DCIT CEN CIR 3(2), MUMBAI vs. JSW ISPAT STEEL LTD, MUMBAI

ORDER PER MAHAVIR SINGH, V.P. These two appeals by the revenue are arising out of different orders of Commissioner of Income Tax (Appeals)-51, Mumbai [in short CIT(A)] in Appeal Nos. CIT(A)-51/IT No.19 & 20/DCIT-CC-3(2)/17-18 vide even dated 27.02.2019.

2. On the facts and circumstances of the case and in the law, the Ld. CIT(A) erred in allowing the carry forward of unabsorbed depreciation Rs. 504,17,11,121/- based on the decision of Hon’ble Bombay High Court in the case of Hindustan Unilever Ltd. (394 ITR 73) without appreciating the fact that the department has not accepted the above decision and filed SLP against above order. 3. We have heard rival contentions and gone through the facts and circumstances of the case. The short point in dispute in both the years is the AO not allowing the carry forward of unabsorbed depreciation of Rs. 504, 17,11,121/- of Assessment Year 2001-02 on the ground that the limitation period of eight years had expired. Further, in Assessment Year 2011-12 also the Assessing Officer has not allowed the carry forward of unabsorbed depreciation claimed by the assessee for the Assessment Year 2001-02 amounting to Rs. 504,17,11,121/-. Aggrieved, the assessee preferred appeal 3 & 2821/M/2019- JSW Ispat Steel Ltd before the CIT(A). After going through the decision of Hon’ble Bombay High Court in the case of CIT vs. M/s Hindustan Unilever ltd. [2017] 394 ITR 73 (Bombay), CIT(A) allowed the claim of assessee by observing in para-5.2 & 5.3 as under:

“5.2 I have considered the facts of the case, submissions and contentions of the appellant, assessment order as well as the rectification order passed by the AO and also the Order Giving Effect to the order of the FAA. It appears that the AO has relied upon the decision of ITAT, Mumbai Special Bench in the case of Times Guaranty Ltd. (131 TT J 257) to hold that the assessee is not entitled to carry forward the unabsorbed depreciation of Rs. 5,04,17,11,121/- for AY. 2001-02. However, it is noted that the said decision of the Special Bench has been reversed by the Jurisdictional High Court in & 842 of 2011 after placing reliance on its own decision in the case of MI5. Hindustan Unilever Ltd. (394 ITR 73). It is pertinent to mention that the Jurisdictional High Court in the recent decision in the case of M/s Confidence Petroleum India Ltd. (ITA 582/2014) has again followed its own decision in the case of Hindustan Unilever Ltd. Moreover, it is also pertinent to note that the Hon'ble Gujarat High Court in the case of General Motors India P. Ltd. (354 ITR 244) has taken a similar view and the SLP filed by the Department against the same has been dismissed by the Hon'ble Supreme Court. The relevant portion of the decision of the Hon'ble Gujarat High Court is reproduced as under:-

"We are of the considered opinion that any unabsorbed depreciation available to an assessee on 1st day of April 2002 (A. Y. 2002-03) will be dealt with in accordance with the provisions of section 32(2) as amended by Finance Act, 2001. And once the Circular No.14 of 2001 clarified that the restriction of 8 years for carry forward and set off of unabsorbed depreciation had been dispensed with, the unabsorbed depreciation from A. Y.1997-98 upto the A. Y.2001-02 got carried forward to the assessment year 2002-03 and became part thereof, it came to be governed by the provisions 4 & 2821/M/2019- JSW Ispat Steel Ltd of section 32(2) as amended by Finance Act, 2001 and were available for carry forward and set off against the profits and gains of subsequent years, without any limit whatsoever. 5.3 In view of the aforesaid decision of the Hon'ble Gujarat High Court, wherein the SLP of the Department has been dismissed and also the above referred decisions of the Hon'ble Jurisdictional High Court, the AO is directed to follow the ratio of these decisions while considering the assessee's claim of carry forward of unabsorbed depreciation of Rs. 5,04,17,11,121/- for AY. 2001-02.”