ACIT, CHENNAI V. M/s. Nova Dyeing Printing Mills Ltd., CHENNAI

ITA 696/CHNY/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 1173 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 12-01-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 13-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P B SEKARAN
• Assessee Lawyers: ITA NO MDS; N MUTHUKUMARAN ITA NO MDS
• Keywords: Depreciation; Unabsorbed depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHENNAI BENCH B BEFORE DR.O.K.NARAYANAN, VICE-PRESIDENT AND SHRI HARI OM MARATHA, JUDICIAL MEMBER I.T.A. NOS. 484/MDS/2010 ASSESSMENT YEARS : 2007- 08 M/S NOVADYEING PRINTING MILLS LIMITED 41, KKR AVENUE, PERAMBUR CHENNAI 600 011. VS. THE A.C.I.T COMPANY CIRCLE IV(4) CHENNAI 34 (PAN : AAACJ 1466 G) (APPELLANT) (RESPONDENT) I.T.A. NO. 696/MDS/2010] ASSESSMENT YEARS : 2007- 08 THE A.C.I.T COMPANY CIRCLE IV(4) CHENNAI 34 VS. M/S NOVADYEING PRINTING MILLS LIMITED 41, KKR AVENUE, PERAMBUR CHENNAI 600 011. (PAN : AAACJ 1466 G) ( APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI P.B. SEKARAN ASSESSEE BY : SHRI N. MUTHUKUMARAN ITA NO. 484/MDS/10 & ITA NO. 696/MDS/10 :- 2 -: O R D E R PER DR. O.K.NARAYANAN. VICE-PRESIDENT : THERE ARE TWO APPEALS. FIRST IS FILED BY THE ASSES SEE. THE OTHER ONE IS FILED BY THE REVENUE. THE RELEVANT AS SESSMENT YEAR IS 2007-08. THE APPEALS ARE DIRECTED AGAINST THE O RDER OF THE CI.T(APPEALS)-V, AT CHENNAI DATED 26.2.2010 AND ARI SE OUT OF THE ASSESSMENT COMPLETED UNDER SEC.143(3) OF THE I.T. A CT, 1961. 2. AS FAR AS THE APPEAL FILED BY THE ASSESSEE IS CO NCERNED, THE ONLY GROUND RAISED IS THAT THE COMMISSIONER OF INCO ME-TAX (APPEALS) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF ` 15,77,851/- THOUGH HE HAS AGREED THAT EXPENDITURE I NCURRED FOR KEEPING ITS JURISTIC PERSONALITY COULD BE ALLOWED. 3. THE EXPENSES CLAIMED BY THE ASSESSEE RELATED TO MAINLY ESTABLISHMENT AND LEGAL EXPENSES. EVEN THOUGH THE ASSESSEE COMPANY HAS NOT CARRIED OUT ANY SPECIFIC BUSINESS I N THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR UNDER APPEAL, THER E IS NO FORMAL ITA NO. 484/MDS/10 & ITA NO. 696/MDS/10 :- 3 -: DECLARATION OF STOPPAGE OF BUSINESS AND THE COMPANY HAS NOT BEEN WOUND UP NOR HAS IT EVEN BECOME DEFUNCT. IN T HESE CIRCUMSTANCES, INCIDENCE OF NECESSARY ESTABLISHMENT EXPENSES AND OTHER STATUTORY AND LEGAL EXPENSES CANNOT BE OV ERLOOKED AND SUCH EXPENSES ARE LEGITIMATE IN NATURE AS THE ASSES SEE HAS TO CONTINUE ITS STATUS AS A JURIDICAL PERSON. 4. THEREFORE, WE FIND THAT THE DISALLOWANCE OF ` 15,77,851/- IS NOT JUSTIFIED. THE DISALLOWANCE IS DELETED. THE A SSESSING AUTHORITY IS DIRECTED TO ALLOW THE SAME. 5. AS FAR AS THE APPEAL OF THE REVENUE IS CONCERNED , THE ONLY GROUND IS THAT THE COMMISSIONER OF INCOME-TAX (APPE ALS) HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO VERIFY THE PAST RECORDS AND GIVE SET OFF OF THE CARRIED FORWARD UNABSORBED DEPRECIATION TO THE EXTENT OF THE TOTAL INCOME COMPUTED FOR THE CUR RENT YEAR AND CARRY FORWARD THE BALANCE TO THE SUBSEQUENT YEARS. ITA NO. 484/MDS/10 & ITA NO. 696/MDS/10 :- 4 -: 6. WE DO NOT FIND ANY SORT OF INFIRMITY OR ILLEGALI TY IN THE DIRECTION GIVEN BY THE COMMISSIONER OF INCOME-TAX ( APPEALS). BY VIRTUE OF SECTION 32(2) OF THE I.T. ACT, 1961, THE BROUGHT FORWARD UNABSORBED DEPRECIATION PARTAKES THE CHARACTER OF C URRENT YEARS DEPRECIATION AND AS THE COMPANY IS STILL IN EXISTEN CE, IT IS ENTITLED FOR CLAIMING SUCH DEPRECIATION AS DEDUCTION. THE N ATURAL CONSEQUENCE IS THAT, ANY UNABSORBED BALANCE WOULD B E CARRIED FORWARD. THE CONTENTION OF THE REVENUE IS WITHOUT MERIT. 7. IN RESULT, THE APPEAL FILED BY THE ASSESSEE IS A LLOWED WHEREAS THE APPEAL FILED BY THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON WEDNESDAY, THE 13 TH DAY OF JANUARY, 2011 AT CHENNAI. SD/- SD/- (HARI OM MARATHA) JUDICIAL MEMBER ( DR.O.K.NARAYANAN) VICE-PRESIDENT CHENNAI : 13 TH JANUARY, 2011. VL. COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR