK IN OR IN RELATION TO, AND BY WAY OF RENOVATION OR E XTENSION OF, OR IMPROVEMENT TO, THE BUILDING, THEN, THE PROVISIONS OF THIS CLAUSE SHALL APPLY AS IF THE SAID STRUCTURE OR WORK IS A BUILDIN G OWNED BY THE ASSESSEE. EXPLANATION 2. FOR THE PURPOSES OF THIS SUB-SECTION 'WRITTEN DOWN VALUE OF THE BLOCK OF ASSETS' SHALL HAVE THE SAME M EANING AS IN CLAUSE* ( C ) OF SUB-SECTION ( 6 ) OF SECTION 43. EXPLANATION 3. FOR THE PURPOSES OF THIS SUB-SECTION, THE EXPRESSIO N 'ASSETS' SHALL MEAN ( A ) TANGIBLE ASSETS, BEING BUILDINGS, MACHINERY, PLA NT OR FURNITURE; ( B ) INTANGIBLE ASSETS, BEING KNOW-HOW, PATENTS, COPY RIGHTS, TRADE MARKS, LICENCES, FRANCHISES OR ANY OTHER BUSINESS O R COMMERCIAL RIGHTS OF SIMILAR NATURE. EXPLANATION 4. FOR THE PURPOSES OF THIS SUB-SECTION, THE EXPRESSIO N 'KNOW-HOW' MEANS ANY INDUSTRIAL INFORMATION OR TECH NIQUE LIKELY TO ASSIST IN THE MANUFACTURE OR PROCESSING OF GOODS OR IN THE WORKING OF A MINE, OIL-WELL OR OTHER SOURCES OF MINERAL DEPOSITS (INCLUDING SEARCHING FOR DISCOVERY OR TESTING OF DEPOSITS FOR THE WINNING OF ACCESS THERETO). EXPLANATION 5. FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED TH AT THE PROVISIONS OF THIS SUB-SECTION SHALL APPLY WHET HER OR NOT THE ASSESSEE HAS CLAIMED THE DEDUCTION IN RESPECT OF DE PRECIATION IN COMPUTING HIS TOTAL INCOME; ( IIA ) IN THE CASE OF ANY NEW MACHINERY OR PLANT (OTHER THAN SHIPS AND AIRCRAFT), WHICH HAS BEEN ACQUIRED AND INSTALLED AF TER THE 31ST DAY OF MARCH, 2005, BY AN ASSESSEE ENGAGED IN THE BUSIN ESS OF MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING O R IN THE BUSINESS OF GENERATION OR GENERATION AND DISTRIBUTION OF POW ER, A FURTHER SUM EQUAL TO TWENTY PER CENT OF THE ACTUAL COST OF SUCH MACHINERY OR PLANT SHALL BE ALLOWED AS DEDUCTION UNDER CLAUSE ( II ) : ITA NO.5859/MUM/2013 ANIL PRINTERS LTD. 7 FOLLOWING PROVISO SHALL BE INSERTED BEFORE THE EXIS TING PROVISO TO CLAUSE ( IIA ) OF SUB-SECTION (1) OF SECTION 32 BY THE FINANCE A CT, 2015, W.E.F. 1-4-2016 : PROVIDED THAT WHERE AN ASSESSEE, SETS UP AN UNDERTAKING OR E NTERPRISE FOR MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THI NG, ON OR AFTER THE 1ST DAY OF APRIL, 2015 IN ANY BACKWARD AREA NOTIFIE D BY THE CENTRAL GOVERNMENT IN THIS BEHALF, IN THE STATE OF ANDHRA P RADESH OR IN THE STATE OF BIHAR OR IN THE STATE OF TELANGANA OR IN T HE STATE OF WEST BENGAL, AND ACQUIRES AND INSTALLS ANY NEW MACHINERY OR PLANT (OTHER THAN SHIPS AND AIRCRAFT) FOR THE PURPOSES