The ITO, Ward-3(1), JAMNAGAR V. Integrated Proteins Ltd., JAMNAGAR

ITA 70/RJT/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0462 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 27-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C S ANJARIA
• Assessee Lawyers: HARISH RANPURA CA
• Keywords: Depreciation; Unabsorbed depreciation
• Section: 143(3); 154

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [ CONDUCTED THROUGH E-COURT AT AHMEDABAD ] , , ! BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ I.T.A. NO.70/RJT/2014 ( / ASSESSMENT YEAR : 2007-08) THE INCOME TAX OFFICER WARD-3(1) JAMNAGAR / VS. INTEGRATED PROTEINS LTD. CITY POINT, OPP.TOWN HALL JAMNAGAR & ./ ./ PAN/GIR NO. AAACI 7932 G ( &( / APPELLANT ) .. ( )&( / RESPONDENT ) &( * / APPELLANT BY : SHRI C.S. ANJARIA, DR )&( + * / RESPONDENT BY : SHRI HARISH RANPURA, C.A.(AR) ,-. + / DATE OF HEARING 08/12/2015 /0 + / DATE OF PRONOUNCEMENT 23/12/2015 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-JAMNAGAR [CIT(A) IN SHORT] DATED 05/10/2013 PERTAINING TO ASSESSMENT YEAR (AY) 2007-08. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- ITA NO.70 /RJT/ 2014 ITO VS. INTEGRATED PROTEINS LTD. ASST.YEAR 2007-08 - 2 - 1. THE LD.CIT(A) HAS ERRED ON FACTS AND LAW BY DIRECT ING THE A.O. TO ALLOW THE UNABSORBED DEPRECIATION ALLOWANCE AMOUNTI NG TO RS.41,00,487/- OF AY 1999-2000 TO BE CARRIED FORWAR D AS PER THE PROVISIONS OF SEC 32(2) STATING THAT THERE IS NO TI ME LIMIT PRESCRIBED FOR CARRY FORWARD AND SET OFF WHEREAS, PRIOR TO 01. 04.2001, UNABSORBED DEPRECIATION CANNOT BE SET OFF/CARRY FOR WARD UPTO EIGHT ASSESSMENT YEARS IMMEDIATELY SUCCEEDING THE AY FOR WHICH THE SAID ALLOWANCE WAS FIRST COMPUTED. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD.CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFF ICER. 3. IT IS THEREFORE PRAYED THAT THE ORDER OF THE LD.CIT (A) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 4. THAT THE REVENUE CRAVES LEAVE TO ADD, AMEND, ALTER OR WITHDRAW ANY GROUNDS OF APPEAL. 2. THE ONLY EFFECTIVE GROUND IN THIS APPEAL IS AGAI NST DELETION OF DISALLOWANCE OF UNABSORBED DEPRECIATION AMOUNTING T O RS.41,00,487/- MADE BY THE ASSESSING OFFICER (AO IN SHORT). 2.1. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSMENT WAS COMPLETED U/S.143(3) OF THE INCOME TAX ACT,1961 (HE REINAFTER REFERRED TO AS THE ACT) ON 22/12/2009 ASSESSING THE INCOME OF ASSESSEE AT RS.NIL. SUBSEQUENTLY, THE AO MADE ORDER U/S.154 OF THE ACT ON 18/08/2011, WHEREBY THE AO MADE DISALLOWANCE OF CARRIED FORWARD DEPRECIATION PERTAINING TO THE AY 2007-08. THE ASSESSEE BEING A GGRIEVED BY THE SAID ORDER, PREFERRED AN APPEAL BEFORE THE LD.CIT(A), WH O AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE ALLOWED THE APPEAL. