The Dy. CIT, Gandhinagar Circle, Gandhinagar V. Gujarat Water Resources Development Corpn. Ltd., Gandhinagar

ITA 716/AHD/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0032 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 6 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 09-08-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 10-03-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: MEHUL PATEL
• Keywords: Depreciation; Unabsorbed depreciation
• Section: 143(3); 115JB

Judgement Text

, B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMEBR ./ I.T.A. NO. 716/AHD/2014 ( ASSESSMENT YEAR : 2010-11) DY. COMMISSIONER OF INCOME-TAX GANDHINAGAR CIRCLE, GANDHINAGAR / VS. GUJARAT WATER RESOURCES DEVELOPMENT CORP. LTD. NR. BIJ NIGAM, GANDHINAGAR-382010 ./ ./ PAN/GIR NO. : AAACG5588J ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI MUDIT NAGPAL, SR. D.R. / RESPONDENT BY : SHRI MEHUL PATEL, A.R. DATE OF HEARING 05/09/2018 !'# / DATE OF PRONOUNCEMENT 25/09/2018 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE REVENUE AGAINST THE ORDER OF THE CIT(A), GANDHINAGA R (CIT(A) IN SHORT), DATED 02.12.2013 ARISING IN THE ASSESSME NT ORDER DATED 24.01.2013 PASSED BY THE ASSESSING OFFICER (AO) UND ER S. 143(3) ITA NO. 716/AHD/14 [DCIT VS. GUJARAT WATER RESOURCE S DEVELOPMENT CORP. LTD.] A.Y. 2010-11 - 2 - OF THE INCOME TAX ACT, 1961 (THE ACT) CONCERNING AS SESSMENT YEAR 2010-11. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE REA DS AS UNDER:- 1. THE LEARNED CIT(APPEALS) HAS ERRED IN LAW AND FACTS IN ALLOWING BUSINESS LOSS OF RS.1,42,12,987/- TO BE SET OFF WHILE COMPUT ING THE INCOME U/S.115JB, EVEN WHILE HOLDING THAT THE ALTERNATE PLEA OF THE A SSESSEE ON MERITS IS REJECTED. 2. THE LEARNED CIT(APPEALS) HAS ERRED IN LAW AND F ACTS IN ALLOWING UNABSORBED DEPRECIATION OF RS.26,80,86,555/- OF AY 1998-99 AND AY 2000- 01, WHILE IGNORING THE PROVISIONS OF SECTION 32(2) AS IT EXISTED THEN. 3. GROUND NO.1 CONCERNS SET OFF OF BUSINESS LOSS OF RS.1,42,12,987/- WHILE COMPUTING SECTION 115JB OF T HE ACT. 4. WHEN THE MATTER WAS CALLED FOR HEARING, LEARNED DR FOR THE REVENUE REFERRED TO PARA 4.3 OF THE ORDER OF THE CI T(A) AND ADVERTED OUR ATTENTION TO THE FINDINGS OF THE CIT(A ) AT PAGE NOS. 4 & 5 THEREOF. THE FINDINGS OF THE CIT(A) AT FIRST I NSTANCE GIVES AN IMPRESSION THAT ACCUMULATED BUSINESS LOSS AS PER BO OKS OF ACCOUNT STANDS NIL AND AS PER THE PROVISIONS OF SECTION 115 JB OF THE ACT, ASSESSEE IS NOT ENTITLED FOR ANY CLAIM. ON THE OTH ER HAND, IN THE VERY NEXT PARA, THE CIT(A) HAS DIRECTED THE AO TO A LLOW THE BUSINESS LOSS OF RS.1,42,12,987/- AS AN ALTERNATIVE CLAIM. THE LEARNED DR POINTED OUT THAT THE FINDINGS OF THE CIT (A) ARE CLEARLY CONTRADICTORY AND INCOHERENT. ITA NO. 716/AHD/14 [DCIT VS. GUJARAT WATER RESOURCE S DEVELOPMENT CORP. LTD.] A.Y. 2010-11 - 3 - 5. THE LEARNED AR FOR THE ASSESSEE FAIRLY AGREED WI TH THE AFORESAID CONTENTIONS OF THE LEARNED DR FOR THE REV ENUE TOWARDS SUCH CONTRADICTION AND DISARRAY BUT HOWEVER PLEADED FOR THE ISSUE TO BE REMITTED BACK TO THE AO INSTEAD OF THE CIT(A) TO ENABLE THE AO TO TAKE INTO ACCOUNT ALL THE EVIDENCES PLACED OR TO BE PLACED BEFORE HIM FOR DE NOVO CONSIDERATION. 6. WE FIND MERIT IN THE PLEA RAISED ON BEHALF OF TH E REVENUE TOWARDS INEXPLICABLE CONTRADICTION IN THE ORDER OF THE CIT(A) WHILE ADJUDICATING THE ISSUE. WE ALSO NOTICE THAT CERTAIN REVISED WORKING WERE PLACED BY THE ASSESSEE BEFORE THE CIT( A) TO SUPPORT ITS SUBMISSIONS FOR SET OFF. IT WILL BE JUST AND E QUITABLE TO REMIT THE ISSUE BACK TO THE FILE OF THE AO FOR DE NOVO CONSIDERATION OF ALL ASPECTS OF THE ISSUE AFTER GIVING REASONABLE OP PORTUNITY TO THE ASSESSEE. CONSEQUENTLY, THE ISSUE TOWARDS ELIGIBIL ITY OF SET OFF OF CARRY FORWARD LOSSES AGAINST THE BOOK PROFIT UNDER S.115JB OF THE ACT IS RESTORED BACK TO THE FILE OF THE AO FOR ITS FRESH DETERMINATION IN ACCORDANCE WITH THE LAW. 7. IN THE RESULT, GROUND NO.1 OF THE REVENUES APPE AL IS ALLOWED FOR STATISTICAL PURPOSES. 8. GROUND NO.2 CONCERNS ALLOWABILITY OF UNABSORBED DEPRECIATION UNDER THE NORMAL PROVISIONS OF THE ACT . 9. THE LEARNED DR FOR THE REVENUE REFERRED TO PARA 5.3 OF THE ORDER OF THE CIT(A) AND SUBMITTED THAT THE CIT(A) H AS TAKEN INTO ACCOUNT THE DETAILS SUBMITTED BY THE ASSESSEE BASED ON PAST RETURNS. SUCH DETAILS ON FACTUAL ASPECTS WERE NOT MADE AVAILABLE ITA NO. 716/AHD/14 [DCIT VS. GUJARAT WATER RESOURCE S DEVELOPMENT CORP. LTD.] A.Y. 2010-11 - 4 - TO THE AO BY THE ASSESSEE. THE LEARNED DR SUBMITTE D THAT THE ENTIRE ISSUE REGARDING MAINTAINABILITY OF UNABSORBE D DEPRECIATION REQUIRES TO BE SET ASIDE TO THE FILE OF THE AO WITH OUT ANY FETTERS. 10. THE LEARNED AR, ON THE OTHER HAND, POINTED OUT THAT THE CIT(A) ALSO HAS MERELY REMITTED THE ISSUE BACK TO T HE FILE OF THE AO FOR CERTAIN VERIFICATIONS. THE LEARNED AR THERE AFTER REFERRED TO THE DECISION OF THE HONBLE GUJARAT HIGH COURT I N THE CASE OF CIT VS. GUJARAT THEMIS BIOSYN LTD. TAX APPEAL NO. 3 OF 2014 WHEREIN THE CLAIM OF THE ASSESSEE FOR CARRY FORWARD OF THE UNABSORBED DEPRECIATION WAS ALLOWED TO BE CARRIED F ORWARD TO THE SUCCEEDING ASSESSMENT YEAR WITHOUT ANY LIMITATION O F EIGHT YEARS FOR SUCH CARRY FORWARD AND SET OFF PLACED AS PER TH E ERSTWHILE PROVISIONS OF SECTION 32(2) OF THE ACT. THE LEARNE D AR SUBMITTED THAT THE RESTRICTION OF EIGHT YEARS FOR CARRY FORWA RD AND SET OFF OF UNABSORBED DEPRECIATION HAS BEEN DISPENSED WITH BY THE SUBSEQUENT AMENDMENT AND ACCORDINGLY THE UNABSORBED DEPRECIATION ARISING IN THE ASSESSMENT YEARS PRIOR TO THE AMENDMENTS ARE ALSO GOVERNED BY THE PROVISIONS OF S ECTION 32(2) OF THE ACT AS AMENDED BY THE FINANCE ACT, 2001. TH E LEARNED AR THEREFORE URGED THAT WHILE REMITTING THE ISSUE BACK TO THE FILE OF THE AO, THE AO BE DIRECTED TO RE-EXAMINE THE ISSUE IN THE LIGHT OF THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN T HE CASE OF GUJARAT THEMIS BIOSYN LTD. (SUPRA) AND GENERAL MOTO RS INDIA P. LTD. VS. DCIT 354 ITR 244 (GUJ). IN THE LIGHT OF THE CONSENSUS BROADLY ARRIVED BETWEEN THE PARTIES AND IN CONSONAN CE WITH THE FINDINGS OF THE CIT(A), THE ISSUE IS REMITTED BACK IN ITS ENTIRETY TO THE FILE OF THE AO FOR DE NOVO EXAMINATION FOR ELIGIBILITY OF SET OFF UNDER S.32(2) OF THE ACT AFTER VERIFICATION OF FACTUAL ASPECTS. ITA NO. 716/AHD/14 [DCIT VS. GUJARAT WATER RESOURCE S DEVELOPMENT CORP. LTD.] A.Y. 2010-11 - 5 - THE AO SHALL DETERMINE THE ELIGIBILITY UNDER S.32(2 ) OF THE ACT IN THE LIGHT OF THE DECISIONS OF THE HONBLE GUJARAT H IGH COURT AND SHALL DECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE. 11. GROUND NO.2 OF THE REVENUES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 12. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALL OWED FOR STATISTICAL PURPOSES. SD/- SD/- (MAHAVIR PRASAD) (PRADIP KUMA R KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 25/09/2018 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- &. / REVENUE 2. / ASSESSEE (. )*+ , / CONCERNED CIT 4. ,- / CIT (A) /. 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7. 289 : / GUARD FILE. BY ORDER / 4 /5 *+#4 56) THIS ORDER PRONOUNCED IN OPEN COURT ON 25/09/201 8