SUVINO TELEVIDEO,MUMBAI vs. ITO WARD 25(1)(3), MUMBAI

ITA 2099/MUM/2023Status: DisposedITAT Mumbai18 February 2025AY 2013-1431 pages
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What did the Tribunal hold?

The Tribunal held that the AO and CIT(A) had not followed the correct law laid down by the Hon'ble Gujarat High Court in General Motors India (P.) Ltd. vs. DCIT (2013) 354 ITR 244, which was also followed by the Jurisdictional High Court in Bond Safety Belts vs. DCIT (2023) 156 taxmann.com 222. The Tribunal noted that the Bond Safety Belts judgment was delivered after the CIT(A)'s order. Following the mandate of the Jurisdictional High Court, the Tribunal held that the assessee is right in carrying forward unabsorbed depreciation amounting to Rs. 1,18,93,030/- against income from house property and short-term capital gains. The Tribunal quashed and set aside the orders of the lower authorities on this issue, directing the AO to delete the addition. The Tribunal found that the unabsorbed depreciation pertaining to AY 1997-98 to 2001-02 could be set off against short-term capital gains. The issue of whether unabsorbed depreciation before 2002 could be carried forward indefinitely was implicitly answered in the affirmative by allowing the set off, aligning with the cited High Court judgments.

What were the facts?

The assessee, Suvino Televideo, a partnership firm, filed an appeal before the ITAT Mumbai against the order of the CIT(A) NFAC, Delhi. The CIT(A) had dismissed the assessee's appeal and confirmed the AO's order. The AO had refused to allow the carry forward of unabsorbed depreciation pertaining to AY 1995-96 to AY 2013-14. The assessee had claimed to set off unabsorbed depreciation of Rs. 4,33,328/- (AY 2006-07) against house property income and Rs. 11,14,59,699/- (AY 2007-08) against capital gains. The AO disallowed this set off, stating that business losses including depreciation can only be set off against business income, and the assessee had no business income in AY 2013-14. The AO also questioned the carry forward of losses from AY 1995-96 onwards.

What were the issues?

1. Whether unabsorbed depreciation pertaining to AY 1995-96 onwards can be set off against income from house property and capital gains in AY 2013-14, when the assessee has no business income in the current year? (Question of law, turning on Section 32(2) and Section 72 of the Income Tax Act, 1961). Assessee's contentions: Unabsorbed depreciation, by legal fiction under Section 32(2), becomes part of the current year's depreciation and can be set off against any other income. Relied on CIT vs. Jaipuria China Clay Mines (P) Ltd. (59 ITR 555). Revenue's contentions: As per Section 72, business losses, including depreciation, can only be set off against business income. Relied on Garden Silk Weaving Factory (94 CTR 136). 2. Whether unabsorbed depreciation prior to AY 2002 can be carried forward for an unlimited period? Assessee's contentions: Prior to Finance Act, 1996, unabsorbed depreciation could be carried forward indefinitely. The restriction of 8 years introduced by Finance Act, 1996, was removed by Finance Act, 2001, allowing carry forward for unlimited periods. Relied on judgments like General Motors India (P.) Ltd. vs. DCIT (354 ITR 244), CIT vs. Hicsonand Dadaji (P.) Ltd. (120 taxmann.com 93), Harvey Heart Hospitals Ltd. vs. ACIT (127 taxmann.com 805), and Dr. Willmar Schwable India (P.) Ltd. vs. Additional CIT (152 taxmann.com 428). Revenue's contentions: Not recorded.

Which sections of the Income-tax Act were involved?

Section 32(2),Section 72,Section 250,Section 143(1),Section 143(2),Section 142(1),Section 71

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Income Tax Appellate Tribunal, MUMBAI BENCH “G”, MUMBAI

Before: MS. PADMAVATHY S. & SHRI. RAJ KUMAR CHAUHAN

For Appellant: Shri. Narayan Patil
For Respondent: Shri. Pushkaraj
Pronounced: 18.02.2025

PER RAJ KUMAR CHAUHAN (J.M.):

1.

This appeal is filed by the appellant/assessee against the order dated 24.03.2023 of Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as the “CIT(A)"],passed under section 250 of the Income Tax Act, 1961 [hereinafter referred to as “the Act”] for the A.Y. 2013-14. The ld. CIT(A) has dismissed the appeal of the assessee and confirmed the order of the learned Assessing Officer, ITO, Ward – 25(1)(3) (hereinafter referred to as "ld. AO"), dated 18.03.2016, who has refused to allow to carry forward the unabsorbed depreciation pertaining to A.Y. 1

The order continues below.

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