Assistant Commissioner of Income Tax, Circle-1(2)1., Bangalore V. M/s Kids Kemp, Bangalore

MA 107/BANG/2018

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 6495 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s) 12 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 25-05-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 13-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P V PRADEEP KUMAR
• Assessee Lawyers: A SHANKAR
• Keywords: Business income; Depreciation; Retrospective amendment; Unabsorbed depreciation
• Section: 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE - C BENCH, BANGALORE BEFORE SHRI A.K.GARODIA, ACCOUNANT MEMBER AND SHRI LALIET KUMAR, JUDICIAL MEMBER [MP NOS. 8, 106 & 107/BANG/2018 (IN ITA NOS. 1034 TO 1036/BANG/2016)] (ASSESSMENT YEARS : 2008 09 TO 2010 11) THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 1 (2) (1), BANGALORE. APPELLANT VS M/S. KIDS KEMP, NO. 18, RAMANASHREE ARCADE, M. G. ROAD, BANGALORE 560001. PAN : AABFK6993K RESPONDENT ASSESSEE BY : SHRI A. SHANKAR, ADVOCATE REVENUE BY : SHRI DR. P. V. PRADEEP KUMAR, ADDL. CIT DR DATE OF HEARING : 25-05-2018 DATE OF PRONOUNCEMENT : 25-05-2018 O R D E R PER A. K. GARODIA, A.M.: THESE THREE M. PS. ARE FILED BY THE REVENUE AGAINST A COMBINED ORDER OF THE TRIBUNAL DATED 06.07.2017. OUT OF THESE THREE M. PS ., ONE M. P. I.E. M. P. NO. 8/BANG/2018 FOR A. Y. 2008 09 WAS FILED ON 10.01. 2018 AND REMAINING TWO M. PS. WERE FILED ON 13.04.2018. ALL THESE THREE M. PS . WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER F OR THE SAKE OF CONVENIENCE. 2. AT THE VERY OUTSET, IT WAS SUBMITTED BY THE LEAR NED AR OF THE ASSESSEE THAT TWO M. PS. FILED BY THE REVENUE ON 13.04.2018 FOR A. YS . 2009 10 & 2010 11 ARE BARRED BY LIMITATION BECAUSE AS PER THE AMENDED PRO VISIONS OF SECTION 254 (2), A M. P. CAN BE FILED BY THE ASSESSEE OR THE A.O. WI THIN 6 MONTHS FROM THE END OF THE MONTH IN WHICH, THE IMPUGNED ORDER WAS PASS ED BY THE TRIBUNAL. M. P. NOS. 8, 106 & 107/BANG/2018 2 ACCORDINGLY, M. P. IN THE PRESENT CASE COULD BE FIL ED UP TO 31.01.2018 BUT THESE TWO M. PS. WERE FILED ON 13.04.2018 AND THEREFORE, THESE TWO M. PS. ARE TIME BARRED. IN REPLY, LEARNED DR OF THE REVENUE HAD NOT HING TO SAY ON THIS ASPECT. 3. REGARDING THE M. P. FOR A. Y. 2008 09 WHICH WA S FILED IN TIME, IT WAS SUBMITTED BY THE LEARNED DR OF THE REVENUE THAT THE IMPUGNED TRIBUNAL ORDER IN RESPECT OF ITS DECISION TO ALLOW SET OFF OF B/F UNA BSORBED DEPRECIATION OF RS. 30,89,083/- FOR A. Y. 1997 98, RS. 185,29,937/- F OR A. Y. 1998 99 AND RS. 331,56,880/- FOR A. Y. 1999 2000 IN A. Y. 2008 09 IS NOT IN LINE WITH THE JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF PEERLESS GENERAL FINANCE & INVESTMENT CO. LTD. VS. CIT AS REPORTED I N 380 ITR 165. HE SUBMITTED THAT THE TRIBUNAL HAS FOLLOWED A JUDGMENT OF HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF GENERAL MOTOR INDIA ( P) LTD. VS. DCIT AS REPORTED IN 354 ITR 244 AND HENCE, THERE IS AN APPARENT MIST AKE IN THE TRIBUNAL ORDER BECAUSE THE SAME IS NOT IN LINE WITH THIS JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF PEERLESS GENERAL FINANCE & INVESTMENT CO. LTD. VS. CIT (SUPRA). IN REPLY, IT WAS SUBMITTED BY THE LEAR NED AR OF THE ASSESSEE THAT THIS JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF PEERLESS GENERAL FINANCE & INVESTMENT CO. LTD. VS. CIT (SUPRA) IS ON LY FOR DISMISSAL OF SLP FILED BY THE ASSESSEE AGAINST THE JUDGMENT OF HONBLE CAL CUTTA HIGH COURT REPORTED IN 242 TAXMAN 209. HE POINTED OUT THAT IN THAT CASE , THE ONLY DISPUTE BEFORE HONBLE CALCUTTA HIGH COURT WAS THIS AS TO WHETHER THE B/F UNABSORBED DEPRECIATION AS ON 01.04.1997 COULD BE SET OFF AGAI NST INCOME FROM HOUSE PROPERTY AND INCOME FROM OTHER SOURCES. IN THIS REG ARD, HE DRAWN OUR ATTENTION TO TWO QUESTIONS OF LAW FRAMED BY THE HONBLE CALCU TTA HIGH COURT AT THE TIME OF THE ADMISSION OF THE APPEAL. HE POINTED OUT THAT TH E SAME ARE AVAILABLE IN PARA 7 OF THIS JUDGMENT OF HONBLE CALCUTTA HIGH COURT. FOR READY REFERENCE, WE REPRODUCE THE SAME AS UNDER:- I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE TRIBUNAL ERRED IN CONSTRUING THE AMENDMENT OF S ECTION 32(2) BY THE FINANCE (NO.2) ACT 1996 AS RETROSPECTI VE IN EFFECT SO AS TO PRECLUDE THE ASSESSEES CLAIM FOR ADJUSTME NT OF ACCUMULATED UNABSORBED DEPRECIATION ALLOWANCE BROUG HT FORWARD AS ON THE 1 ST APRIL, 1997 FROM EARLIER YEARS AGAINST M. P. NOS. 8, 106 & 107/BANG/2018 3 INCOME FROM HOUSE PROPERTY AND INCOME FROM OTHER SO URCES FOR ASSESSMENT YEAR 1998-99 ? II) WHETHER THE ASSURANCE OF THE FINANCE MINISTER I N PARLIAMENT THAT SET-OFF OF THE CUMULATIVE UNABSORBE D DEPRECIATION BROUGHT FORWARD FROM EARLIER YEARS AS ON APRIL 01, 1997 CAN BE SET OFF AGAINST THE PROFITS AND GAI NS OF A BUSINESS OR PROFESSION OR ANY OTHER INCOME OF THE T AX PAYER FOR THE ASSESSMENT YEAR 1997-98 AND SUBSEQUENT YEAR FOR MS PART OF THE LEGISLATIVE INTENT AND ANY CONSTRUCTION CONT RARY THERETO IS ERRONEOUS? 4. HE FURTHER POINTED OUT THAT AS PER THIS JUDGMENT OF HONBLE APEX COURT CITED BY THE LEARNED DR OF THE REVENUE, THE SLP WAS DISMISSE D WITH THE OBSERVATION THAT THE UNABSORBED DEPRECIATION AS ON 01.04.1997 C AN BE SET OFF AGAINST INCOME UNDER ANY HEAD BUT IF SOME UNABSORBED DEPREC IATION IS REMAINING FOR SET OFF, IT CAN BE CARRIED FORWARD UP TO EIGHT ASSE SSMENT YEARS BUT CAN BE SET OFF AGAINST BUSINESS INCOME ONLY. FOR READY REFERENCE, THIS OBSERVATION OF HONBLE APEX COURT IS ALSO REPRODUCED HEREIN BELOW:- THE SPECIAL LEAVE PETITION IS DISMISSED SUBJECT TO THE OBSERVATION THAT THE UNABSORBED DEPRECIATION AS ON 1ST APRIL, 1 997 CAN BE SET OFF AGAINST THE INCOME FROM ANY HEAD FOR THE IMMEDIATE ASSESSMENT YEAR FOLLOWING 1ST APRIL, 1997 AND THEREAFTER IF THERE S TILL IS ANY UNABSORBED DEPRECIATION THE SAME CAN BE SET OFF ONL Y AGAINST THE BUSINESS INCOME FOR A PERIOD OF EIGHT (08) ASSESSME NT YEARS. 5. HE SUBMITTED FIND THAT AS PER THIS JUDGMENT OF H ONBLE APEX COURT ALSO, THE UNABSORBED DEPRECIATION CAN BE SET OFF IN A. Y. 199 8 99 AGAINST ANY INCOME AND REMAINING UNABSORBED DEPRECIATION CAN BE CARRIE D FORWARD FOR EIGHT YEARS. AS PER THE SUBSEQUENT AMENDMENT BY FINANCE ACT, 200 1 W.E.F. A. Y. 2002 03, THE OLD PROVISIONS WERE RESTORED AS PER WHICH, THE B/F UNABSORBED DEPRECIATION BECOMES DEPRECIATION OF THE CURRENT YE AR I.E. THE SUCCEEDING YEAR. HE SUBMITTED THAT DEPRECIATION OF THE A. YS. 1997 98 TO 1999 2000 CANNOT EXPIRE BEFORE A. Y. 2002 03 BECAUSE EIGHT YEARS A RE NOT OVER AND CARRY FORWARD FOR EIGHT YEARS IS AVAILABLE AS PER THE PRO VISIONS PRIOR TO AMENDMENT BY FINANCE ACT, 2001 AND ONCE IT