ACIT CORPORATE CIRCLE 3(1), CHENNAI vs. TAMIL NADU CIVIL SUPPLIES CORPORATION, CHENNAI

PDF · subscribers
ITA 1902/CHNY/2018Status: DisposedITAT Chennai27 November 2018AY 2008-095 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s decision, following various precedents that unabsorbed depreciation, especially after amendments to Section 32(2), can be carried forward indefinitely.

What were the facts?

The Revenue appealed against the CIT(A)'s order allowing the assessee's claim for unabsorbed depreciation. The Assessing Officer had denied this claim, stating it could not be carried forward beyond eight years.

What were the issues?

Whether unabsorbed depreciation can be carried forward and set off indefinitely, notwithstanding the eight-year limitation period.

Which sections of the Income-tax Act were involved?

Section 32(2)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

Before: Shri Abraham P. George & Shri Duvvuru RL Reddy

Hearing: 20.11.2018Pronounced: 27.11.2018

(Appellant) (Respondent) अपीलाथ� की ओर से / Appellant by : Mrs. Pavuna Sundari, JCIT ��थ� की ओर से/Respondent by : Shri P. Selvamoorthy, CA सुनवाई की तारीख/ Date of hearing : 20.11.2018 घोषणा की तारीख /Date of Pronouncement : 27.11.2018 आदेश /O R D E R

PER DUVVURU RL REDDY, JUDICIAL MEMBER:

1.

This appeal filed by the Revenue is directed against the order of the Commissioner of Income Tax (Appeals) 11, Chennai dated 14.03.2018 relevant to the assessment year 2008-09. The only effective ground raised in the appeal of the Revenue is that the ld. CIT(A) has erred in directing the Assessing Officer to allow the assessee’s claim of unabsorbed depreciation to the tune of ₹.2,76,64,000/-.

2.

The assessee filed its return of income on 30.09.2008 declaring a loss of ₹.8,11,38,952/-. The return was subsequently revised on 17.03.2009 reducing the loss to ₹.4,02,38,952/-. Thereafter another return was filed on 01.10.2009 declaring NIL income after setting off of brought forward losses amounting to ₹.7,05,33,527/-. The assessment under section 143(3) of the Income Tax Act, 1961 [“Act” in short] was completed on 29.11.2010 determining the income at ₹.1,22,91,307/-. Subsequently, the assessment was reopened under section 147 of the Act. The assessment under section 143(3) r.w.s. 147 of the Act was completed by determining taxable income of the assessee at ₹.3,49,30,527/- by denying the set off of brought forward depreciation for the assessment year 1999-2000 at ₹.2,2,76,64,000/-.

3.

The assessee carried the matter in appeal before the ld. CIT(A). By following the decision in the case of Ford India Pvt. Ltd. v. DCIT in & 2345/Mds/2012 dated 12.05.2017, the ld. CIT(A) decided the issue in favour of the assessee.

4.

Aggrieved, the Revenue is in appeal before the Tribunal. The ld. DR submitted that against the order of the Tribunal, the Department preferred further appeal and pleaded for reversing the appellate order.

5.

On the other hand, the ld. Counsel for the assessee strongly supported the order passed by the ld. CIT(A).

6.

We have heard both sides, perused the materials available on record and gone through the orders of authorities below. The Assessing Officer disallowed set off of claim of unabsorbed depreciation by stating that it cannot be carried over for beyond eight years. We find that the issue is squarely covered in favour of the assessee by various decisions of the Tribunal including in the case of DCIT v. Tamil Nadu State Transport Corporation (Villupuram) Limited in dated 18.01.2012, wherein, the Tribunal has observed and held as under:

“In view of the above circular, arid also in view of the decision of the jurisdictional High Court, in the case of CIT Vs S & S Power Switchgear Ltd., (218 CTR 701)(Mad) the entire depreciation that was brought forward to the A.Y. 1996- 97 and the net unabsorbed depreciation computed for the A.Y. 1996-97 and carried forward to the A.Y.1997-98 becomes the depredation allowance of A.Y. 1997-98. The unabsorbed" depreciation allowance after set off against the income of the current year, will become the unabsorbed depreciation allowance of A.Y. 1997-98 and the limitation of 8 years, as per the amended provisions of sec.32(2), starts from the A.Y.1997-98. Therefore, all the depreciation allowances that are brought forward from the earlier years and were available during the A.Y. 1997-98 can be carried forward for another period of 8 years i.e., up to A.Y.2005-06. In any case, with the change in the provisions of sec.32(2) w.e.f. 01.04.2002 the unabsorbed depreciation once again was made available to the assessee indefinitely by clubbing with the current depreciation allowance”.

6.1 Further, in the case of KMC Speciality Hospitals India Ltd. [2014] 32 ITR(T) 149 (Chennai Tribunal), wherein, it was held that the interregnum restriction of limiting the claim for an eight-year period does not take away the right of an assessee to claim the balance of unabsorbed depreciation, forever. Further, by virtue of the amendment bought out by the Finance Act 2001, the unabsorbed depreciation for the interregnum period (AY 1997-98 to AY 2001-02) would revive back into life and become eligible for carry forward and set off for an indefinite period.

6.2 Moreover, in the case of CIT v. Gujarat Themis Biosyn Ltd. 105 DTR 72, the Hon’ble Gujarat High Court has held that as per Circular No. 14 of 2001, restriction of 8 years for carry forward and set off of unabsorbed depreciation had been dispensed with. The unabsorbed depreciation concerning assessment year 1997-98 to 2001-02 got carried forward to the assessment year 2002-03 and became part thereof, it came to be governed by the provisions of section 32(2) of the Act, 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 time limit, whatsoever.

6.3 By following the above decisions, in the case of Ford India Pvt. Ltd. v. DCIT (supra), the Tribunal has given similar decision and the ld. DR could controvert the above findings of the Tribunal. Under the above facts and circumstances, we find no reason to interfere with the order passed by the ld. CIT(A) on this issue. Thus, the ground raised by the Revenue is dismissed.

7.

In the result, the appeal filed by the Revenue is dismissed. Order pronounced on the 27th November, 2018 at Chennai.

More judgments on Section 32(2)

All 321 judgments and leading authorities on Section 32(2) →

Recent GST High Court judgments

Search GST case law →