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), NOW THE REVENUE IS IN APPEA L BEFORE US. ITA NO.70 /RJT/ 2014 ITO VS. INTEGRATED PROTEINS LTD. ASST.YEAR 2007-08 - 3 - 3. THE LD.DR SUPPORTED THE ORDER OF THE ASSESSING O FFICER, WHEREAS LD.COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDER OF THE LD.CIT(A) AND REITERATED THE SUBMISSIONS AS WERE MADE IN THE WRIT TEN SUBMISSIONS. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSU E IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT RENDERED IN THE CASE OF GENERAL MOTORS INDIA (P.) LTD. VS. DY.CIT REPORTED AT (2013) 354 ITR 244 / (2012) 25 TAXMANN.COM 364 / 210 TAXMAN 20 (GUJ.)[MAG.] AND OF CIT VS. GUJARAT THEM IS BIOSYN LTD. REPORTED AT (2014) 44 TAXMANN.COM 204. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE JUDGEMENTS RELIED UPON BY THE LD.COU NSEL FOR THE ASSESSEE. THE ONLY ISSUE BEFORE US FOR ADJUDICATION IS WHETHE R THE ASSESSEE IS ENTITLED FOR THE UNABSORBED DEPRECIATION ALLOWANCE TO BE CARRIED FORWARD AND SET OFF IN RESPECT OF THE ASSESSMENT YEAR UNDER CONSIDERATION. THE AO HAD MADE DISALLOWANCE ON THE BASIS THAT THE ASSE SSEE-COMPANY HAS CARRIED FORWARD UNABSORBED DEPRECIATION OF AY 1999- 2000 OF RS.41,00,487/-. HOWEVER, AS PER PROVISIONS OF SUB- SECTION 2(III)(B) OF SECTION 32, UNABSORBED DEPRECIATION WAS TO BE TREAT ED AS BUSINESS LOSS AND COULD NOT BE CARRIED FORWARD FOR MORE THAN EIGH T ASSESSMENT YEARS IMMEDIATELY SUCCEEDING THE ASSESSMENT YEAR FOR WHIC H ALLOWANCE WAS FIRST DETERMINED. THE ASSESSEE HAS MADE FOLLOWING WRITTEN SUBMISSIONS:- ITA NO.70 /RJT/ 2014 ITO VS. INTEGRATED PROTEINS LTD. ASST.YEAR 2007-08 - 4 - GROUND NO. 1: THE LD. CIT(A) HAS ERRED ON FACTS AND LAW BY DIRECT ING THE AO TO ALLOW THE UNABSORBED DEPRECIATION ALLOWANCE AMOUNTING TO RS. 41,00,487/- OF A.Y. 1999- 2000 TO BE CARRIED FORWARD AS PER THE PROVISIONS OF SEC 32(2) STATING THAT THERE IS NO TIME LIMIT PRESCRIBED FOR CARRY FORWARD AND SET OFF WHEREAS PRIOR TO 01.04.2001, UNABSORBED DEPRECIATION CANNOT BE SET OFF/CARRY FOR WARD UP TO EIGHT ASSESSMENT YEARS IMMEDIATELY SUCCEEDING THE A.Y. FOR WHICH THE SAID ALLOWANCE WAS FIRST COMPUTED. A) THE RESPONDENT IS A PUBLIC LIMITED COMPAN Y AND ENGAGED IN THE BUSINESS OF MANUFACTURING AGRO BASED PRODUCTS. IT HAD FILED ITS RETURN OF INCOME OF RS. NIL FOR THE ASSESSMENT YEAR UNDER APPEAL. IN ASSESSMENT UNDER S ECTION 143(3) OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED TO-AS THE 'ACT'], THE THEN AO HAD-VERIFIED ALL THE DETAILS AND INFORMATION CALLED FOR AND FURNISHED BY THE RESPONDENT AND THEN HE ASSESSED TOTAL INCOME. THE RESPONDENT HAD ACCEPTED THE SAID ORDER PASSED U NDER SECTION 143(3) OF THE ACT. B) HOWEVER, THE AO THEN ISSUED NOTICE UNDER SECTION 154 OF THE ACT ON 12.05.2011 ALLEGING THAT THERE WAS MISTAKEN APPAREN T FROM RECORD-AS UNABSORBED DEPRECIATION IN RESPECT OF A.Y. 1999-2000 WAS NOT A VAILABLE TO BE CARRIED FORWARD AND SET OFF AS THE SAME, WAS AVAILABLE FOR EIGHT AS SESSMENT YEAR UNDER SECTION 32(2)(III)(B) OF THE ACT AND THEREBY THE THEN AO PA SSED ORDER UNDER SECTION 154 OF THE ACT AND DISALLOWED SET OFF OF UNABSORBED DEPRECIATI ON IN RESPECT OF A.Y. 1999-2000. C) THE ID. CIT(A) HAS DIRECTED THE AO TO ALL OW SUCH UNABSORBED DEPRECIATION IN RESPECT OF ASSESSMENT YEAR 1999-2000-TO BE CARRIED FORWARD AND SET OFF BY INTERPRETING SECTION 32(2) OF THE ACT. D) IN THIS CONNECTION, IT IS SUBMITTED THAT PROVISIONS OF SECTION 32(2) OF THE ACT WAS AMENDED BY THE FINANCE ACT, 2001 IN A MANNER TH AT IT WAS RESTORED TO THE POSITION PRIOR TO ASSESSMENT YEAR 1996-97 WHEREIN T HE UNABSORBED DEPRECIATION FOR ANY PREVIOUS YEAR GOT MERGED WITH CURRENT DEPRECIAT ION FOR NEXT PREVIOUS YEAR AND AVAILABLE FOR SET OFF WITHOUT TIME LIMIT. E) SECTION 32(2) OF THE ACT WAS AMENDED BY T HE FINANCE-ACT, 1996 TO THE EFFECT THAT FROM ASSESSMENT YEARS 1996-97, UNABSORBED DEPR ECIATION OF PREVIOUS YEAR NOT ADJUSTED AGAINST RESPECTIVE CURRENT YEAR'S INCOME S HALL BE CARRIED FORWARD AND SET OFF ITA NO.70 /RJT/ 2014 ITO VS. INTEGRATED PROTEINS LTD. ASST.YEAR 2007-08 - 5 - IN THE NEXT ASSESSMENT YEAR AND SUCH CARRY FORWARD AND SET OFF WAS RESTRICTED TO EIGHT ASSESSMENT YEARS FROM THE ASSESSMENT YEAR IN WHICH IT WAS FIRST COMPUTED. F) HOWEVER, AGAIN BY THE FINANCE ACT, 2001, STATUS QUO ANTE WAS RESTORED BACK WITH EFFECT FROM 01.04.2002 I.E. FROM ASSESSMENT YE AR 2002-03. THE EFFECT OF AMENDMENT BY THE FINANCE ACT, 2001 IS THAT DEPRECIA TION FOR ANY PREVIOUS YEAR REMAINING TO BE SET OFF IN RESPECTIVE PREVIOUS YEAR SHALL BE ADDED TO THE DEPRECIATION AS CALCULATED IN ACCORDANCE WITH SECTION 32(1) FOR THE FOLLOWING PREVIOUS YEAR. SUCH AMENDMENT DID NOT PRESCRIBE ANY CONDITIONS AND LIMI TATIONS REGARDING PRIOR YEAR'S DEPRECIATION. FURTHER, THE LANGUAGE USED IN AMENDED SECTION 32(2) ALSO SUGGESTS THAT IT IS ALSO COVERING DEPRECIATION OF ANY PRECEDING P REVIOUS YEARS. G) THE AMENDMENT IN SECTION 32(2) OF THE ACT CAME INTO FORCE FROM A.Y. 2002-03. ACCORDING TO ALLEGATION PUT BY ASSESSING OFFICER DE PRECIATION RELATING TO THE PERIOD AFTER AMENDMENT I.E. FROM ASSESSMENT YEAR 2002-03 S HOULD ONLY BE ALLOWED FOR CARRY FORWARD AND DEPRECIATION RELATING TO THE YEARS BEFO RE AMENDMENT SHOULD BE ALLOWED FOR CARRY FORWARD ONLY FOR THE LIMITED PERIOD OF EI GHT YEARS FROM THE YEAR WHEN IT WAS FIRST COMPUTED. ACCORDING TO THE SAID ALLEGATION OF ASSESSING OFFICER, DEPRECIATION AVAILABLE FOR CARRY FORWARD ON THE FIRST DAY OF ASS ESSMENT YEAR 2002-03 WILL BE AVAILABLE FOR CARRY FORWARD ONLY FOR THE LIMITED PE RIOD OF EIGHT YEARS AS IT PERTAINS TO THE PERIOD BEFORE AMENDMENT CAME INTO FORCE. DEPREC IATION FROM FINANCIAL YEAR 2002-03 I.E. ASSESSMENT YEAR 2003-04 WILL ONLY BE C ARRIED FORWARD FOR THE PERIOD WITHOUT LIMITATION. IF THE AO'S VERSION OF INTERPRE TATION APPLIES THEN PROVISION OF SECTION 32(2) OF THE ACT WOULD BE REDUNDANT FOR FIR ST ASSESSMENT YEAR 2002-03 FROM WHICH THE PROVISION IS MADE APPLICABLE BY THE FINAN CE ACT, 2001. IT CANNOT BE THE INTENTION OF LEGISLATURE THAT THE AMENDMENT BECOMES REDUNDANT IN THE FIRST YEAR OF APPLICABILITY ITSELF: THUS, ASSESSING OFFICER HAS N OT CONSIDERED THE PLAIN MEANING OF THE PROVISION IN CORRECT PERSPECTIVE. H) IN THIS CONNECTION, RELIANCE IS PLACED ON THE FOLLOWING DECISIONS. (I) HON'BLE ITAT DELHI BENCH 'D' IN THE CASE OF RAJASTHAN PETRO SYNTHETICS LTD. VS ACIT [2014] 49 TAXMANN.COM 599, WHEREIN HON'BLE ITAT HAS HELD THAT: 'IN TERMS OF AMENDED PROVISIONS OF SECTION 32(2) BY FINANCE ACT, 2001, UNABSORBOD DEPRECIATION ALLOWANCE PERTAINING TO ASS ESSMENT YEARS 1997-98, 1998-99, 1999-2000 AND 2000-01-COULD BE CARRIED FOR WARD FOR SOT OFF INDEFINITELY' ITA NO.70 /RJT/ 2014 ITO VS. INTEGRATED PROTEINS LTD. ASST.YEAR 2007-08 - 6 - (II) HON'BLE ITAT MUMBAI BENCH 'B' IN THE CAS E OF DCIT VS. BAJAJ HINDUSTAN LTD. [2014] 47 TAXMANN.COM 333, WHEREIN HON'BLE ITA T HAS HELD THAT: 'WHERE COMMISSIONER (APPEALS) FOLLOWING ORDER PASSE D IN CASE OF GENERAL MOTORS INDIA (P.) LTD. V. DY CIT [2013] 354 ITR 244 /[2012] 25 TAXRNANN.COM 364/210 TAXMAN 20 (GUJ.) (MAG.), HELD THAT UNABSORBED DEPRECIATION RELATING TO ASSESSMENT YEARS 1999-2000 TO 2002-03 WAS AVAILABLE FOR SETTING OFF FOR A PERIOD BEYOND EIGHT YEARS, SINCE NO CONTRARY DECISION HAD BEEN BROUGHT ON RECORD BY REVENUE, IMP UGNED ORDER PASSED BY COMMISSIONER (APPEALS) WAS TO BE UPHELD'. (III) HON'BLE HIGH COURT OF GUJARAT IN THE CAS E OF CIT VS. GUJARAT THEMIS BIOSYN LTD. [2014] 44 TAXMANN.COM 204, WHEREIN THE HON'BLE HIGH COURT HAS HELD THAT: 'UNABSORBED DEPRECIATION OF ASSESSMENT YEARS 1997-9 8 TO 2001-02 COULD BE ALLOWED TO BE CARRIED FORWARD AND SET OFF EVEN AFTE R A PERIOD OF EIGHT YEARS, IN VIEW OF AMENDED SECTION 32(2)' (IV) HON'BLE HIGH COURT OF GUJARAT IN THE CASE OF GENERAL MOTORS INDIA (P.) LTD. VS , DCIT [2012] 25 TAXMANN.COM 364, WHEREIN THE HO N'BLE HIGH COURT HAS HELD THAT: