THE COMMISSIONER OF INCOME T vs. M/S.COMSTAR AUTOMOTIVE TECHN

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TCA/301/2019HC Madras06 July 2020Bench: Hon`ble Mr Justice T. S. SIVAGNANAM4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the issue involved in the appeal was covered by its own previous decision in the assessee's own case, specifically TCA.No.228 of 2011 dated 18.3.2020. In that prior judgment, the assessee's appeal was allowed, and the substantial questions of law were answered in favour of the assessee. Consequently, following this precedent, the High Court dismissed the Revenue's appeal. The substantial questions of law were answered in favour of the assessee and against the Revenue. No costs were awarded. The specific reasoning from the prior judgment, which would have addressed the interplay of unabsorbed depreciation and Section 10B deduction, is not detailed in this judgment but is referenced as the basis for the decision.

What were the facts?

The Revenue, represented by the Commissioner of Income Tax, Chennai, filed an appeal under Section 260A of the Income Tax Act, 1961, against an order dated 25.10.2018 passed by the Income Tax Appellate Tribunal, Chennai 'C' Bench. The appeal pertains to assessment year 2003-04 and concerns the assessee, M/s. Comstar Automotive Technologies Pvt. Ltd. The core dispute revolves around the set-off of brought forward unabsorbed depreciation and its impact on the deduction under Section 10B. The High Court admitted the appeal on substantial questions of law. Subsequently, both parties agreed that the issue was covered by a previous decision in the assessee's own case.

What were the issues?

The Tribunal had to decide three substantial questions of law: 1. Whether the set-off of brought forward unabsorbed depreciation from assessment years 2001-02 and 2002-03 should be considered before allowing deduction under Section 10B for assessment year 2003-04. 2. Whether the Tribunal was correct in allowing deduction under Section 10B without considering depreciation loss, in light of the Apex Court's decision in Yokogawa India Ltd., which held that Section 10B deduction is to be allowed while computing gross total income under Chapter IV. 3. Whether the Tribunal ought to have applied the Apex Court's decision in Himatsingke Seide, which held that unabsorbed depreciation loss of a Section 10B unit cannot be set off against other incomes, a decision not overruled or discussed in Yokogawa India Ltd. Assessee's contention: The assessee argued that the issue is covered by the decision in their own case (TCA.No.228 of 2011 dated 18.3.2020), where their appeal was allowed and the substantial questions of law were answered in their favour. Revenue's contention: The Revenue's arguments are implicit in the substantial questions of law framed, questioning the Tribunal's allowance of Section 10B deduction without considering unabsorbed depreciation and relying on Yokogawa India Ltd. and Himatsingke Seide.

Which sections of the Income-tax Act were involved?

Section 260A,Section 10B

AI-generated summary — verify with the full judgment below

TCA.No.301 of 2019 In the High Court of Judicature at Madras Dated : 06.7.2020 Coram : The Honourable Mr.Justice T.S.SIVAGNANAM and The Honourable Mrs.Justice V.BHAVANI SUBBAROYAN Tax Case Appeal No.301 of 2019 The Commissioner of Income Tax, Chennai ...Appellant Vs M/s.Comstar Automotive Technologies Pvt. Ltd., Chengalpattu-600204. ...Respondent APPEAL under Section 260A of the Income Tax Act, 1961 against the order dated 25.10.2018 made in ITA.No.209/Chny/2018 on the file of the Income Tax Appellate Tribunal, Chennai 'C' Bench for the assessment year 2003-04. For Appellant: Mr.T.Ravikumar, SSC & Mrs.R.Hemalatha, SSC For Respondent: Mr.R.Sivaraman Judgment was delivered by

T.S.Sivagnanam,J

We have heard Mr.T.Ravikumar and Mrs.R.Hemalatha, learned Senior Standing Counsel appearing for the appellant – Revenue and Mr.R. Sivaraman, learned counsel appearing for the respondent. 1/4 http://www.judis.nic.in TCA.No.301 of 2019 2. This appeal, filed by the Revenue under Section 260A of the Income Tax Act, 1961 (for short, the Act) is directed against the order dated 25.10.2018 made in ITA.No.209/Chny/2018 on the file of the Income Tax Appellate Tribunal, Chennai 'C' Bench (for brevity, the Tribunal) for the assessment year 2003-04. 3. The appeal has been admitted on 08.7.2019 on the following substantial questions of law : “i. Whether the set off of brought forward unabsorbed depreciation of the Assessment year 2001-02 and 2002-03 are to be first set off before considering deduction under Section 10B for the assessment year 2003-04? 2. Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the deduction under Section 10B is to be allowed without considering the depreciation loss, when it was held by the Apex Court in the case of Yokogawa India Ltd that the deduction under Section 10B is to be allowed while computing the gross total income of the eligible undertaking under Chapter -IV of the Income Tax Act? And 3. Whether the Tribunal ought to have applied the decision of the Apex Court in the case of Himatsingke Seide reported in 48 Taxmann.com page 357 SC which had held that the unabsorbed 2/4 http://www.judis.nic.in TCA.No.301 of 2019 depreciation loss of Section 10B unit cannot be set off against other incomes, which was neither overruled nor discussed in Yokogawa India Ltd reported in 77 Taxmann.com page 41?” 4. It is submitted by the learned counsel on either side that the issue involved in this appeal is covered by the decision in the assessee's own case in TCA.No.228 of 2011 dated 18.3.2020, by which, the assessee's appeal was allowed and the substantial questions of law were answered in favour of the assessee. 5. Following the said decision, the above tax case appeal filed by the Revenue is dismissed and the substantial questions of law are answered in favour of the assessee and against the Revenue. No costs. 06.7.2020 To The Income Tax Appellate Tribunal, Chennai 'C' Bench. RS 3/4 http://www.judis.nic.in TCA.No.301 of 2019 T.S.SIVAGNANAM,J AND V.BHAVANI SUBBAROYAN,J RS TCA.No.301 of 2019 06.7.2020 4/4 http://www.judis.nic.in

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