OF THE SA ID UNDERTAKING OR ENTERPRISE DURING THE PERIOD BEGINNING ON THE 1ST D AY OF APRIL, 2015 AND ENDING BEFORE THE 1ST DAY OF APRIL, 2020 IN THE SAID BACKWARD AREA, THEN, THE PROVISIONS OF CLAUSE ( IIA ) SHALL HAVE EFFECT, AS IF FOR THE WORDS 'TWENTY PER CENT', THE WORDS 'THIRTY-FIVE PER CENT' HAD BEEN SUBSTITUTED : PROVIDED 13 [ FURTHER ] THAT NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF ( A ) ANY MACHINERY OR PLANT WHICH, BEFORE ITS INSTALL ATION BY THE ASSESSEE, WAS USED EITHER WITHIN OR OUTSIDE INDIA B Y ANY OTHER PERSON; OR ( B ) ANY MACHINERY OR PLANT INSTALLED IN ANY OFFICE P REMISES OR ANY RESIDENTIAL ACCOMMODATION, INCLUDING ACCOMMODATION IN THE NATURE OF A GUEST-HOUSE; OR ( C ) ANY OFFICE APPLIANCES OR ROAD TRANSPORT VEHICLES ; OR ( D ) ANY MACHINERY OR PLANT, THE WHOLE OF THE ACTUAL COST OF WHICH IS ALLOWED AS A DEDUCTION (WHETHER BY WAY OF DEPRECIAT ION OR OTHERWISE) IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION' OF AN Y ONE PREVIOUS YEAR; ( III ) IN THE CASE OF ANY BUILDING, MACHINERY, PLANT OR FURNITURE IN RESPECT OF WHICH DEPRECIATION IS CLAIMED AND ALLOWED UNDER CLA USE ( I ) AND WHICH IS SOLD, DISCARDED, DEMOLISHED OR DESTROYED IN THE PREVIOUS YEAR (OTHER THAN THE PREVIOUS YEAR IN WHICH IT IS FIRST BROUGHT INTO USE), THE AMOUNT BY WHICH THE MONEYS PAYABLE IN RESPECT OF SUCH BUIL DING, MACHINERY, PLANT OR FURNITURE, TOGETHER WITH THE AMOUNT OF SCR AP VALUE, IF ANY, FALL SHORT OF THE WRITTEN DOWN VALUE THEREOF : PROVIDED THAT SUCH DEFICIENCY IS ACTUALLY WRITTEN OFF IN THE BOOKS OF THE ASSESSEE. EXPLANATION. FOR THE PURPOSES OF THIS CLAUSE, ( 1 ) 'MONEYS PAYABLE' IN RESPECT OF ANY BUILDING, MACH INERY, PLANT OR FURNITURE INCLUDES ( A ) ANY INSURANCE, SALVAGE OR COMPENSATION MONEYS PA YABLE IN RESPECT THEREOF; ITA NO.5859/MUM/2013 ANIL PRINTERS LTD. 8 ( B ) WHERE THE BUILDING, MACHINERY, PLANT OR FURNITUR E IS SOLD, THE PRICE FOR WHICH IT IS SOLD, SO, HOWEVER, THAT WHERE THE ACTUAL COST OF A MOTOR CAR IS, IN ACCORDANCE WITH THE PROVISO TO CLAUSE ( 1 ) OF SECTION 43, TAKEN TO BE TWENTY-FIVE THOUSAND RUPEES, THE MONEYS PAYABLE IN RESPECT OF SUCH MOTOR CAR SHALL BE TAKEN TO BE A SUM WHICH BEA RS TO THE AMOUNT FOR WHICH THE MOTOR CAR IS SOLD OR, AS THE C ASE MAY BE, THE AMOUNT OF ANY INSURANCE, SALVAGE OR COMPENSATION MO NEYS PAYABLE IN RESPECT THEREOF (INCLUDING THE AMOUNT OF SCRAP VALUE, IF ANY) THE SAME PROPORTION AS THE AMOUNT OF TWENTY-FI VE THOUSAND RUPEES BEARS TO THE ACTUAL COST OF THE MOTOR CAR TO THE ASSESSEE AS IT WOULD HAVE BEEN COMPUTED BEFORE APPLYING THE SAID P ROVISO; ( 2 ) 'SOLD' INCLUDES A TRANSFER BY WAY OF EXCHANGE OR A COMPULSORY ACQUISITION UNDER ANY LAW FOR THE TIME BEING IN FOR CE BUT DOES NOT INCLUDE A TRANSFER, IN A SCHEME OF AMALGAMATION, OF ANY ASSET BY THE AMALGAMATING COMPANY TO THE AMALGAMATED COMPANY WHERE THE AMALGAMATED COMPANY IS AN INDIAN COMPANY OR IN A SCHEME OF AMALGAMATION OF A BANKING COMPANY, AS REFERRED TO I N CLAUSE ( C ) OF SECTION 5 OF THE BANKING REGULATION ACT, 1949 (10 O F 1949) WITH A BANKING INSTITUTION AS REFERRED TO IN SUB-SECTION ( 15) OF SECTION 45 OF THE SAID ACT, SANCTIONED AND BROUGHT INTO FORCE BY THE CENTRAL GOVERNMENT UNDER SUB-SECTION (7) OF SECTION 45 OF T HAT ACT, OF ANY ASSET BY THE BANKING COMPANY TO THE BANKING INSTITU TION. XXXXXXXXXXXXXX (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 GAINS CHARGEABLE FOR THAT PREVIOUS YEAR, OR OWING TO THE PROFITS OR GAINS CHARGEABLE B EING LESS THAN THE ALLOWANCE, THEN, SUBJECT TO THE PROVISIONS OF SUB-S ECTION (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 TH E CASE MAY BE, SHALL BE ADDED TO THE AMOUNT OF THE ALLOWANCE FOR D EPRECIATION FOR THE FOLLOWING PREVIOUS YEAR AND DEEMED TO BE PART O F THAT ALLOWANCE, OR IF THERE IS NO SUCH ALLOWANCE FOR THAT PREVIOUS YEAR, BE DEEMED TO BE THE ALLOWANCE FOR THAT PREVIOUS YEAR, AND SO ON FOR THE SUCCEEDING PREVIOUS YEARS. 2.3. IF THE AFORESAID SUB-SECTION (2) TO SECTION 3 2 IS ANALYZED SPEAKS ABOUT NOT GIVING FULL EFFECT TO ANY ALLOWANCE UNDER SUB-SECTION (1), IN ANY PREVIOUS YE AR, ITA NO.5859/MUM/2013 ANIL PRINTERS LTD. 9 OWING TO THERE BEING NO PROFITS OR GAINS CHARGEABLE FOR THAT PREVIOUS YEAR, OR OWING TO THE PROFIT OR GAINS CHAR GEABLE BEING LESS THAN THE ALLOWANCE. WHEREAS, SECTION 80 OF THE ACT REQUIRES THAT RETURN BE FILED AS PER SECTION 13 9(3) OF THE ACT TO CARRY FORWARD LOSSES WITHIN DUE DATE, AS ENV ISAGED U/S 139(1) OF THE ACT, HOWEVER, WITHIN THE AMBIT OF SECTION 80 FOR CARRY FORWARD LOSSES, SECTION 32(2) IS NOT I NCLUDED. IN THE PRESENT CASE, THE ASSESSEE HAS CLAIMED SET O F AND CARRY FORWARD OF UNABSORBED DEPRECIATION AGAINST TH E PROFIT & GAINS OF BUSINESS OF THE SUCCEEDING YEAR. THE BU SINESS LOSS DETERMINED IN THE HANDS OF THE ASSESSEE UNDER THE HEAD PROFIT & GAINS OF BUSINESS STANDS OF DIFFERE NT FOOTING THEN UNABSORBED DEPRECIATION DETERMINED IN THE HAND S OF THE ASSESSEE, THUS, THE ASSESSEE HAVING CLAIMED THE SET