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

Facts

This Tax Appeal under section 260(A) of the Income Tax Act, 1961, is filed by the Revenue against an order of the Income Tax Appellate Tribunal (ITAT), Ahmedabad, dated February 13, 2019, for Assessment Year 2013-14. The ITAT had dismissed the Revenue's appeal. The dispute concerns the carry forward and set-off of unabsorbed depreciation. The Revenue's appeal before the ITAT was dismissed by relying on a co-ordinate bench's decision in the assessee's own case, which in turn followed the Gujarat High Court's decision in General Motors India Pvt. Ltd. vs. DCIT. The Revenue's appeal before the High Court challenges the ITAT's dismissal.

Held

The High Court held that the ITAT was justified in dismissing the Revenue's appeal. The Tribunal had relied on its co-ordinate bench's decision in the assessee's own case, which in turn followed the Gujarat High Court's decision in General Motors India Pvt. Ltd. vs. DCIT. The Tribunal also noted that the Gujarat High Court in CIT vs. Gujarat Themis Biosyn Ltd., after considering General Motors India Pvt. Ltd., held that unabsorbed depreciation concerning impugned assessment years could be set off in subsequent years without any time limit. The High Court further noted that the Revenue's appeal against the ITAT's order in the assessee's own case (Tax Appeal No.1042 of 2018) was dismissed by the High Court itself. Therefore, no case was made out for interference, and the appeal was dismissed.

Key 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 tax appeal of the Revenue relying on its judgment in the case of General Motors (P) Ltd. Vs. DCIT, without appreciating that unabsorbed depreciation cannot be carried forward beyond eight assessment years as specified in Section 32(2)(iii)(b) of the Act, as amended by the Finance (No.2) Act, 1996, and also that the Hon'ble Supreme Court has kept the Question of Law open in the case of General Motors (P) Ltd.? (Assessee's contention: The ITAT was justified in dismissing the appeal, following precedents. Revenue's contention: The ITAT erred by not considering the time limit for carry forward of unabsorbed depreciation and the Supreme Court's observation in General Motors (P) Ltd.). 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 in the instant case eight years expired prior to the instant A.Y. 2013-14 and that the assessee was not entitled for carrying forward and setting off unabsorbed depreciation of Rs.41,27,25,500/- for A.Y. 2000-01 against the income of A.Y. 2013-14? (Assessee's contention: The assessee is entitled to carry forward and set off the depreciation. Revenue's contention: The eight-year period for carry forward had expired, making the assessee ineligible for set-off).