Anamallais Agencies Private Ltd., Coimbatore V. DCIT, Coimbatore

ITA 886/CHNY/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8005 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 21-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR B NISCHAL
• Assessee Lawyers: G BASKAR
• Keywords: Depreciation; Unabsorbed depreciation
• Section: 143(3); 32

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , D B ENCH, CHENNAI . . . , . , & BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.886/MDS/2015 ( / ASSESSMENT YEAR: 2010-11) M/S.ANAMALLAIS AGENCIES PVT.LTD. 252, METTUPALAYAM ROAD, COIMBATORE-641 043. VS THE DEPUTY COMMISSIONER OF INCOME TAX , CORPORATE CIRCLE-2, COIMBATORE-641 018. PAN:AAACC4793R ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. G.BASKAR, ADVOCATE /RESPONDENT BY : DR.B.NISCHAL, JCIT /DATE OF HEARING : 4 TH FEBRUARY, 2016 /DATE OF PRONOUNCEMENT : 12 TH FEBRUARY, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THIS APPEAL IS FILED BY THE ASSESSEE AGGRIEVED BY T HE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS)- 8, MUMBAI DATED 19.01.2015 IN ITA NO.CIT(A)-8/ITO- 3(1)(3)/IT-11/13-14 PASSED UNDER SECTION 143(3) OF THE ACT. 2. THE ONLY GROUND RAISED BY ASSESSEE IN ITS APP EAL IS THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN SUSTAINING THE ORDER OF THE LEARNED ASSESS ING OFFICER IN DENYING THE CLAIM OF SET OFF OF UNABSORBED DEPRE CIATION OF 2 ITA NO.886 /MDS/2015 ` 4,87,761/- AND ` 2,42,314/- FOR THE ASSESSMENT YEARS 1999- 2000 & 2000-01 RESPECTIVELY. 3. AT THE OUTSET, THE LEARNED COUNSEL FOR THE ASSES SEE SUBMITTED THAT THE ISSUE INVOLVED IN THE APPEAL IS SQUARELY COVERED BY THE ORDER OF THIS TRIBUNAL DATED 10.07. 2015 IN THE CASE OF ACIT VS.SRI RAMAKRISHNA MILLS (COIMBATORE) LTD., WHEREIN THE TRIBUNAL HAS DECIDED THE SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE FOLLOWING THE DECISION OF THE JURI SDICTIONAL HIGH COURT IN THE CASE CIT VS.PIONEER ASIA PACKING P.LTD. (310 ITR 198)(MAD). 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE O THER HAND ARGUED IN SUPPORT OF THE ORDERS OF THE REVEN UE, HOWEVER COULD NOT CONTROVERT TO THE SUBMISSIONS OF THE LEARNED AUTHORIZED REPRESENTATIVE. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. ON A PERUSAL OF THE ORDER OF TH IS TRIBUNAL DATED 10.07.2015 IN THE CASE OF SRI RAMAKRISHNA MIL LS (COIMBATORE) LTD. (SUPRA), WE FIND THAT THIS TRIBUN AL BY FOLLOWING THE DECISIONS OF THE HONBLE JURISDICTIO NAL HIGH COURT IN THE CASE CIT VS.PIONEER ASIA PACKING P.LTD . (310 ITR 198)(MAD) AND THE DECISION OF HONBLE GUJARAT H IGH 3 ITA NO.886 /MDS/2015 COURT IN THE CASE OF GENERAL MOTORS INDIA P.LTD. VS . DCIT (354 ITR 244)(GUJ) HAS HELD THAT THE ASSESSEE IS E LIGIBLE TO CARRY FORWARD THE UNABSORBED DEPRECIATION OF THE AS SESSMENT YEARS 1999-2000 & 2000-01 IN THE RELEVANT ASSESSME NT YEAR 2010-11. WHILE DOING SO, THE TRIBUNAL HAS OBSERVED AS UNDER:- 5. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY P ERUSED THE MATERIALS AVAILABLE ON RECORD. THE CASE RELIED BY THE LD. A.R. IS SQUARELY APPLICABLE TO THE FACTS OF THE CASE. THE RELEVANT GIST/PORTION OF THE RESPECTIVE ORDERS IS S TATED HEREIN BELOW FOR REFERENCE:- (A) CIT VS. PIONEER ASIA PACKING P. LTD.:- WE ARE NOT ABLE TO SEE ANY ILLEGALITY OR IRREGULARI TY IN THE ORDER OF THE TRIBUNAL, AS CONTENDED BY LEARNED SENI OR STANDING COUNSEL FOR THE REVENUE. AS PER THE AMENDE D PROVISIONS OF SECTION 32(2) OF THE ACT, WITH EFFECT FROM APRIL 1,1997, IF THE INCOME FROM BUSINESS FOR THE ASSESSM ENT YEAR IS INSUFFICIENT TO ABSORB THE DEPRECIATION ALL OWANCE OF THAT ASSESSMENT YEAR, THE AMENDED PROVISION PERMITS ABSORPTION OF DEPRECIATION ALLOWANCE OF A BUSINESS AGAINST PROFITS AND GAINS OF ANY OTHER BUSINESS OF THE SAME ASSESSMENT YEAR. WHEN THE DEPRECIATION ALLOWANCE OF A BUSINESS OF THE ASSESSMENT YEAR ITA NO.2468 /MDS/20 14 IS NOT ABSORBED BY ANY OTHER BUSINESS OF THE SAME ASSESSMENT YEAR, THEN THE REMAINING UNABSORBED DEPRECIATION ALLOWANCE COULD BE SET OFF AGAINST THE INCOME UNDER ANY OTHER HEAD THAT IS ASSESSABLE FOR THE SAM E ASSESSMENT YEAR. IN THE EVENT OF DEPRECIATION ALLOW ANCE OF THE YEAR IS UNABLE TO BE ABSORBED BY ANY OTHER BUSI NESS INCOME OR FROM INCOME UNDER ANY OTHER HEAD IN THE S AME ASSESSMENT YEAR, THE REMAINING UNABSORBED DEPRECIAT ION ALLOWANCE SHALL BE CARRIED FORWARD TO THE FOLLOWING YEAR AND (A) UNABSORBED ALLOWANCE SHALL BE SET OFF AGAINST T HE PROFITS AND GAINS OF ANY BUSINESS CARRIED BY A PERS ON, (B) IF THE UNABSORBED DEPRECIATION ALLOWANCE CANNOT BE WHO LLY SET OFF SO, IT SHALL BE ALLOWED TO BE CARRIED FORWA RD FOR THE FOLLOWING EIGHT ASSESSMENT YEARS IMMEDIATELY SUCCE EDING THE ASSESSMENT YEAR IN WHICH IT WAS FIRST COMPUTED. THE 4 ITA NO.886 /MDS/2015 PROVISO PROVIDES THAT THE BUSINESS TO WHICH DEPRECI ATION ALLOWANCE IS RELATED TO MUST BE CARRIED ON IN THE SUCCEEDING YEAR SO AS TO ALLOW SUCH SET OFF. THUS, BY THE AMENDMENT, THE DEEMING FICTION OF TREATING THE EARL IER YEARS' UNABSORBED DEPRECIATION AS THE CURRENT YEAR DEPRECIATION WAS REMOVED. THE PERIOD AVAILABLE FOR ABSORBING THE UNABSORBED DEPRECIATION AGAINST THE P ROFIT OF THE SUCCEEDING YEARS WAS LIMITED TO EIGHT YEARS. TH E CLARIFICATION OF THE FINANCE MINISTER IN PARLIAMENT IS ALSO TO THE EFFECT THAT INASMUCH AS THE CUMULATED UNABSORBE D DEPRECIATION BROUGHT FORWARD AS ON APRIL 1, 1997, C OULD STILL BE SET OFF AGAINST THE TAXABLE BUSINESS PROFIT OR I NCOME UNDER ANY OTHER HEAD FOR THE ASSESSMENT YEAR 1997-9 8 AND SEVEN SUBSEQUENT YEARS VIDE [1996] 222 ITR (ST. ) 36. CIRCULAR OF THE CENTRAL BOARD OF DIRECT TAXES NO. 7 62, DATED FEBRUARY 18, 1998 ([1998] 230 ITR (ST.) 12 ) ALSO CLARIFIES THE ISSUE TO THE FOLLOWING EFFECT (PAGE 2 7): 'SUB-SECTION (2) OF SECTION 32 , AS IT EXISTED UP T O THE ASSESSMENT YEAR 1996-97, PROVIDED THAT THE UNABSORB ED DEPRECIATION OF A YEAR SHALL BE ADDED TO THE AMOUNT OF THE ALLOWANCE FOR DEPRECIATION OF THE FOLLOWING PREVIOU S YEAR AND DEEMED TO BE PART OF THAT ALLOWANCE. THEREFORE, THE UNABSORBED DEPRECIATION ALLOWANCE, IF ANY, OF THE ASSESSMENT YEAR 1996-97 SHALL BE ADDED TO THE AMOUN T OF THE ALLOWANCE FOR DEPRECIATION OF THE ASSESSMENT YE AR 1997-98 AND DEEMED TO BE PART OF THE ALLOWANCE FOR THIS YEAR. IN OTHER WORDS, THE UNABSORBED DEPRECIATION ALLOWANCE OF THE ASSESSMENT YEAR 1996-97 SHALL BE A DDED TO THE ALLOWANCE OF 1997-98 AND WILL BE DEEMED TO B E THE ALLOWANCE OF THAT YEAR. THE LIMITATION OF EIGHT YEA RS SHALL START FROM THE ASSESSMENT YEAR 1997-98.' 6. IN VIEW OF THE ABOVE POSITION OF LAW, WE ARE OF THE VIEW THAT THE TRIBUNAL HAS RIGHTLY COME TO THE CONC LUSION THAT THE ASSESSEE IS ENTITLED TO THE UNABSORBED DEPRECIATION BROUGHT FORWARD AS ON APRIL 1, 1997, A ND COULD BE SET OFF AGAINST THE BUSINESS PROFITS AND IN ORDE R TO GIVE EFFECT TO THAT FINDING, THE CASE WAS REMITTED TO TH E FILE OF THE ASSESSING OFFICER FOR VERIFICATION AS TO HOW MUCH DEPRECIATION WAS AVAILABLE UP TO VERIFICATION AS T O HOW MUCH DEPRECIATION WAS AVAILABLE UP TO APRIL 1, 1997 , THAT COULD BE INCLUDED IN THE INCOME OF THE ASSESSEE. (B) GENERAL MOTORS INDIA P. LTD. VS. DCIT: EVEN ON THE MERITS THE PROVISIONS OF SECTION 32(2) , AS AMENDED BY THE FINANCE ACT, 2001, WOULD ALLOW THE 5 ITA NO.886 /MDS/2015 UNABSORBED DEPRECIATION ALLOWANCE AVAILABLE IN THE ASSESSMENT YEARS 1997-98, 1999-2000, 2000-01 AND 2 001- 02 TO BE CARRIED FORWARD TO THE SUCCEEDING YEARS A ND IF ANY UNABSORBED DEPRECIATION OR PART THEREOF COULD NOT BE SET OFF ILL THE ASSESSMENT YEAR 2002-03 THEN IT WOULD BE C ARRIED FORWARD TILL THE TIME IT IS SET OFF AGAINST THE PR OFITS AND GAINS OF SUBSEQUENT YEARS. SINCE IN THE GIVEN CASE BEFORE US, THE ISSUE IS WIT H RESPECT TO CARRY FORWARD OF UNABSORBED DEPRECIATION OF THE AS SESSMENT YEARS 1999-2000 TO 2000-2001 IN THE RELEVANT ASSES SMENT YEAR 2010-11, THE FACTS OF THE CASE IS IDENTICAL T O THE ISSUE DECIDED BY THE HONBLE HIGH COURTS SUPRA, THEREFOR E WE HEREBY CONFIRM THE ORDER OF THE LD. CIT (A) WHICH IS IN FAVOUR OF THE ASSESSEE. 6. RESPECTFULLY FOLLOWING THE SAME, WE HEREBY DIREC T THE LEARNED ASSESSING OFFICER TO ALLOW THE CLAIM OF THE ASSESSEE TO SET OFF THE UNABSORBED DEPRECIATION OF THE ASSESSMENT YEARS 1999-2000 & 2000-01 IN THE RELEVAN T ASSESSMENT YEAR 2010-11. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 12 TH FEBRUARY, 2016 SD/- SD/- ( . . . ) ( . ) (N.R.S.GANESAN) ( A.M OHAN ALANKAMONY ) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER # /CHENNAI, ( /DATED 12 TH FEBRUARY, 2016 SOMU *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF