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Income Tax Appellate Tribunal, ‘A’ BENCH, BENGALURU
Before: SHRI B.R. BASKARAN & SHRI PAVAN KUMAR GADALE
The revenue has filed the appeal against the order of the CIT(A), Bengaluru-2, Bengaluru, passed u/s 143(3) r.w.s. 147 and 250 of the Income-tax Act,1961 ['the Act' for short].
2. The Revenue has raised the following grounds of appeal:
Page 2 of 6 1. “The Order of the Ld. CIT (A), in so far as it is prejudicial to the interest of the Revenue, is opposed to law and the fact and circumstances of the case.
On facts of the case, Whether the Ld CIT (A) is justified in law as well on facts in holding that unabsorbed depreciation is covered by the provisions of Section 32(2) of the Act, as amended by the Finance Act, 2001 and therefor6, the assessee is entitled to carry forward and set off against profit and gains of subsequent year?
3. On facts of the case, whether the decision of the Ld.CIT(A) is right in allowing the appeal of the assessee ignoring the amendments to the Finance Act amended as on 01.04.1997, wherein it was mentioned that the depreciation ought to be allowed up to 8 Asst. years only?
For these and other grounds that may be urged at the time of hearing, it is prayed that the order of the CIT (A) in so far as it relates to the above grounds may be reversed and that of the Assessing Officer may be restored.
The appellant craves leave to add, alter, amend and / or delete any of the grounds that may be urged.”
Brief facts of the case are that the assessee is engaged in the business of manufacturing and marketing of foam products and filed the Return of income on 31/10/2007 with business loss of Rs.1,82,38,966/- and capital loss of Rs.44,32,201/-. The Return of income was processed u/s 143(1) of the Act. Subsequently, the case
Page 3 of 6 was selected for scrutiny under CASS and assessment order was passed u/s 143(3) dated 31/12/2009 determining the business loss of Rs.1,79,04,666/- and income from capital gains of Rs.5,41,45,206/- and taxable income determined at Rs.3,62,40,540/-. Subsequently the AO having reason to believe that the income has escaped assessment has issued notice u/s 148 of the Act.
In response, the assessee filed letter to treat the Return of income filed on 31/10/2007 as compliance to the notice.
In the re-assessment proceedings the AO has considered the observations of original assessment proceedings and dealt on the set off of brought forward unabsorbed depreciation of earlier years at para 4 of the order and finally the AO, on verifying the documents, found that there is unabsorbed depreciation for the assessment years 1997-98 and 1998-99 and cannot be carried forward and made addition of Rs.11,43,96,461/- to the taxable income and assessed the total income of Rs.3,56,93,133/- and passed order u/s 143 read with 147 of the Act dated 30/03/2015.
Page 4 of 6 4. Aggrieved with the AO order, the assessee filed an appeal before the CIT(A). In appellate proceedings, the CIT(A) considered the grounds of appeal and granted relief in respect of carried forward of unabsorbed depreciation and relied on the decision in the case of General Motors India P Ltd. vs. DCIT(354 ITR 244) and allowed the appeal.
5. Aggrieved, the revenue is in appeal before The Tribunal. The learned DR submitted that the CIT(A) has erred in granting relief and carried forward unabsorbed depreciation without considering the fact that the amendment in Finance Act, 2001 and supported the order of the AO.
Contra, the learned AR supported the order of the CIT(A) and relied on the judicial decisions.
We heard the rival submissions and perused material on record. The sole crux of the disputed issue is with respect to the deletion of addition made on account of unabsorbed depreciation. The learned DR submitted that unabsorbed depreciation cannot be carried forward for set offwhereas the learned AR relied on the decision of in the case of General Motors India P Ltd. (supra) and we found
Page 5 of 6 that the CIT(A) has made observations at page 5, para.3.6 which read as under:
“3.6 In the case of the appellant, the issue is with regard to set off pertaining to carry forward of depreciation of asst. year 1997-98, 1998-99 and subsequent years i.e., asst. year 2000-01 and asst. year 20R1-2002 to be allowed in asst. year 2007-08. As 8 years had not elapsed as on 1.4.2002 (the date by which the amendment is applicable) in respect of depreciation for asst. year 1997-98 and 1998-99 and subsequent years involved, the appellant cannot be denied the said claim. This view has also been upheld by Gujarat High Court in the case of General Motors India P Ltd., vs. DCIT 354 ITR 244. Under such position of law, the addition made by the AO of Rs. 1,43,96,461 in this regard is unwarranted and is hereby deleted.”
We find the disputed issue decided by the CIT(A) relying on the judicial decision and facts of the case. The learned DR could not controvert with any cogent evidence or material except relying on the order of the AO. Accordingly, we are the substantive opinion that the CIT(A) has considered the facts and the provisions of law and the judicial decision and passed a reasoned order which cannot be interfere. Accordingly, we uphold the same and the grounds of appeal of the revenue are dismissed.
In the result, the revenue’s appeal is dismissed.
Order pronounced in the open court on 04th June, 2019.