OF AND CARRY FORWARD OF ALLOWANCE OF DEPRECIATION, UNA DJUSTED AGAINST THE PROFIT OF CURRENT PREVIOUS YEAR CANNOT BE DENIED SUCH SET OF OR CARRY FORWARD OF UNABSORBED DEPRECIA TION ALLOWANCE AS THE PROVISIONS OF SECTION 139(3) OF TH E ACT IS NOT APPLICABLE, MORE SPECIFICALLY, WHEN THE ASSESSE E FILED ITS RETURN OF INCOME, THOUGH BELATEDLY, BUT WITHIN THE EXTENDED PERIOD ALLOWED UNDER THE STATUTE, THUS, THE ASSESSE E IS ENTITLED TO THE BENEFIT OF CARRY FORWARD AND SET OF F OF UNABSORBED DEPRECIATION ALLOWANCE AS PART OF DEPREC IATION. SO FAR AS, THE CONTENTION OF THE REVENUE THAT SECTI ON 80 OF THE ACT RESTRICT THE SAME, IS CONCERNED, IT IS NOTE D THAT SECTION 32 OF THE ACT DEALS WITH DIFFERENT TYPES OF DEPRECIATION, WHEREAS, SECTION 80 DEALS WITH CARRY FORWARD ITA NO.5859/MUM/2013 ANIL PRINTERS LTD. 10 OF UNABSORBED LOSSES OTHER THAN LOSSES ON ACCOUNT O F DEPRECIATION. 2.4. THE HONBLE APEX COURT IN CIT VS SHRI SHUBH LAXMI MILLS LTD. (2001) 249 ITR 795(SC), WHILE DELI BERATING UPON SECTIONS 32, 33, 79 (PRIOR TO AMENDMENT IN 198 8) WITH RESPECT TO CARRY FORWARD OF LOSSES HELD THAT IN ORD ER TO INVOKE SECTION 79 TO DENY CARRY FORWARD AND SET OFF OF LOSSES IN THE CASE OF A COMPANY, IN WHICH PUBLIC IS NOT SUBSTANTIALLY INTERESTED, THE DEPARTMENT HAS TO PRO VE NOT ONLY THAT IS CHANGE IN 50% OF THE VOTING POWER HAS TAKEN PALACE BUT ALSO SUCH CHANGE HAS TAKEN PLACE WITH AN INTENT TO REDUCE OR TO AVOID TAX LIABILITY. IN CIT VS GOVI NG NAGAR SUGAR LTD. (334 ITR 13) (DEL.), HONBLE HIGH COURT WHILE DEALING WITH SECTION 32 R.W.S 80 AND 139 OF THE ACT , ON THE ISSUE WHETHER SECTION 80 AND 139(3) APPLY TO BUSINE SS LOSSES AND NOT UNABSORBED DEPRECIATION, WHICH IS EXCLUSIVELY GOVERN BY PROVISIONS OF SECTION 32(2) A ND THEREFORE, PERIOD OF LIMITATION FOR FILING LOSS RET URN AS PROVIDED U/S 139(1), HELD THAT IT SHALL NOT BE APPL ICABLE FOR CARRY FORWARD OF UNABSORBED DEPRECIATION. WHILE CO MING TO THIS CONCLUSION, THE HONBLE COURT CONSIDERED FOLLO WING JUDICIAL PRONOUNCEMENTS:- A) SRI HARI MILLS LTD. V. FIRST ITO [1967J 65 ITR 348 (MAD) B) SATHAPPA TEXTILES (P.) LTD. V. SECOND ITO [1969] 71 ITR 260 (MAD.) ITA NO.5859/MUM/2013 ANIL PRINTERS LTD. 11 C) BRAHMAVER CHEMICALS ( P.) LTD. V. SECOND ITO [1999] 239 ITR 807 (KAR.) D) CIT V. HARYANA HOTELS LTD. [2005] 276 ITR 521/148 TAXMAN 373 (PUNJ. & HAR.) E) CIT V. VIRMANI INDUSTRIES (P.) LTD. [1995] 216 ITR 607/83 TAXMAN 343 (SC) F) CIT V. J. PATEL & CO. [1984] 149 ITR 682/18 TAXMAN 204 (DELHI), G) CIT V. NAGAPATINAM IMPORT & EXPORT CORPN. [1975]119 ITR 444/[1980)3 TAXMAN 150 (MAD.) H) CIT V. SINGH TRANSPORT CO. [1980)123 ITR 698/4 TAXMAN 86 (GAUHATI) AND I) GARDEN SILK WVG. FACTORY V CIT [1991] 189 ITR 512/5 6 TAXMAN 4K (SC) 2.5. ACCORDING THE NEWLY SUBSTITUTED (W.E.F 01/04/2002) SECTION 32 (2) BY THE FINANCE ACT, 2001 (14 OF 2001) , WHICH IS OPERATIVE FOR AND FROM A.Y. 2002-0 3, CERTAIN CONDITIONS, INTER-ALIA, THE RESTRICTION OF EIGHT YEARS FOR CARRY FORWARD AND SET OFF OF UNABSORBED DEPRECI ATION WAS DISPENSED WITH, REVERTING TO PRE-1997 POSITION. IT MAY BE NOTED THAT THE LEGAL FIXATION OF TREATING UNABSO RBED DEPRECIATION AS THE DEPRECIATION OF THE SUBSEQUENT YEARS HAS BEEN SPECIFICALLY MADE SUBJECT TO THE PROVISION S OF SECTION 72(2) AND 73(3) (MYSORE PAPER MILLS LTD. VS CIT) ITA NO.5859/MUM/2013 ANIL PRINTERS LTD. 12 (1979) 117 ITR 132, 135 (KARNATKA) AND CIT VS GUJAR AT STATE WAREHOUSING CORPORATION (1976) 104 ITR 1(GUJ. ). THUS, IF AN ASSESSEE HAS UNABSORBED DEPRECIATION U/ S 32(2) OF THE ACT AS WELL AS UNABSORBED BUSINESS LOSS CARR IED FORWARD U/S 72(1), SECTION 72(2) PROVIDED THE UNABS ORBED LOSSES SHALL HAVE PRECEDENCE, AND BE SET OFF FIRST, SO FAR AS THE SUFFICIENCY OF INCOME TO BE SET OFF AGAINST PER MITS. IT IS ONLY AFTER THE CARRIED FORWARD BUSINESS LOSS IS SET OFF, AND THERE YET REMAINS POSITIVE INCOME, THAT THE UNABSOR BED DEPRECIATION WOULD COME IN FOR A SET OFF. THIS IS B ENEFICIAL TO THE ASSESSEE IN AS MUCH AS THE UNABSORBED BUSINESS LOSSES HAVE A TIME BAR OF EIGHT YEARS WHILE THE UNABSORBED DEPRECIATION HAS NO TIME BAR, IT INTEGRATES WITH, A ND IS TREATED AS DEPRECIATION ALLOWABLE FOR THE SUBSEQUEN T YEAR ITSELF (CIT VS JAIPURIA CHINA CLAY MINES PVT. LTD. (1966) 59 ITR 555)(SC), CIT VS GUJARAT STATE WAREHOUSING CORPORATION 104 ITR 1 (GUJ.). WHAT SECTION 72(2) CONTEMPLATES IS THAT IF THERE IS SOME UNABSORBED LO SSES CARRIED FORWARD TO BE SET OFF, AND THERE IS ALSO SO ME UNABSORBED DEPRECIATION ALLOWANCE CARRIED FORWARDED TO BE SET OFF, THE FORMER SHALL GET PRIORITY (ALLUMINIUM CORPORATION OF INDIA LTD.) (1958) 33 ITR 367 (CAL.) AND CIT VS AHMEDABAD ELECTRICITY COMPANY LTD. (1973) 89 ITR 77 (BOM.). THIS IS SO BECAUSE UNABSORBED DEPRECIATION RETAINS ITS OWN CHARACTER EVEN IN SUCCEEDING YEAR(S) AS DISTINGUISHED FROM CURRENT DEPRECIATION (CIT VS RAV I INDUSTRIES LTD. ) (1963) 49 ITR 145, 155 (BOM.). TH E ITA NO.5859/MUM/2013 ANIL PRINTERS LTD. 13 HONBLE MADRAS HIGH COURT IN SESHASAYEE