SHREE MAHESH INDUSTRIES P. LTD, MUMBAI V. ITO WD 4(3)(4), MUMBAI

ITA 6231/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 101005 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 10-09-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 25-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: UDAYA BHASKAR JACKLE
• Keywords: Depreciation; Unabsorbed depreciation
• Section: 32

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI N.K . BILLAIYA, ACCOUNTANT MEMBER AND RAM L AL NEGI, JUDICIAL MEMBER / I .T.A. NO. 6231/MUM/2013 ( / ASSESSMENT YEAR : 2010 - 11 M/S. SHREE MAHESH INDUSTRIES LTD., 7, BHANGWADI SHOPPING CENTRE, KALBADEVI ROAD, MUMBAI - 400 002 / VS. THE ITO, WARD - 4(3)(4), AAYAKAR BHAVAN, MUMBAI - 400 020 ./ ./ PAN/GIR NO. : AAACS 6087J ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI RAJIV KHANDELWAL SHRI NEEL KANTH KHANDELWAL / RESPONDENT BY: SHRI UDAYA BHASKAR JACKLE / DATE OF HEARING : 10 .0 9 .2015 / DATE OF PRONOUNCEMENT : 10 .0 9 .2015 / O R D E R PER N.K. BILLAIYA, AM: THIS IS AN APPEAL BY THE ASSESSEE PREFERRED AGAINST THE ORDER OF THE LD. CIT(A) - 8 , MUMBAI D ATED 1 2 . 9 .201 3 PERTAINING TO ASSESSMENT YEAR 20 1 0 - 11 . ITA. NO. 6231/M/2013 2 2. THE SUM AND SUBSTANCE OF THE GRIEVANCE OF THE ASSESSEE IS THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO OF NOT ALLOWING CARRY FORWARD OF UNABSORBED DEPRECIATION FOR A.Y. 1997 - 98 AND 2001 - 02. 3. WHILE SCRUTINIZING THE RETURN OF INCOME, THE ASSESSING OFFICER NOTICED THE BROUGHT FORWARD DEPRECIATION WHICH HAS BEEN SET OFF AGAINST THE CURRENT YEARS INCOME. THE SAME IS EXPLAINED IN THE FOLLOWING CHART: NATURE OF LOSS A.Y. BROUGHT FORWARD IN RS. SET OFF IN RS. UNABSORBED DEPRECIATION 1997 - 98 2752179 2752179 UNABSORBED DEPRECIATION 1998 - 99 1958522 759793 UNABSORBED DEPRECIATION 2000 - 01 632427 `NIL UNABSORBED DEPRECIATION 2001 - 02 355399 NIL 3.1. DRAWING SUPPORT FROM THE DECISION OF THE TRIBUNAL, MUMBAI BENCH IN THE CASE OF M/S. TIMES GUARANTY LTD IN ITA NOS. 4917 & 4918/M/2008, THE AO WAS OF THE FIRM BELIEF THAT THE SET OFF OF CARRIED FORWARD UNABSORBED DEPRECIATION RELATING TO A.Y. 1997 - 98 TO 1999 - 2000 IS TO BE DEALT WITH IN ACCORDANCE WITH THE PROVISIONS OF SEC. 32(2) AS APPLICABLE FOR A.Y. 1997 - 98 TO 1999 - 2000. THE CLAIM OF THE ASSESSEE WAS ACCORDINGLY DENIED. 4. THE ASSESSEE AGITATED THE MATTER BEFORE THE LD. CIT(A) BUT WITHOUT ANY SUCCESS. 5. BE FORE US, THE LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO THE VARIOUS DECISIONS OF THE HIGH COURTS AND THE TRIBUNAL. IT IS THE SAY OF THE LD. COUNSEL THAT THE ISSUE OF SET OFF OF CARRIED FORWARD ITA. NO. 6231/M/2013 3 UNABSORBED DEPRECIATION HAS TO BE DEALT WITH IN ACCORD ANCE WITH THE PROVISIONS AS THEY STOOD DURING THE ASSESSMENT YEAR UNDER QUESTION. 6. WE HAVE CAREFULLY UNDERSTOOD THE FACTS IN ISSUE. WE HAVE ALSO GONE THROUGH THE JUDICIAL DECISIONS RELIED UPON BY THE ASSESSEE. IT WOULD BE PERTINENT TO MENTION HERE CIRCULAR NO. 14 OF 2001 WHEREIN THE CBDT HA D CLARIFIED THAT U/S. 32(2), IN COMPUTING THE PROFITS AND GAINS OF BUSINESS OR PROFE SSION FOR ANY PREVIOUS YEAR , DEDUCTION OF DEPRECIATION U/S. 32 SHALL BE MANDATORY. THEREFORE, THE PROVISIONS OF SEC. 32(2) AS AMENDED BY FINANCE ACT , 2001 WOULD ALLOW THE UNABSORBED DEPRECIATION ALLOWANCE AVAILABLE IN THE ASSESSMENT YEARS 1997 - 98, 1999 - 20 00, 2000 - 01 AND 2001 - 02 TO BE CARRIED FORWARD TO THE SUCCEEDING YEAR S, AND IF ANY UNABSORBED DEPRECIATION OR PART THEREOF COULD NOT BE SET OFF TILL THE ASSESSMENT YEAR 2002 - 03 THEN IT WOULD BE CARRIED FORWARD TILL THE TIME IT IS SET OFF AGAINST THE PROFITS AND GAINS OF SUBSEQUENT YEARS. THIS CIRCULAR HAS BEEN CONSIDERED AND ON IDENTICAL SET OF FACTS, THE HONBLE HIGH COURT OF GUJARAT IN THE CASE OF GENERAL MOTORS INDIA (P). LTD. VS DCIT 354 ITR 244 HAD DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINS T THE REVENUE. THIS DECISION OF THE HONBLE HIGH COURT OF GUJARAT HAS BEEN FOLLOWED BY THE TRIBUNAL MUMBAI BENCH IN THE CASE OF SMITH & NEPHEW HEALTHCARE (P) LTD VS DCIT 32 ITR (T) 208 AND ALSO BY THE TRIBUNAL MUMBAI BENCH IN THE CASE OF DCIT VS BAJAJ HIN DUSTAN LTD., 149 ITD 709. RESPECTFULLY FOLLOWING THE AFOREMENTIONED JUDICIAL DECISION IN THE LIGHT OF THE CBDT CIRCULAR (SUPRA), WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE AO TO ALLOW THE CLAIM OF SET OFF OF UNABSORBED DEPRECIATION. ITA. NO. 6231/M/2013 4 7. IN T HE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON 10 TH SEPTEMBER , 2015 SD/ - SD/ - ( RAM L AL NEGI ) (N.K. BILLAIYA) /JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 10 TH SEPTEMBER , 2015 . . ./ RJ , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI