ARCH FINE CHEMICALS PVT. LTD., HYDERABAD V. A.C.I.T. C.C. 32, MUMBAI

ITA 8378/MUM/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71799 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 03-10-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 09-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S J SINGH
• Assessee Lawyers: BHUMIKA VORA
• Keywords: Depreciation; Unabsorbed depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUM BAI , , BEFORE SHRI SANJAY ARORA, AM AND SHRI VIJAY PAL RA O, JM ./ I.T.A. NOS. 8378 & 8379/MUM/2011 ( / ASSESSMENT YEAR: 2008-09 & 2009-10) ARCH FINE CHEMICALS PVT. LTD. (FORMERLY KNOWN AS WATSOL ORGANICS LTD.) H-WING, 4 TH FLOOR, TEX CENTRE, OFF. SAKI VIHAR ROAD, CHANDIVALI, ANDHERI (E), MUMBAI-400 072 / VS. ASST. CIT-32, AAYKAR BHAVAN, MUMBAI ./ ./PAN/GIR NO. AAACW 1817 C ( ! /APPELLANT ) : ( '#! / RESPONDENT ) ! $ / APPELLANT BY : MS. BHUMIKA VORA '#! % $ / RESPONDENT BY : SHRI S. J. SINGH & ' ( % ) * / DATE OF HEARING : 03.10.2013 +,- % ) * / DATE OF PRONOUNCEMENT : 27.11.2013 . / O R D E R PER SANJAY ARORA, A. M.: THESE ARE A SET OF TWO APPEALS BY THE ASSESSEE AGIT ATING THE DISMISSAL OF ITS APPEAL FOR TWO CONSECUTIVE YEARS, BEING ASSESSMENT YEARS ( A.Y.) 2008-09 AND 2009-10, BY THE COMMISSIONER OF INCOME TAX (APPEALS)-41, MUMBAI (C IT(A) FOR SHORT) VIDE HIS COMBINED ORDER DATED 15.09.2011. THE APPEALS RAISIN G COMMON ISSUES, WERE FIXED FOR HEARING AND, ACCORDINGLY, HEARD TOGETHER, AND ARE B EING DISPOSED OF VIDE A COMMON, CONSOLIDATED ORDER. 2 ITA NO. 8378 & 8379/MUM/2011 (A.Y. 08-09 & 09-10) ARCH FINE CHEMICALS PVT. LTD. VS. ASST. CIT 2. THE ONLY ISSUE IN THE ASSESSEES INSTANT APPEALS IS THE MAINTAINABILITY IN LAW OF THE ASSESSEES CLAIM FOR SET OFF OF UNABSORBED DEPRECIA TION ALLOWANCE FOR THE EARLIER YEARS, WHICH STOOD CLAIMED PER ITS RETURN OF INCOME FOR TH E RELEVANT YEARS BY THE ASSESSEE AT RS.1,05,55,697/- AND RS.1,20,76,331/- FOR THE TWO C ONSECUTIVE YEARS, I.E., A.Y. 2008-09 AND 2009-10 RESPECTIVELY. THE SAME STOOD DISALLOWED , AND FURTHER CONFIRMED FOR BEING VALID BY THE FIRST APPELLATE AUTHORITY, IN VIEW OF THE AMENDMENT TO SECTION 32(2) BY FINANCE (NO.2) ACT, 1996 W.E.F. 01.04.1997, RESTRIC TING THE CARRY FORWARD OF THE UNABSORBED DEPRECIATION ALLOWANCE U/S. 32(2) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) TO EIGHT YEARS BEGINNING WITH THE YEAR IMMEDIATELY SUCCEEDING THE YEAR FOR WHICH THE ALLOWANCE IS FIRST COMPUTED. THOUGH THE R ELEVANT PROVISION HAD BEEN SINCE AMENDED, I.E., BY FINANCE ACT, 2001 W.E.F. 01.04.20 02, SO AS TO REMOVE THE SAID RESTRICTION OR LIMITATION QUA THE PERIOD OF CARRY FORWARD (OF UNABSORBED DEPRECI ATION), IT WOULD APPLY W.E.F. A.Y. 2002-03 ONWARDS, SO THAT IT WOULD HAVE NO APPLICATION IN RESPECT OF THE DEPRECIATION RELATING TO THE INTERVENING YEA RS, I.E., BEING AYS. 1997-98 TO 2001-02. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. 3.1 THE REVENUE, IN RESTRICTING THE ASSESSEES CLAI M FOR DEPRECIATION (INSOFAR AS IT RELATES TO THE A.YS. 1997-98 TO 2001-02) TO EIGHT Y EARS IMMEDIATELY SUCCEEDING THE YEAR FOR WHICH THE ALLOWANCE WAS FIRST COMPUTED, RELIES ON THE PROVISION OF SECTION 32(2) AS SUBSTITUTED BY FINANCE (NO.2) ACT, 1996 W.E.F. 01.0 4.1997, AND AS FURTHER AMENDED BY FINANCE ACT, 2000 W.E.F. 01.04.2001. THE SAME IS IN AGREEMENT WITH THE VIEW EXPRESSED IN ITS RESPECT BY THE SPECIAL BENCH OF THE TRIBUNAL IN DY. CIT VS. TIMES GUARANTY LTD. [2010] 4 ITR (TRIB) 210 (SB). ON THIS BEING POINTED OUT BY THE LD. AUTHORIZED REPRESENTATIVE (AR) DURING HEARING, SHE WOULD PLACE ON RECORD THE COPY OF THE DECISION DATED 23.08.2012 BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF GENERAL MOTORS INDIA PVT. LTD. VS. DY. CIT (IN SPECIAL CIVIL APPEAL NO.1773 OF 2012), ADVERTIN G TO THE RELEVANT PART THEREOF, BEING PARAS 30 TO 38. THE PROVISION O F SECTION 32(2) HAS BEEN SINCE RESTORED, I.E., VIDE ITS SUBSTITUTION BY FINANCE ACT, 2001 W. E.F. 01.04.2002, SO THAT THE BAR OF EIGHT YEARS WOULD NO LONGER OBTAIN. WHILE THE SPECIAL BEN CH HAD INTERPRETED THE SAID CHANGES 3 ITA NO. 8378 & 8379/MUM/2011 (A.Y. 08-09 & 09-10) ARCH FINE CHEMICALS PVT. LTD. VS. ASST. CIT IN LAW TO IMPLY THAT THE RESTRICTION OF EIGHT YEARS WOULD APPLY TO THE DEPRECIATION RELATING TO A.YS. 1997-98 TO 2001-02, AND NOT TO THAT UPTO A .Y. 1996-97 OR FROM A.Y. 2002-03 ONWARDS, THE HONBLE COURT HAS OPINED DIFFERENTLY. ARGUING THAT THERE IS NO CAVEAT IN THE PROVISION, I.E., AS APPLICABLE FOR THE RELEVANT YEA RS, AND PLACING RELIANCE ON THE CIRCULAR NO.14 OF 2001 BY THE CBDT, IT HAS HELD THAT THE ENT IRE UNABSORBED DEPRECIATION UPTO A.Y. 2001-02 SHALL, BY VIRTUE OF THE DEEMING OF SEC TION 32(2), BECOME PART OF THE DEPRECIATION FOR A.Y. 2002-03 AND, THUS, SHALL BE G OVERNED BY THE PROVISION AS IT STANDS AMENDED BY FINANCE ACT, 2001 AND, AS SUCH, ELIGIBLE FOR AN INDEFINITE CARRY FORWARD AGAINST THE PROFITS AND GAINS FOR THE SUBSEQUENT YE ARS. THE WRIT PETITION BY THE ASSESSEE- PETITIONER WAS ACCORDINGLY ALLOWED BY THE HONBLE C OURT. THOUGH THE HONBLE COURT DID NOT HAVE THE BENEFIT OF THE DECISION BY THE SPECIAL BENCH IN THE CASE OF TIMES GUARANTY LTD. (SUPRA), RENDERED BY DRAWING ON SEVERAL DECISIONS BY THE HONBLE APEX COURT, THE MATTER BEING LEGAL, THE DECISION BY THE HONBLE HIG H COURT SHALL PREVAIL. 3.2 IN VIEW OF THE FOREGOING, RESPECTFULLY FOLLOWIN G THE DECISION IN GENERAL MOTORS INDIA PVT. LTD. (SUPRA), I.E., IN PREFERENCE TO THE DECISION BY THE SPECIAL BENCH OF THE TRIBUNAL IN TIMES GUARANTY LTD. (SUPRA), WE HEREBY DIRECT FOR THE ALLOWANCE OF THE ASSESSEES CLAIMS IN ACCORDANCE WITH AND IN TERMS O F THE SAID DECISION. WE DECIDE ACCORDINGLY. 4. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED ON THE AFORESAID TERMS. ORDER PRONOUNCED IN THE OPEN COURT ON NOVEMBER 27, 2013 SD/- SD/- (VIJAY PAL RAO) (SANJAY ARORA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER & /( MUMBAI; 0' DATED : 27.11.2013 .'../ ROSHANI , SR. PS 4 ITA NO. 8378 & 8379/MUM/2011 (A.Y. 08-09 & 09-10) ARCH FINE CHEMICALS PVT. LTD. VS. ASST. CIT ! ' #$%& ' &$ / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT ARCH FINE CHEMICALS PVT. LTD. (FORMERLY KNOWN AS WATSOL ORGANICS LTD.) 3/1, 3/2, 4 TH FLOOR, SAI SRI NILAYAM, STREET NO.4, HABSRIGNDA, HYDERABAD-73 2. '#! / THE RESPONDENT 3. & 1) ( ) / THE CIT(A) 4. & 1) / CIT - CONCERNED 5. 4 5 ')'67 , * 67- , & /( / DR, ITAT, MUMBAI 6. 5 89 : ( / GUARD FILE ! ( / BY ORDER, )/(* + (DY./ASSTT. REGISTRAR) , & /( / ITAT, MUMBAI