PAPER & BON DS LTD. VS DCIT(2005) 272 ITR 165 (MAD.) HELD THAT UND ER SECTION 32(2) A LEGAL FICTION HAS BEEN CREATED THA T UNABSORBED DEPRECIATION OF THE EARLIER YEAR SHALL F ORM PART OF CURRENT YEARS DISALLOWANCE AND THEREFORE IT SHA LL HAVE TO DEALT WITH ACCORDINGLY SUBJECT TO THE PROVISION OF S ECTION 72(2) AND 72(3) OF THE ACT. THUS, THE CARRIED FORW ARD UNABSORBED DEPRECIATION OF THE EARLIER YEAR HAS TO BE TAKEN AS A PART OF THE CURRENT YEARS DEPRECIATION ALLOWA NCE AND TO BE SET OFF, TO THE EXTENT POSSIBLE, AGAINST INCO ME OF THE CURRENT YEAR. THE UNABSORBED DEPRECIATION SHOULD BE ALLOWED BEFORE THE UNABSORBED INVESTMENT ALLOWANCE AND THAT WOULD BE THE ORDER OF PRIORITY IN CLAIMING THE UNABSORBED DEPRECIATION AND UNABSORBED INVESTMENT ALLOWANCE. HONBLE PUNJAB & HARYANA HIGH COURT IN CIT VS HARYANA HOTELS LTD. (2005) 276 ITR 521 EVEN WENT TO THE EXTENT THAT THE ASSESSEE WAS ENTITLED TO GET UNABSO RBED DEPRECIATION OF EARLIER YEARS 1984-85 AND 1995-96 S ET OFF IN 1987-88 EVEN IF NO VALID RETURN FOR A.Y.1986-87 WAS FILED BY THE ASSESSEE. IN CIT VS BRIGADIER PERMANAND (2006) 287 ITR 142 (ALL.), THE HONBLE HIGH COURT HELD THAT TH E ASSESSEE WAS ENTITLED TO CARRY FORWARD OF UNABSORBE D DEPRECIATION U/S 32(2) NOTWITHSTANDING THE FACT THA T THE LOSSES HAS BEEN DETERMINED. THE RATIO LAID DOWN IN CIT VS R.S. BAJWA & COMPANY (2008) 301 ITR 333 (JHAR.), CI T VS PIONEER ASIA PACKING PVT. LTD. (2009) 310 ITR 198 ( MAD.), CIT VS S & S POWER SWITCH GEARS LTD. (2009) 318 ITR 187 ITA NO.5859/MUM/2013 ANIL PRINTERS LTD. 14 (MAD.), CIT VS RPIL SIGNALLING SYSTEMS LTD. (2010) 328 ITR 283 (MAD.), CIT VS BANCOMAR HOTELS (GOA) PVT. LTD. (2011) 332 ITR 441 (BOM.), CIT VS GOVIND NAGAR SUGAR LTD. (2011) 334 ITR 13 (DEL.) AND CIT VS YOKOGAWA INDIA LTD. (2012) 341 ITR 385 (KARN.) SUPPORTS THE CASE OF THE ASSESS EE. IN VIEW OF THE FOREGOING DISCUSSION, WE FIND NO INFIRM ITY IN THE CONCLUSION DRAWN BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS). FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 14/03/2016. SD/- SD/- (RAJENDRA) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER # $ MUMBAI; ) DATED : 14/03/2016 F{X~{T? P.S/. . . %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. + + # ,' ( ) / THE CIT, MUMBAI. 4. + + # ,' / CIT(A)- , MUMBAI ITA NO.5859/MUM/2013 ANIL PRINTERS LTD. 15 5. /01 '2 , + & 23 , # $ / DR, ITAT, MUMBAI 6. 14 5$ / GUARD FILE. / BY ORDER, /' ' //TRUE COPY// / (DY./ASSTT. REGISTRAR) , # $ / ITAT, MUMBAI