THE DY. CIT, GANDHINAGAR CIRCLE,, GANDHINAGAR vs. GUJARAT WATER RESOURCES DEVELOPMENT CORPN. LTD.,, GANDHINAGAR

The grounds of appeal raised by the Revenue reads as under:-

Ground No.1 concerns set off of business loss of Rs.1,42,12,987/- while computing Section 115JB of the Act.

When the matter was called for hearing, learned DR for the Revenue referred to para 4.3 of the order of the CIT(A) and adverted our attention to the findings of the CIT(A) at page nos. 4 & 5 thereof. The findings of the CIT(A) at first instance gives an impression that accumulated business loss as per books of account stands Nil and as per the provisions of Section 115JB of the Act, assessee is not entitled for any claim. On the other hand, in the very next para, the CIT(A) has directed the AO to allow the business loss of Rs.1,42,12,987/- as an alternative claim. The learned DR pointed out that the findings of the CIT(A) are clearly contradictory and incoherent.

The learned AR for the assessee fairly agreed with the aforesaid contentions of the learned DR for the Revenue towards such contradiction and disarray but however pleaded for the issue to be remitted back to the AO instead of the CIT(A) to enable the AO to take into account all the evidences placed or to be placed before him for de novo consideration.

We find merit in the plea raised on behalf of the Revenue towards inexplicable contradiction in the order of the CIT(A) while adjudicating the issue. We also notice that certain revised working were placed by the assessee before the CIT(A) to support its submissions for set off. It will be just and equitable to remit the issue back to the file of the AO for de novo consideration of all aspects of the issue after giving reasonable opportunity to the assessee. Consequently, the issue towards eligibility of set off of carry forward losses against the book profit under s.115JB of the Act is restored back to the file of the AO for its fresh determination in accordance with the law.

In the result, Ground No.1 of the Revenue’s appeal is allowed for statistical purposes.

Ground No.2 concerns allowability of unabsorbed depreciation under the normal provisions of the Act.

The learned DR for the Revenue referred to para 5.3 of the order of the CIT(A) and submitted that the CIT(A) has taken into account the details submitted by the assessee based on past returns. Such details on factual aspects were not made available

The learned AR, on the other hand, pointed out that the CIT(A) also has merely remitted the issue back to the file of the AO for certain verifications. The learned AR thereafter referred to the decision of the Hon’ble Gujarat High Court in the case of CIT vs. Gujarat Themis Biosyn Ltd. Tax Appeal No. 3 of 2014 wherein the claim of the assessee for carry forward of the unabsorbed depreciation was allowed to be carried forward to the succeeding assessment year without any limitation of eight years for such carry forward and set off placed as per the erstwhile provisions of Section 32(2) of the Act. The learned AR submitted that the restriction of eight years for carry forward and set off of unabsorbed depreciation has been dispensed with by the subsequent amendment and accordingly the unabsorbed depreciation arising in the assessment years prior to the amendments are also governed by the provisions of Section 32(2) of the Act as amended by the Finance Act, 2001. The learned AR therefore urged that while remitting the issue back to the file of the AO, the AO be directed to re-examine the issue in the light of the decision of the Hon’ble Gujarat High Court in the case of Gujarat Themis Biosyn Ltd. (supra) and General Motors India P. Ltd. vs. DCIT 354 ITR 244 (Guj). In the light of the consensus broadly arrived between the parties and in consonance with the findings of the CIT(A), the issue is remitted back in its entirety to the file of the AO for de novo examination for eligibility of set off under s.32(2) of the Act after verification of factual aspects.

Ground No.2 of the Revenue’s appeal is allowed for statistical purposes.

In the result, the appeal of the Revenue is allowed for statistical purposes.