THE PRINCIPAL COMMISSIONER OF INCOME TAX-1 vs. ANKUR PROTEIN INDUSTRIES LTD.

Facts

This tax appeal was filed by the revenue against an order of the Income Tax Appellate Tribunal (ITAT), Ahmedabad 'C' Bench, dated December 13, 2018, pertaining to Assessment Year 2008-09. The appeal challenges the ITAT's decision regarding the carry forward of unabsorbed depreciation and the claim of deferred revenue expenditure. The revenue sought to raise two specific questions of law before the High Court. The High Court considered the submissions made by both parties concerning these questions.

Held

The High Court held that the first question of law, concerning the carry forward of unabsorbed depreciation, was squarely covered by its own previous decision in the case of General Motors India Private Limited Vs. Deputy Commissioner of Income-tax reported in 354 ITR 244. Regarding the second question, concerning the claim of deferred revenue expenditure, the revenue's counsel pointed to an observation in the order of the Commissioner of Income-tax (Appeals) which stated that the ground for allowing 1/10th of amortized expenses for AY 2008-09 to 2012-13 would stand dismissed. In light of this, the revenue's counsel conceded that the second proposed question would not survive. Consequently, the appeal was dismissed.

Key Issues

1. Whether the Appellate Tribunal erred in law and facts by allowing the carry forward of unabsorbed depreciation, relying on Circular No. 14 of 2001, without considering that the amendment to the Finance Act was prospective? The revenue argued that the amendment was prospective and the Tribunal's reliance on the circular was misplaced. The assessee's arguments are not recorded. 2. Whether the Appellate Tribunal erred in law and facts by holding that the assessee is entitled to claim deferred revenue expenditure of Rs. 18,82,326, failing to appreciate that this would result in a double benefit by way of one-tenth of the expenditure being allowed once fresh claims for Assessment Years 2006-07 and 2007-08 are granted? The revenue contended that allowing this claim would lead to a double benefit. The assessee's arguments are not recorded.