CARRY FORWARD OF UNABSORBED DEPRECIATION OF ASSESS MENT YEAR 1997-98 - UNABSORBED DEPRECIATION OF ASSESSMENT YEAR 1997-98 COULD BE ALLOWED TO BE CARRIED FORWARD AND SOT OFF AFTER A PERIOD OF EIGHT YEARS, IN VIEW OF AMENDED SECTION 32(2) I) IN VIEW OF THE ABOVE SUBMISSION, THE AP PELLANT SUBMITS THAT THE LD. CIT(A) HAS NOT COMMITTED AN ERROR WHILE INTERPRETING SECTI ON 32(2) AS AMENDED BY THE FINANCE ACT, 2001 TO BE APPLICABLE ; F.ROM ASSESSMENT YEAR 2002-02 AND THEREFORE PRAYS THAT THE LD. CIT(A)'S ORDER DIRECTING THE AO TO ALLOW UNABSORBED DEPRECIATION ALLOWANCE TO BE CARRIED FORWARD AND SET OFF MAY KIN DLY BE UPHELD. 4.1. THE HONBLE JURISDICTIONAL HIGH COURT IN THE C ASE OF CIT VS. GUJARAT THEMIS BIOSYN LTD. (SUPRA) HAS HELD, UNABSORBED DEPRECIATION OF ASSESSMENT YEARS 1997-98 TO 2001-02 COULD BE ALL OWED TO BE CARRIED ITA NO.70 /RJT/ 2014 ITO VS. INTEGRATED PROTEINS LTD. ASST.YEAR 2007-08 - 7 - FORWARD AND SET OFF EVEN AFTER A PERIOD OF EIGHT YE ARS, IN VIEW OF AMENDED SECTION 32(2) . 4.2. FURTHER, THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF GENERAL MOTORS INDIA (P.) LTD. VS. DCIT REPORTED AT (2012) 25 TAXMANN.COM 364 HAS HELD, CARRY FORWARD OF UNABSORBED DEPRECIATION OF ASSESSMENT YEAR 1997-98 UNABSORBED DEPRECIATIO N OF ASSESSMENT YEAR 1997-98 COULD BE ALLOWED TO BE CARRIED FORWARD AND SET OFF AFTER A PERIOD OF EIGHT YEARS, IN VIEW OF AMENDED SECTION 3 2(2). THE REVENUE HAS NOT PLACED ON RECORD ANY CONTRARY DECISION AGAI NST THE AFORESAID TWO JUDGEMENTS OF THE HONBLE JURISDICTIONAL HIGH COURT . THEREFORE, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF T HE LD.CIT(A) ON THIS ISSUE, SAME IS HEREBY UPHELD. THUS, GROUNDS OF TH E REVENUES APPEAL ARE REJECTED. 5. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED . ORDER PRONOUNCED IN THE COURT ON WEDNESDAY, THE 23 RD DAY OF DECEMBER, 2015 AT AHMEDABAD. SD/- SD/- ( ) ( ) ( PRAMOD KUMAR ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 23/ 12 /2015 ..,, -. ,../ T.C. NAIR, SR. PS ITA NO.70 /RJT/ 2014 ITO VS. INTEGRATED PROTEINS LTD. ASST.YEAR 2007-08 - 8 - / COPY OF THE ORDER FORWARDED TO : 1. &( / THE APPELLANT 2. )&( / THE RESPONDENT. 3. 4 5 / CONCERNED CIT 4. 5 ( ) / THE CIT(A)-JAMNAGAR 5. 7-8 , , , /DR,ITAT, RAJKOT 6. 8CD E. / GUARD FILE. / BY ORDER, )7 //TRUE COPY// / ( DY./ASSTT.REGISTRAR) & ' , / ITAT, RAJKOT 1. DATE OF DICTATION 10.XII.15 (DICTATION-PAD 7- PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER ..11.XII.15 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 23.12.15 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 23.12.15 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER