M/s. CoAchieve Solutions Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 6647/DEL/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7026 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 11-07-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 08-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIPIN JAIN CA SHRI DEEPAK GARG
• Assessee Lawyers: ARE GENERAL; READ AS UNDER
• Keywords: Business income; Depreciation; Unabsorbed depreciation

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-I: NEW DELHI BEFORE SHRI P.K.BANSAL, ACCOUNTANT MEMBER ITA NO.:- 6647/DEL /2014 ASSESSMENT YEAR: 2011-12 COACHIEVE SOLUTIONS PVT. LTD. FLAT NO. 915, 9 TH FLOOR INDRA PRAKASH BUILDING, 21, BARAKHAMBA ROAD NEW DELHI 110 001 PAN AADCC1301Q VS. ITO WARD-3(4), NEW DELHI (APPELLANT) (RESPONDENT) O R D E R THIS APPEAL HAS BEEN FILED BY THE ASSESSEE A GAINST THE ORDER OF THE LD. CIT(A) DATED 28.10.2014. THE ASSESSEE HAS TAKEN AS MANY AS 4 GROUNDS OF APPEAL. GROUND 3 AND 4 ARE GENERAL AND D OES NOT REQUIRE ANY ADJUDICATION. GROUND NO. 1 AND 2 READ AS UNDER :- ASSESSEE BY : SHRI VIPIN JAIN, CA DEPARTMENT BY : SHRI DEEPAK GARG, SR. D R DATE OF HEARING 11/07 /2016 DATE OF PRONOUNCEMENT 12 /07 /2016 ITA NO. 6647/DEL/2014 2 1.1 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE AUTHORITIES BELOW HAVE ERRED IN HOLDING THAT CHANGE IN SHARE HOLDING OF THE ASSESSEE COMPANY IN THE ASSESS MENT YEAR 2010-2011, PRECLUDES IT FROM CARRYING FORWARD THE B USINESS LOSSES AND DEPRECIATION AMOUNTS SUFFERED BY IT IN THE ASST T. YEARS 2008- 09 TO 2010-2011, AND THAT THE SAID LOSSES/DEPRECIAT ION AMOUNTS CEASE TO BE AVAILABLE WITH THE ASSESSEE COMPANY FOR SET OFF AGAINST BUSINESS INCOME IN THE SUBSEQUENT YEARS INC LUDING THE ASSTT. YEAR 2011-2012. 1.2 THAT THE AUTHORITIES BELOW HAVE ERRONEOUSLY INV OKED AND APPLIED THE PROVISIONS OF SECTION 79 OF THE INCOME TAX ACT, 1961, NOT APPLICABLE IN THE PRESENT CASE, AND HAVE FURTHE R ERRED IN HOLDING THAT UNABSORBED BUSINESS LOSSES TOTALING RS . 2,20,32,972, AND UNABSORBED DEPRECIATION AMOUNTS TOTALING RS. 14 ,57,465, BROUGHT FORWARD FROM THE ASS YEARS 2008-2009 TO 201 0-2011, ARE NOT AVAILABLE WITH THE ASSESSEE COMPANY FOR SET OFF AGAINST ITS BUSINESS INCOME OF RS. 22,96,119 FOR THE ASSTT. YE AR 2011-2012. THAT THE SET OFF OF THE BUSINESS LOSSES BEING PERMI TTED AND ALLOWABLE UNDER SECTION 72 OF THE INCOME TAX ACT, 1 961, IT IS PRAYED THAT THE SAME BE DIRECTED TO BE SET OFF AGAI NST THE INCOME OF THE ASSESSEE COMPANY FOR THE AY 2011-2012. 1.3 THAT THE AUTHORITIES BELOW HAVE FAILED TO APPR ECIATE THAT THE CHANGE IN SHARE HOLDING OF THE ASSESSEE COMPANY IN THE ASSESSMENT YEAR 2010-2011 WAS BONAFIDE AND NOT WITH A VIEW TO AVOID OR REDUCE ANY TAX LIABILITY, AND AS HELD BY V ARIOUS COURTS, THE PROVISIONS OF SECTION 79 OF THE ACT ARE NOT MADE AP PLICABLE. 