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Income Tax Appellate Tribunal, ‘C’ BENCH, BANGALORE
Before: SHRI VIJAY PAL RAO & SHRI INTURI RAMA RAO
Date of hearing : 14/07/2016 Date of pronouncement : 08/09/2016 O R D E R
Per INTURI RAMA RAO, AM :
This is an appeal filed by the revenue and the cross objections by the assessee directed against the order of the CIT(A), Bangalore-3, dated 31/03/2015 for the assessment year 2008-09.
Page 2 of 7 2. Briefly facts of the case are that the assessee is a limited company, engaged in the business of manufacturing and trading of electrical power tools. For the assessment year 2008-09, return of income was filed on 14/10/2008 declaring a total income of Rs.6,55,88,070/-. After issuing requisite notice under the provisions of sec.143(2) of the Income-tax Act,1961 [‘the Act’ for short], the case was selected for scrutiny assessment. The assessment was completed u/s 143(3) on 30/09/2011. In the assessment made, except addition on account of expenditure incurred on gifts of Rs.6,98,904/-, no other addition was made. Subsequently, the DCIT, Circle 11(4), Bangalore, had issued a notice u/s 154 dated 5/11/2012 proposing to deny set off unabsorbed depreciation u/s 32(2) of Rs.20,93,332/- and Rs.23,87,532/- of the assessment years 1998-99 and 1999-00 respectively. In response to notice u/s 154, the assessee- company vehemently contended that the proposed rectification was beyond the scope and ambit of the provisions of sec.154 as the issue of set off of unabsorbed depreciation carried forward is a debatable issue. However, the Assessing Officer (AO) negatived the contention of the assessee and passed an order u/s 154 dated 05/03/2014 denying the benefit of set off of unabsorbed depreciation of Rs.20,93,332/- and Rs.23,87,532/- pertaining to assessment years 1998-99 and 1999-00 respectively.
Page 3 of 7 3. Being aggrieved, an appeal was filed before the CIT(A) who, vide impugned order dated 31/3/2015 allowed the appeal vide para.6 of his order, which reads as under:
Being aggrieved, revenue is in appeal before us raising the following grounds of appeal:
Page 5 of 7 5. We heard rival submissions and perused material on record. The only issue in appeal is whether unabsorbed depreciation available to an assessee as on 1/4/2002 i.e. assessment year 2002-03 should be dealt with by the amended provisions of section 32(2) by the Finance Act, 2001. This issue has been squarely dealt with by the Hon’ble Gujarat High Court in the case of General Motors India Pvt. Ltd. Vs. CIT (354 ITR 244) wherein the Hon’ble High Court held that in the absence of provisions in the Act restricting unabsorbed depreciation worked out in the assessment year prior to assessment year 2002-03, unabsorbed depreciation should be dealt with only by the amended provisions. The CIT(A) has extracted the operative portion of the judgment. Even the judgment was affirmed by the Hon’ble Supreme Court by disposal of the SLP(C) No.11282/13 dated 11/3/2013. The Hon’ble Gujarat High Court had reiterated the same legal position in the case of Synbiotics vs. ACIT (370 ITR 119) wherein it was specifically held that unabsorbed depreciation available to an assessee as on1/4/2002 i.e. assessment year 2002-03 will be dealt with in accordance with provisions of section 32(2) as amended by the Finance Act, 2001 and held as follows: “We are of the considered opinion that any unabsorbed depreciation available to an assessee on 1st day of April 2002 (assessment year 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 Page 6 of 7 unabsorbed depreciation from the assessment year 1997-98 up to the assessment year 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) 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."
We do not find any reason to differ with the reasoning of the Hon’ble Gujarat High Court in the case cited supra. Even the CIT(A) followed the decision of the Hon’ble Gujarat High Court in the cases cited supra. Hence, the appeal filed by the revenue is dismissed.
The cross objections are filed by the assessee raising the following cross-objections:
The cross objections challenge the jurisdiction of the AO u/s 154 of the Act. Since we have dismissed the revenue’s appeal on merits of addition, cross objections filed by the assessee become infuctuous and dismissed as such.