THE PRINCIPAL COMMISSIONER OF INCOME TAX-4 vs. M/S BANASKANTHA DIST. OIL SEEDS GROWERS UNION LTD.

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TAXAP/599/2019HC GujaratGJHC24054827201909 September 2019Author: HONOURABLE MR. JUSTICE J.B.PARDIWALA,HONOURABLE MR. JUSTICE A.C. RAO5 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal filed by the Revenue. The Tribunal had dismissed the Revenue's appeal by relying on its own previous decisions, specifically in the case of Gujarat Lease Finance Ltd. and General Motors India (P) Ltd. The Tribunal noted that the Gujarat High Court had held that unabsorbed depreciation available as of April 1, 2002 (AY 2002-03) would be dealt with under Section 32(2) as amended by the Finance Act, 2001. Circular No. 14 of 2001 clarified that the eight-year restriction for carry forward and set off of unabsorbed depreciation was dispensed with. Therefore, unabsorbed depreciation from AY 1997-98 up to AY 2001-02 got carried forward to AY 2002-03 and became governed by the amended Section 32(2), available for set off in subsequent years without any limit. The High Court further observed that the Revenue had previously filed a Tax Appeal (No. 1042 of 2018) against a similar order of the ITAT concerning the assessee, which was dismissed by the High Court on August 21, 2018. Given this history and the consistent view of the Tribunal and the High Court, no case was made out for interference. The operative direction was the dismissal of the appeal.

What were the facts?

This is a Tax Appeal filed by the Revenue against an order of the Income Tax Appellate Tribunal (ITAT), Ahmedabad, dated March 28, 2019, for Assessment Year 2014-15. The appeal challenges the ITAT's decision to dismiss the Revenue's appeal. The ITAT had relied on its previous judgments in similar cases, including the case of General Motors (P) Ltd. vs. DCIT, to allow the assessee's claim for carrying forward and setting off unabsorbed depreciation. The Revenue contends that unabsorbed depreciation cannot be carried forward beyond eight assessment years as per Section 32(2)(iii)(b) of the Income Tax Act, 1961, as amended, and that the Supreme Court had left this question open in the General Motors case. The specific dispute concerns unabsorbed depreciation of Rs. 38,01,74,403/- for AY 2001-02.

What were the issues?

1. Whether, on the facts and in the circumstances of the case and in law, the Hon'ble ITAT was justified in dismissing the Revenue's appeal by relying on its judgment in General Motors (P) Ltd. vs. DCIT, without considering that unabsorbed depreciation cannot be carried forward beyond eight assessment years as per Section 32(2)(iii)(b) of the Act (as amended by the Finance (No.2) Act, 1996), and that the Supreme Court had kept the question of law open in the General Motors case? 2. Whether, on the facts and in the circumstances of the case and in law, the Hon'ble Tribunal was justified in not appreciating that eight years had expired prior to AY 2014-15, and thus the assessee was not entitled to carry forward and set off unabsorbed depreciation of Rs. 38,01,74,403/- for AY 2001-02 against the income of AY 2014-15? Assessee's Contentions: The judgment does not explicitly record the assessee's contentions. However, the ITAT's decision implies the assessee argued that unabsorbed depreciation could be carried forward indefinitely, relying on judicial pronouncements. Revenue's Contentions: The Revenue argued that unabsorbed depreciation is restricted to an eight-year carry-forward period under Section 32(2)(iii)(b) of the Act, as amended. They also contended that the Supreme Court had left the question of law open in the General Motors (P) Ltd. case, and that for AY 2014-15, the eight-year period for AY 2001-02 had expired, disentitling the assessee from setting off the depreciation.

Which sections of the Income-tax Act were involved?

Section 32(2),Section 260(A)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
C/TAXAP/599/2019 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 599 of 2019 ========================================================== THE PRINCIPAL COMMISSIONER OF INCOME TAX-4 Versus M/S BANASKANTHA DIST. OIL SEEDS GROWERS UNION LTD. ========================================================== Appearance: MRS MAUNA M BHATT(174) for the Appellant(s) No. 1 ========================================================== CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALA and HONOURABLE MR.JUSTICE A.C. RAO Date : 09/09/2019

ORAL ORDER (PER : HONOURABLE MR.JUSTICE J.B.PARDIWALA)

1.00.

This Tax Appeal under section 260(A) of the Income Tax Act, 1961 (for short “the Act”) is at the instance of the revenue and is directed against the order passed by the Income Tax Appellate Tribunal, Ahmedabad, B-Bench in ITA No.2121/Ahd/2017 dated 28/03/2019 for the A.Y. 2014-15. 2. 00. The revenue has proposed the following two questions of law for the consideration of this Court :- “[A]. Whether on the facts and in the circumstances of the case and in law, the Hon'ble 354 ITR 244, without appreciating that unabsorbed C/TAXAP/599/2019 ORDER depreciation cannot be carried forward beyond the eight assessment years as specified in the section 32(2)(iii)(b) of the Act as amended by the Finance (No.2) Act, 1996 w.e.f. 1st April, 1997 and also that the Hon'ble Supreme Court has kept the Question of Law open in the case of General Motors (P) Ltd.? [B] Whether on the facts and in the circumstances of the case and in law, the Hon'ble Tribunal was justified in not appreciating that in the instant case eight years expired prior to instant A.Y. 2014-15 and that the assessee was not entitled for carrying forward and setting off unabsorbed depreciation of Rs.38,01,74,403/- for A.Y. 2001-02 against the income of A.Y. 2014-15?”

2.00.

The ITAT while dismissing the appeal preferred by the revenue has observed as under :- “Heard the rival contentions; perused the relevant materials available on record. We have carefully considered the order passed by the Co-ordinate Bench in ITA Nos.1993-1994/Ahd/2016 for Assessment Years 2009-10 and 2012 -13, operative portion whereof is as follows :

We have heard the rival contentions and perused the material on record carefully. During the course of appellate proceedings before us the ld. counsel has brought to our notice that Co-ordinate Bench of ITAT Ahmedabad vide ITA No.1993/Ahd/2013 dated C/TAXAP/599/2019 ORDER 03.05.2017 in the case of Gujarat Lease Finance Ltd. has decided the identical issue in favour of assessee. The part of the judicial findings and the principles laid down by the Hon'ble Jurisdictional High Court in the case of General Motors Pvt. Ltd. are reproduced here as under :- “We are of the considered opinion that any unabsorbed depreciation available to an assessee on 1st day of April 2002 (A.Y. 2002- 03) will be dealt with in accordance with the provisions of section 32(2) as amended by Finance Act, 2001. And once the Circular No.14 of 2001 clarified that the restriction of 8 years for carry forward and set off of unabsorbed depreciation had been dispensed with, the unabsorbed depreciation from A.Y. 1997-98 upto the A.Y. 2001-02 got carried forward to the assessment year 2002-03 and became part thereof, it came to be governed by the provisions of section 32(2) as amended by Finance Act, 2001 and were available for carry forward and set off against the profits and gains of subsequent years, without any limit whatsoever.” The relevant part of the decision of the Co-ordinate Bench of the ITAT decided in the case of Gujarat Lease Finance Ltd. vide ITA No.2393/Ahd/2013 dated 03/05/2017 is reproduced as hereunder :- C/TAXAP/599/2019 ORDER “6.

We have heard the rival contentions. We have also perused the judicial pronouncement delivered by the Hon'ble High Court of Gujarat Hon'ble Gujarat High Court in the case of CIT Vs. Gujarat Themis Biosyn Ltd. [2014] 44 taxmann.com 204 (Gujarat) in which after considering the judgement given in General Motors India (P) Ltd. it was held that carry forward

of unabsorbed

depreciation concerning impugned assessment years could be set off in subsequent years without any set time limit. In view of the above judicial pronouncement on the issue and the elaborate findings of the ld. CIT(A), we do not find any reason to interfere in the decision of the ld. CIT(A).

Respectfully following the decision of the Co- ordinate Bench as supra, we do not find any error in the finding of the ld. CITA(A), therefore, the appeal of the revenue is dismissed. In the result, both the appeals of the revenue are dismissed.”

3.00.

Thus, the Appellate Tribunal relied on the order passed by the Co-ordinate Bench in the case of the assessee itself. The said order passed by the Co-ordinate Bench of the C/TAXAP/599/2019 ORDER ITAT was carried in appeal by the revenue before this Court by filing Tax Appeal No.1042 of 2018. The said appeal came to be dismissed by this Court vide order dated 21/8/2018. In the overall view of the matter, we are convinced that no case is made out for interference. The appeal, therefore, fails and is hereby dismissed. (J. B. PARDIWALA, J) (A. C. RAO, J) RAFIK..

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