BECOMES PART OF CURRE NT YEAR DEPRECIATION FOR A. Y. 2002 03 OR A LATER YEAR, THE NEW PROVISIONS AR E APPLICABLE AS PER WHICH, IT BECOMES PART OF CURRENT YEARS DEPRECIATION AND CAN BE SET OFF AGAINST ANY INCOME. HE ALSO PLACED RELIANCE ON A JUDGMENT OF HO NBLE RAJASTHAN HIGH M. P. NOS. 8, 106 & 107/BANG/2018 4 COURT RENDERED IN THE CASE OF CIT VS. HISTORIC RESO RT HOTELS AS REPORTED IN 78 DTR (RAJ) 73. HE SUBMITTED THAT IT WAS HELD IN THIS JUDGMENT THAT WHETHER THE AMENDMENT MADE TO SECTION 32 (2) IS PROSPECTIVE EFF ECT OR RETROSPECTIVE EFFECT IS A DEBATABLE ISSUE AND THEREFORE, THE SAME CANNOT BE DEALT IN PROCEEDINGS U/S 154. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIN D THAT AS PER PARA 4 OF THE JUDGMENT OF HONBLE CALCUTTA HIGH COURT RENDERED IN THE CASE OF PEERLESS GENERAL FINANCE & INVESTMENT CO. LTD. VS. CIT (SUPR A), THE A. Y. INVOLVED IN THAT CASE WAS 1998 99 I.E. PRIOR TO AMENDMENT BY FINANCE ACT 2001 W.E.F. A. Y. 2002 03 AND THE JUDGMENT OF HONBLE APEX COURT CITED BY THE LEARNED DR OF THE REVENUE IS REGARDING DISMISSAL OF SLP FILED BY THE ASSESSEE AGAINST THIS JUDGMENT OF HONBLE CALCUTTA HIGH COURT AND HENCE, IN THIS JUDGMENT OF HONBLE APEX COURT CITED BY THE LEARNED DR OF THE R EVENUE ALSO, THE A. Y. INVOLVED IN A. Y. 1998 99 I.E. PRIOR TO AMENDMENT BY FINANCE ACT 2001 W.E.F. A. Y. 2002 03. IN THE PRESENT CASE, THE A. Y. IN VOLVED IS 2008 09 I.E. MUCH AFTER THE AMENDMENT BY FINANCE ACT 2001 W.E.F. A. Y . 2002 03. THIS IS ALSO SEEN THAT AS PER THIS JUDGMENT OF HONBLE APEX COUR T, THE B/F UNABSORBED DEPRECIATION IN A. Y. 1998 99 CAN BE SET OFF AGAI NST ANY INCOME AND BALANCE REMAINING FOR CARRY FORWARD CAN BE CARRIED FORWARD FOR EIGHT YEARS. HONBLE APEX COURT HAS HELD THAT IT CAN BE SET OFF IN THOSE EIGH T YEARS AGAINST BUSINESS INCOME ONLY BUT THAT DECISION IS WITHOUT CONSIDERIN G THE AMENDMENT BY FINANCE ACT 2001 W.E.F. A. Y. 2002 03 BECAUSE THERE WAS N O OCCASION TO DO SO SINCE THE SLP WAS IN RESPECT OF A. Y. 1998 99 ONLY. IN OUR CONSIDERED OPINION, THIS JUDGMENT OF HONBLE APEX COURT IS NOT RELEVANT FOR AN ASSESSMENT YEAR AFTER THE AMENDMENT BY FINANCE ACT 2001 W.E.F. A. Y. 2002 0 3 BECAUSE THAT THERE WAS NO OCCASION TO CONSIDER THAT AMENDMENT IN THIS CASE . SINCE THE A. Y. INVOLVED IN THE PRESENT CASE IS A. Y. 2008 09, THIS JUDGME NT IS NOT RELEVANT IN THE PRESENT YEAR AND HENCE, WE HOLD THAT THERE IS NO ME RIT IN THIS M. P. OF THE REVENUE BECAUSE IN SUPPORT OF THIS M. P., THE ONLY ARGUMENT OF THE LEARNED DR OF THE REVENUE WAS THIS ONLY THAT THERE IS AN APPAR ENT MISTAKE IN THE TRIBUNAL ORDER BECAUSE THE SAME IS NOT IN LINE WITH THIS JUD GMENT OF HONBLE APEX COURT. SINCE, THIS JUDGMENT IS NOT RELEVANT IN THE PRESENT CASE BEING AN YEAR AFTER M. P. NOS. 8, 106 & 107/BANG/2018 5 AMENDMENT AND THE SAID AMENDMENT WAS NOT TAKEN NOTE OF IN THAT CASE BECAUSE THERE WAS NO NEED OR OCCASION TO DO SO IN T HAT CASE, THIS M. P. OF THE REVENUE IS LIABLE TO BE DISMISSED BECAUSE THE REVEN UE COULD NOT SHOW ANY APPARENT MISTAKE IN THE TRIBUNAL ORDER. WE ORDER AC CORDINGLY. 7. IN THE RESULT, ALL THESE THREE M. PS. OF REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- SD/- (LALIET KUMAR) (A.K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 25 TH MAY, 2018. /MS/ COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.