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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
O R D E R
PER PAVAN KUMAR GADALE JM:
The revenue has filed the appeal against the order of the Commissioner of Income Tax (Appeals) - 20, Mumbai, passed u/s.143(3) r.w.s 147 and 250 of the Income Tax Act, 1961. The revenue has raised the following grounds of appeal:
1. Whether, on the facts and in the circumstances of the case and in law, the ld. CIT(A) is justified in allowing the carry forward and set off of unabsorbed depreciation pertaining to A.Y 1989-99 beyond 8 years contrary the provisions of Sec. 32(2) as applicable to that year (A.Y 1998-99).
Metroglobal ltd., Mumbai - 2 -
2. On the facts and in circumstances of the case, the Hon’ble is requested to entertain this appeal though the tax effect is below the monetary limit prescribed in the CBDT circular No. 17/2019 dated 08.08.2019 r.w circular No. 03/2018 dated 11.07.2018 as amended on 20.08.2018 as the case falls in the exception provided in para 10(c) of the said instruction in as much as the addition is pursuant to revenue audit objection which has been accepted by the department.
3. The appellant prays that the order of the Ld. CIT(A) on the grounds be set aside and that of the AO be restored. 4. The appellant craves leave to add, amend or alter all or any of the grounds of appeal.
The Brief facts of the case are that the assessee company is engaged in trading in chemicals, dyes, dyes- intermediates, infrastructure and realty development and financial activities. The assessee has filed the return of income on 25.09.2012 declaring a total income of Rs. Nil for the A.Y 2012-13 and the assessment was completed u/s 143(3) of the Act on 11.03.2015 accepting the total income of Rs. Nil. The assessee company is formed because of amalgamation of Metrological Chemical Industries Ltd with Global Board Ltd. The A.O found that the unabsorbed depreciation of Rs. 83,22,358/- pertains to A.Y 1998-99 has been set off against the current year income. Therefore, the total income was disclosed at Rs. Nil. Therefore the A.O. has reason to believe that income has escaped assessment and issued notice u/s 148 of the Act. The assessee has filed the objections to the reasons
Metroglobal ltd., Mumbai - 3 - recorded and also a letter was filed to treat the return filed u/s 139(1) of the Act on 25.09.2012 as a compliance to notice u/s 148 of the Act. The assessee’s objections on reassessment reasons were disposed off vide order dated 16.12.2018. Subsequently, notice u/s 143(2) of the Act was issued. In compliance, the assessee explained that the company is sick company under the Sub Sec.(1) Section 17 of sick industrial company( special provisions) Act and as per the BIFR terms and conditions, the limit of 8 years is not applicable to the assessee company.
The assessee has filed the copy of the BIFR order dated 30.08.2001 declaring that the assessee company is a sick industrial company. The assessee filed submissions in respect of setoff of unabsorbed depreciation of earlier assessment year,which can be carried forward beyond the 8 years limit referred at page 3 para 8 of the assessment order. Whereas, the A.O. found that the claim of the assessee company cannot be considered as the unabsorbed depreciation for the A.Y 1997-98 to 2001-02 is not eligible for relief granted by amended sec. 32(2) of the Act in the A.Y 2002-03. The A.O dealt on the amended provisions in respect of unabsorbed depreciation, carry forward and set off against the business income. Finally, the A.O. observed that the assessee does not qualify for the set off of unabsorbed depreciation of Rs. 83,22,358/-
Metroglobal ltd., Mumbai - 4 - and assessed the total income of Rs. 83,22,350/- and passed order passed u/s 143(3) r.w.s 147 of the Act dated 22.12.2018.
Aggrieved by the order, the assessee has filed an appeal before the CIT(A). The Ld.CIT(A) considered the grounds of appeal, findings of the A.O, submissions of the assessee and upheld the validity of the reassessment proceedings. Whereas, in respect of the ground of appeal on brought forward of depreciation allowance pertaining to the A.Y 1998-99, the CIT(A) after considering the explanations at para 5.3 of the order and the judicial decisions has granted the relief by allowing the set off of brought forward unabsorbed depreciation relying on the jurisdictional Honble High Court and Coordinate Bench of Hon’ble Tribunal decisions and partly allowed the assessee appeal. Aggrieved by the order of the Ld.CIT(A) the revenue has filed an appeal before the Honble Tribunal.
5. At the time of hearing, the Ld. DR submitted that the CIT(A) erred in granting the relief of set off of unabsorbed depreciation pertaining to A.Y 1998-99 beyond 8 years period overruling the provisions of Sec. 32(2) of the Act . Further, the judicial decisions relied by the Ld.CIT(A) are Metroglobal ltd., Mumbai - 5 - contested in the higher forums by the revenue and prayed for restoration of order of the A.O.
6.Contra, the Ld. AR supported the order of the Ld.CIT(A) and substantiated his arguments relying on the judicial decisions and also submitted that the tax effect in the revenue appeal is below the monetary limit and prayed for dismissal of the revenue appeal.
We heard the rival submissions and perused the material on record. The revenue has challenged the set off of unabsorbed deprecation pertaining to A.Y 1998-99 beyond the period of 8 years as per the findings of the CIT(A). We found that the Ld.CIT(A) has relied on the decision of the Jurisdictional Honble Bombay High Court in the case of Pr. CIT Vs. Supreme Petrochem in of 2007 dated 07.06.2019, where the Hon’ble High Court has dismissed the revenue appeal holding that the issued raised in above appeals are squarely covered by the decision of the Hon’ble Gujarat High Court in the case of General Motors Ind Pvt Ltd., Vs. DCIT in 1773 of 2012 and also CBDT circular dated 22.11.2001. We find that on this disputed issue, The Honble Supreme court of India in CIT VS Associated Cables (P) Ltd (2019) 105 taxmann.com 114 has dismissed the SLP filed by the Revenue against the Jurisdictional Bombay High Court
Metroglobal ltd., Mumbai - 6 - order. Further,the Ld.DR could not controvert the observations of the CIT(A) with any new cogent evidence or information and relied on the order of the A.O. Wheras, the Ld.CIT(A) relied on the jurisdictional Honble High Court and Honble Tribunal decisions and passed a reasoned order. Accordingly, we do not find any infirmity in the order of the Ld.CIT(A) and uphold the same and dismissed the grounds of appeal of the revenue.
In the result, the appeal filed by the revenue is dismissed.