2. THAT WITHOUT PREJUDICE, THE AUTHORITIES BELOW HAV E FAILED TO ACCEPT THE PRINCIPLES OF LAW ENUNCIATED BY THE HON' BLE SUPREME COURT IN SUBHALAXMI MILLS CASE WHEREIN THE APEX COU RT HAS HELD EVEN IN A CASE WHERE PROVISIONS OF SECTION 79 OF TH E ACT APPLY, UNABSORBED DEPRECIATION AMOUNTS OF EARLIER YEARS AR E TO BE SET OFF AGAINST CURRENT YEARS BUSINESS INCOME. ITA NO. 6647/DEL/2014 3 2. THE ISSUE INVOLVED IN THE GROUNDS TAKEN BY T HE ASSESSEE IS THE APPLICABILITY OF THE PROVISION OF SECTION 79 OF THE INCOME TAX ACT 1961 DURING THE YEAR. 3. I HAVE HEARD THE RIVAL SUBMISSIONS AND CAREF ULLY CONSIDERED THE SAME. BEFORE DECIDING THE ISSUE WHETHER THE ASSESSE E WILL BE ENTITLED TO SET OFF AND CARRY FORWARD THE UNABSORBED LOSSES AND UNABSORBED DEPRECIATION BROUGHT FORWARD FROM THE EARLIER YEAR DURING THE IMPUGNED YEAR IT IS NECESSARY TO APPRECIATE THE PROVISION OF SECTION 79 OF THE INCOME TAX ACT. 4. FROM THE PERUSAL OF THE AFORESAID SECTION IT IS APPARENT THAT THIS PROVISION DEBARS A COMPANY NOT BEING A COMPANY IN W HICH PUBLIC ARE SUBSTANTIALLY INTERESTED TO CARRY FORWARD ONLY THE BUSINESS LOSS AND NOT THE UNABSORBED DEPRECIATION AS THE SECTION SPEAKS O F LOSS IT DOES NOT INCLUDE UNABSORBED DEPRECIATION. THIS SECTION SPEAK S THAT IN THE CASE OF COMPANY NOT BEING A COMPANY IN WHICH PUBLIC ARE SUB STANTIALLY INTERESTED WHERE THERE IS A CHANGE IN SHARE HOLDING HAS TAKEN PLACE IN A PREVIOUS YEAR THEN NO LOSS INCURRED IN ANY YEAR PRI OR TO THE PREVIOUS YEAR SHALL BE CARRIED FORWARD AND SET OFF AGAINST T HE INCOME OF THE PREVIOUS YEAR UNLESS ON THE LAST DAY OF THAT PREVIO US YEAR AND ON THE LAST DAY OF THE PREVIOUS YEAR IN WHICH THE LOSS WAS INCURRED, THE SHARES OF THE COMPANY CARRYING NOT LESS THAN 51% OF THE VO TING POWER WERE ITA NO. 6647/DEL/2014 4 BENEFICIALLY HELD BY THE SAME PERSONS . THE ASSESSE E HAS UNABSORBED DEPRECIATION FOR THE ASSTT. YEARS 2008-09 , 2009-10 AND 2010-11. SINCE THE PROVISION OF SECTION 79 ARE NOT APPLICABLE TO T HE UNABSORBED DEPRECIATION THERE IS NO DISPUTE THAT THE ASSESSEE SHALL BE ENTITLED TO SET OFF THE UNABSORBED DEPRECIATION BUT SO FAR THE BROU GHT FORWARD LOSSES ARE CONCERNED I NOTED DURING THE IMPUGNED ASSESSMEN T YEAR THE ASSESEE HAS EARNED PROFIT TO THE EXTENT OF RS. 23,7 5,802/- AND HOLD THE BROUGHT FORWARD LOSSES TO THE EXTENT OF RS. 2,20,32 ,972/- AND UNABSORBED DEPRECIATION RS. 14,57,465/-. SINCE THER E IS NO CHANGE IN THE SHAREHOLDING AS COMPARED TO THE EARLIER ASSESSM ENT YEAR SHAREHOLDING REMAINS THE SAME IN IMPUGNED ASSTT. YE AR. THEREFORE IN MY OPINION THE PROVISION OF SECTION 79 WILL NOT BE APP LICABLE IN THE CASE OF THE ASSESSEE. IF THESE PROVISIONS CAN BE APPLIED TH AT CAN BE APPLIED ONLY TO THE BUSINESS LOSS INCURRED IN ANY YEAR PRIO R TO THE PREVIOUS YEAR I.E. ONLY FOR THE ASSESSMENT YEAR 2009-10 AND NOT F OR THE ASSTT. YEAR 2010-11. IN THE ASSESSMENT YEAR 2010-11, I NOTED TH AT THE AO HAS NOT DISALLOWED THE CARRY FORWARD OF THE LOSSES INCURRED IN THE ASSTT. YEAR 2009-10. THEREFORE I AM OF THE VIEW THAT SINCE THER E IS NO CHANGE IN THE SHARE HOLDING PATTERN OF THE ASSESSEE IN THE IM PUGNED ASSTT. YEAR AS COMPARED TO ASSTT. YEAR 2010-11 THE PROVISION OF SE CTION 79 WILL NOT DEBAR THE ASSESEE IN THE IMPUGNED ASSTT. YEAR TO CA RRY FORWARD AND SET ITA NO. 6647/DEL/2014 5 OFF THE LOSSES OF THE ASSTT. YEAR 2010-11. I ACCORD INGLY SET ASIDE THE ORDER OF THE LD. CIT(A). 5. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12/07/2016. SD/- (P.K. BANSAL) ACCOUNTANT MEMBER DATED: 12/07/2016 VEENA COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI