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Order u/s.254(1)of the Income-tax Act,1961(Act) लेखा लेखा सद�य लेखा लेखा सद�य सद�य राजे�� सद�य राजे�� राजे�� केकेकेके अनुसार राजे�� अनुसार अनुसार /PER RAJENDRA, AM- अनुसार Challenging the order,dtd.30.01.2012 of the Assessing Officer(AO)passed in pursuance of the directions of the Dispute Resolution Panel (DRP)dtd.06.09.2012, the assessee has filed the present appeal raising various grounds of appeal. Assessee-company,engaged in the business of manufacturing of tractors and it parts as well as trading of cost and its parts,filed its return of income, on 30.09.2008,declaring NIL income.The AO completed the assessment, u/s.143(3) r.w.s.144C(13)of the Act,determining the income of the assessee at Rs.NIL. During the course of hearing the Authorised Representative(AR)stated that the assessee was not interested in pressing ground no.19,hence,same stands dismissed. 2.First effective Ground of appeal(GOA.1to 5 & 14 to 16)deals with Transfer Pricing (TP) Adjustments.During the assessment proceedings, the AO found that the assessee had entered into International Transactions (IT.s) with its Associated Enterprise (AE). Accordingly, he made a reference to the Transfer Pricing Officer (TPO), who vide his order dated, 28/10/20 and one, proposed an addition of Rs. 24.20 crores to the tractor division of the assessee. Based on his 7574/M/12(08-09) New Holland Fiat(I) Pvt.Ltd.(Now CNH Industrial Ltd.)
order the AO passed a draft assessment order and computed the income of the assessee at Rs. 1, 84,73,63,220/-. Aggrieved by the draft order,the assessee filed objections before the DRP. In pursuance of the directions of the DRP, the AO, in the final assessment order, made an addition of Rs.27.48 crores,based on the computation done by the TPO that the entity level. The adjustment could be tabulated as under: SN. Particulars Amounts 1. Sales to Rs.10,72,32,89,000/- 2 (a) AE Rs. 4,51,48, 21,000/- Rs. 6,20,84,68,000/- 3 (b) Non-AE Rs. 10,00,06,68,000/- 4 Operating Expenses 5 Operating Profit Rs. 83,09,95,000 /- 6 ALP Margin 9.974% 7 ALP Profit Rs. 99, 74, 66, 626 /- 8 ALP Revenue Rs. 10, 99, 81, 34, 626 /- 9 ALP of AE Revenue Rs. 4, 78, 96, 66, 626/- 10 Adjustment Rs. 27, 48, 45, 626/- 2.1.During the course of hearing before us, the AR argued that even if the above working of TP adjustment made by the TPO was considered as it was no addition could survive after applying the principle of Alstom Projects India Ltd. (APIL) in the of 2014 of the Hon’ble Bombay High Court, that the Hon’ble court had held that TP adjustment had to be done only in respect of IT.s with the AE and not at the entity level, that if the adjustment was made that the entity level the variation would be within the range of 5%, that the DRP had rejected comparable namely TAFE Motors and Tractors Ltd.,that the TPO had rejected the comparables at the time of TP orders as the financial of that company were not available, that the assessee had filed the financial results of the comparables before the DRP,that request made by the assessee was rejected by the DRP, that DRP ought to have examined the financials and should have decided the comparability, that the TPO had arbitrarily change the mechanism for computing the TP adjustments, that in his original order, dated 28/10/2011,the TPO used a particular method, that after the DRP directions he suddenly change the mechanism and computed the TP addition holding that there was substantial inevitable changes in the mechanism, that he also held that there was a symmetrical mistakes in the adjustment,that the change in method resulted in TP addition increasing from Rs. 24.20 crores to Rs. 27.48 crores. The Departmental Representative (DRP) stated that for computing the ALP, the assessee had adopted external TNMM, that PLI was OP/OC at entity level of the tractor division, that assessee was tested party, that six companies were identified as comparables, it had made proportionate 2 7574/M/12(08-09) New Holland Fiat(I) Pvt.Ltd.(Now CNH Industrial Ltd.) adjustments and had cited certain case laws in its support, that it had worked out a proportionate amount of adjustment on AE sales at Rs. 11.57 crores on the proportion of AE sales to total sales of the tractor division, that there was dispute regarding the manner of working out the adjustment to the value of IT. He referred to the provisions of section 92 of the Act and Rule 10 B (2) Rule 10C and Rule 10 B (1) (e) of the Income Tax Rules, 1962 (Rules) and argued that the assessee had to choose any of the methods prescribed by section 92C is the most appropriate method, that it had to maintain a record of uncontrolled transaction in line with the method selected as the most appropriate method,that it had to keep a record of the analysis performed to evaluate comparability of uncontrolled transaction with the IT.s.It had to maintain a record of the actual working carried out for determination of ALP including details of financial information used in applying the most appropriate method, that it was the responsibility of the assessee to provide data of profitability of AE segment and also of non-AE segment,the assessee had not complied with the documentation requirement prescribed by law, that by claiming proportionate adjustment it was making an inherent adjustment,that in the entity level profitability the profit aunts on the AE segment as well as the non-AE segment was same, that the argument of the assessee could be accepted provided it had furnished the relevant data for both the segments, that if separate profitability of the AE transactions was not furnished and the assessee would use entity level profits for compatibility the submission made by the assessee about the segment results would be devoid of any evidences,that the assessee had disclosed IT.s of export of tractors and other parts for which external TNMM was considered as the most appropriate method and was applied to determine the ALP,that it had not worked out separate profit from the IT as per the mandate of Rule 10 D and Rule 10 B of the Rules, that by claiming proportionate adjustment on the basis of AE sales to total sales the assessee was claiming that entity level that could be segregated into AE and non-AE segments,that the claim made by the it was erroneous, fallacious and untenable, that it had failed to provide a reliable that are of two segments, that the difference between the AO and the assessee was on the methodology of working out TP adjust - ments to IT.s.,that the AO had worked out cost of non-AE transaction by applying average PLI of external comparables in absence of data for AE/non-AE segments, that the average PLI of comparables was higher than the PLI of the assessees total transaction (AE plus non-AE transactions)of the tractor division, that the profits earned by it on non-AE transaction was at arm’s length,that out of the total profit shown for the tractor division the profit on the non-AE 7574/M/12(08-09) New Holland Fiat(I) Pvt.Ltd.(Now CNH Industrial Ltd.) part embedded in its total profits was at ALP of the comparables, that the shortfall in the profits as compared at entity level was only in respect of IT.s,for which no proportionate adjustment could be allowed. In his rejoinder,the AR referred to the case of APIL (supra) and stated that working prepared by the assessee was as per the provisions of the Act, that the Department itself had accepted the position of law that even in absence of segmental account the adjustment had to be done only in respect of the IT.s with AE.s.,that the working of the assessee had been approved by the Hon’ble Bombay High Court in the case of APIL. 2.2.We have heard the rival submissions and perused the material before us.We find while making the TP adjustments the AO had made an addition of Rs. 27.48 crores at the entity level. There is no need to cite any authority to hold that TP adjustments have to be made only in respect of IT.s. entered in to by an assessee with its AE and not at an entity level. Therefore, the adjustment made by the TPO/AO at entity level have to be rejected.Now coming to the objectio - ns raised by the DR,about the methodology adopted by the assessee for computing the ALP, we would like to refer to the judgment of the Hon’ble jurisdictional High Court in the case of APIL and it reads as under “4.The grievance of the Revenue is that in the absence of segmental accounts being maintained by the Respondent assessee, transfer pricing adjustment had to be done at entity level. XXXXX 8.Nevertheless, the distinction sought to be made by the Revenue is that the issue of non-keeping of segmental account by the assessee was not for consideration the above cases which were dismissed, as in this case. 9.This very issue/question as raised herein was raised by the Revenue in Pedro Aradlite Pvt.Ltd (supra).The question raised therein was as under : “Whether on the facts and law the Tribunal was justified in directing AO/TPO to benchmark as AE transactions without appreciating (a) the Assessee itself in its transferpricing study & report (TPSR) has chosen entity level PLI to benchmark the AE transactions; (b)the Assessee had itself failed to furnish audited segmental accounts and therefore, the TPO had’s rightly applied revised PLI at the entity level to determine the ALP ? At the above hearing, the Revenue accepted that even in the absence of segmental accounts,the adjust-ment has to be done only in respect of the international transactions with Associated Enterprises. This is so recorded in the order dated 24 November 2015. Therefore,on the above ground,the question as proposed does not give rise to any substantial question of law.
We may once more note that the Income Tax Department within the jurisdiction of this Court must adopt a consistent view on the issue of law. In this case, we find that the Revenue urges the absence of segmental accounts would warrant entity wise adjustment, when the Revenue had itself in Pedro Araldite Pvt.Ltd. (supra) did not canvas the point, as even according to it the issue stood covered by the earlier orders of this Court in favour of the assessee. The Revenue must 7574/M/12(08-09) New Holland Fiat(I) Pvt.Ltd.(Now CNH Industrial Ltd.)
apply the law equally to all and cannot take inconsistent position in law (de horse the facts) to apply different standards two different assessee. The decision of tax laws should not degenerate into an arbitrary and inconsistent application of law depended upon the Assessee concerned.
We also note that the Delhi High Court in Commissioner of Income Tax vs. Keihin Panalfa Ltd. (ITA No. 11 of 2015) decided on nine September, 2015 has while dealing with transfer pricing adjustment in the absence of segmental accounts held that adjustments have to be restricted only to transactions with Associated Enterprises. It further held that where separate accounts are not available, the proportionate adjustment be made only in respect of the international transactions with Associated Enterprises.
We are in respectful agreement with the view of Delhi High Court in Keihin Panalfa Ltd. (supra). For and must not lose sight of the fact that the transfer pricing adjustment is done under chapter X of the Act. The amended therein is only to predetermine the consideration received or given to arrive at income arising from for International Transactions with Associated Enterprises. This is particularly so as in respect of transaction with Non Associated Enterprises, Chapter X of the act is not regard to make adjustment to considerations received or paid unless they are Specified Domestic Transactions. The transaction with Non-Associated Enterprises are presumed to be at arm’s length as there is no relationship which is likely to influence the price. If the contention of the Revenue is accepted, it would lead to artificially increase in the profits of transactions entered into with non-Associated Enterprises by applying the margin at entity level which is not the object of Chapter X of the Act. Absence of segmental accounting is not an insurmountable issue, as proportionate basis could be adopted as done by the Delhi High Court in Keihin Panalfa Ltd. (supra).” We also find that in the case of Keihin Panalfa Ltd.(supra), the Hon’ble Delhi High Court had approved the principle that in case of IT.s TP adjustment proportionate to that extent could be made.In short, in our opinion both the arguments, raised by the DR ,before us,stand already negated by the Hon’ble courts. He had argued that if the assessee had not prepared segmental accounts and had computed the PLI at entity level then it could not take the benefit of the principles laid down in Alstom’s case.The second argument of the DR was that the working proposed by the assessee on proportionate basis was based on an erroneous exemption that AE and non-AE had earned the same percent is of profit. After considering the above and respectfully following the judgments of the Hon’ble Bombay and the Delhi High Courts relied upon by us in the earlier paragraphs,we hold that the proportionate adjustment,as presented before us during the hearing of appeal,is within permissib -le limits of 5% and hence no TP adjustment is required to be made.Accordingly,we decide the first effective ground of appeal in favour of the assessee.As we have decided the basic issue in favour of the assessee,so in our opinion,GOA 3 to 5 and 16 have become academic in nature and require no adjudication. 3.Next effective ground(GOA-6,7 & 17)is about disallowance of Rs. 8.51 crores,u/s. 35 of the Act under the head in-house research. During the assessment proceedings, the AO found that 7574/M/12(08-09) New Holland Fiat(I) Pvt.Ltd.(Now CNH Industrial Ltd.) assessee had claimed an expenditure of Rs.8,51,35,223/- towards in-house research, that it had claimed weighted deduction @150% u/s.35(1)(i) of the Act,while filing the return of income, that on its own it revised the claim to 100%. He called for an explanation from the assessee in that regard and held that it had made payment to an organisation named ARAI,that the said organisation did not have the approval of the Central government for deduction u/s. 35, that the assessee had not provided documentary evidences in spite of being specifically asked to furnish the said. 3.1.Aggrieved by the draft order of the AO, the assessee filed objections before the DRP. However,it directed the AO to go to the evidences furnished by the assessee before the DRP and to allow the claim after verification.While completing the final assessment order,the AO did not allow the claim, holding that the assessee had merely filed the list of expenses stated to be incurred on scientific research and development. 3.2.During the course of hearing before us,the AR referred to the paper book and stated all the necessary details were filed before the DRP,that the AO may be directed to verify the same and allow the expenditure.Alternatively,it was argued that if the expenses were found not to be allowable u/s. 35 then he should consider its availability u/s. 37/32 of the Act. The DR stated that he had no objection if the matter was restored back to the file of AO. 3.2.After considering the rival submissions, we are of the opinion that issue should be restored back to the file of the AO for fresh adjudication, in the interest of Justice.He is directed to verify the claim made by the assessee in light of the evidences produced before us. In case he is of the opinion that the claim made by the assessee cannot be allowed u/s.35,then he should consider the availability of the expenditure u/s. 37 or section 32 of the Act. Second effective ground of appeal is decided in favour of the assessee, in part. 4.Third effective ground pertains to disallowance of expenses of Rs.8.25 lakhs u/s.40 of the Act. During the assessment proceedings, the AO found that the assessee had made payment of Rs. 8, 25,518/-to Fiat India Auto Mobiles India Private Ltd(FIAPL),that it had not detected tax at source while making the payment,that it was claimed that payment was on account of reimbursement of expenses to FIAPL.After calling for explanation in this regard from the assessee, the AO disallowed the expenditure holding that it had not detected tax. 4.1.Before the DRP,the assessee argued that it had transferred a substantial portion of its plant from Mumbai to Ranjangaon (near Pune), that it had to relocate some key staff members from 6 7574/M/12(08-09) New Holland Fiat(I) Pvt.Ltd.(Now CNH Industrial Ltd.)
Mumbai to new place,that out of business expediency it asked its sister concern to advance lump sum amounts to its employees towards cost of expenses, that it reimbursement of expenditure to its sister concern, that it was a pure reimbursement of expenses, that assessee was not supposed to deduct tax. The DRP held that assessee had made payment to its sister concern, that it had not detected tax at source,that the AO was justified in disallowing the claim. 4.2.Before us, the AR contended that the DRP had accepted the fact that amounts paid by the assessee to sister concern were in fact reimbursements, that on reimbursements no tax is to be deducted at source. It relied upon the cases of WNS Global Services UK Ltd. (214 Taxman 317) Angle Capital and Debt Market Ltd.(ITA 475 of 2011-Hon’ble Bombay High Court) Lehmann Bros and Advisors Private Limited (ITA 7688/Mumbai/2012). He further argued that in view of the second proviso to section 40 the assessee should be provided relief. In that regard he placed reliance on the cases of Ansal Landmark Township Private Ltd. (377 ITR 635), Hindustan Coca -Cola Beverages Private Ltd (293 ITR 226). It was also argued that the AO had not appreciated that out of the payment of Rs. 8.25 lakhs the assessee had claimed deduction of Rs. 32,887/-, that the balance amounts were not at all claimed as deduction. The DR left the issue to the discretion of the bench. 4.3.After considering the submission of the assessee we are of the opinion that the matter should be restored back to the file of the AO for fresh adjudication. He is directed to make limited verification as to whether FIAPL has filed its return of income and has consider the impugned payment in its total income. We find that the DRP had held that payments in question were reimbursement to sister concern. Even then, in our opinion a limited verification,as suggested above, is necessary. Third effective ground (GOA-8) stands partly allowed. 5.Disallowance of bad debts of Rs. 48.03 lakhs is the subject matter of next effective ground. During the assessment proceedings,the AO found that the assessee had claimed and amount of Rs.48,03,517/- as bad debts in respect of amount receivable from MLR Tolling Private Ltd. (MTPL), that the assessee had claimed that there was a sale of asset accounted in the year ending 31/03/2007 and that there was overbilling.It was further claimed that by issuing a credit note of the party the entry was reversed. The AO did not allow the claim made by the assessee holding that the sale proceeds of the assessee were reduced from the block off assets and were never treated as revenue receipt, that the amount was capital in nature, that same was never considered 7574/M/12(08-09) New Holland Fiat(I) Pvt.Ltd.(Now CNH Industrial Ltd.) a part of assessees income, that the conditions of section 36 (1) were not fulfilled, that deduction was not allowable u/s. 37,that the amount was capital in nature. 5.1.Before us,the AR argued that assessee had made a legal claim in accordance with law,that the increased amount was already deducted from the block of asset, that not allowing the claim would amount to double jeopardy. Alternatively,it was argued that amount should be added back to the WDV and the corresponding depreciation should be granted to the assessee. The DR stated that matter could be decided on merits. 5.2.We have heard the rival submissions.The AO had given a finding of fact that the sale proceeds were never treated as revenue receipt in books of accounts. Nothing was brought over notice to controvert the fact. Therefore, in our opinion the amount should be added back to the WDV and the assessee should be allowed depreciation accordingly.Fourth effective ground of appeal (GOA-9 and 18) is allowed, in part. 6.Fifth effective ground(GOA-10)deals with liquidated damage,amounting to Rs. 8.20 crores. During the assessment proceedings, the AO found that the assessee had agreed to sell the property to Gorakhpur Expressed Ltd. for Rs. 598 crores, memorandum of understanding was executed on 28/07/2006 in that regard, that later on it entered into a supplementary MOU on 16/ 10/2007 wherein it was to receive additional income of Rs. 1.80 crores as compensation towards interest for the period from 18/10/2007 to 30/10/2007,that at the filing of return of income the assessee had offered liquidated damages under the head business income. Before the AO.it was claimed that same should be assessed under the head capital gains. It was also found that as per the supplementary memorandum of understanding the assessee would receive Rs. 8.20 crores towards liquidation damages in the nature of panel interest for delaying the completion of the transaction. After considering the available material, the AO held that liquidated damages could not be part of sale of property, it was in the nature of interest and had to be taxed under the head income from other sources. 6.1.Aggrieved by the order of the AO,the assessee filed objections before the DRP. Rejecting the objections, the DRP upheld the order of the AO stating that there was no escalation clause in the memorandum of understanding,that the assessee was not entitled to classify the receipt as sale consideration,that the receipt was on account of failure on part of the purchaser to execute the conveyance deed, that the amount in question was penal in nature. 8 7574/M/12(08-09) New Holland Fiat(I) Pvt.Ltd.(Now CNH Industrial Ltd.)
6.2.Before us,the AR argued that the Hon’ble Supreme Court in the case of Mother Hospital Private Ltd.(Civil appeal No.3360 of 2006,dtd.08/03/2017) has held that title in the immovable property could not pass when its value is more than rupees hundred unless same is executed on a proper stem paper and his duly registered with the sub registrar, that the assessee had entered into register conveyance deed on 31/10/2007,that MOU and the supplementary MOU was signed on 28/07/2006 and 16/10/2007, that chargeability of capital gain would trigger by transfer, that total consideration would form the full value of consideration, that the Department had no right to split the full value of consideration and it reminds a different character of income. He placed reliance on the cases of Saurashtra Cement Ltd (325 ITR 422), Ram Nath Exports Ltd. (ITA 53 of 2006 of the Delhi High Court) and stated that liquidated damages received was to be consider -ed a part of sale consideration of the capital asset,that same should be treated as part of full value of consideration.The DR argued that in the supplementary MOU the amount of liquidated damages was mentioned as penal interest,that the same should be taxable as income from other sources,that the assessee itself had offered the interest portion as income from other sources. In the rejoinder, the AR submitted that the assessee had made a mistake by offering the interest portion to tax under wrong head of income,that later on the AO assessed it as income from other sources,that he did not tax at under the correct head of income i.e.capital gains, that the mistake committed by the assessee cannot be used against it by the AO, that the liquidated damages should be treated as part of full value of consideration and had to be charged under the head capital gains. 6.3.We have heard the rival submissions.We find that the assessee itself had included the disputed amount a part of total consideration and had increased the sale figure from Rs.598 crores Rs. 606.2 crores,that during the assessment proceedings it was claimed that liquidated damages should be assessed under the head income from other sources.We find that the assessee had received sale consideration and interest as per the sale deed and first MOU whereas liquidated damage as per the later MOU.The assessee has claimed that sums received by it under all the three heads should be taxed under the head capital gains. As far as sale consideration and interest is concerned,we are in agreement with the assessee that same should be taxed under the capital gains as both the sums were directly linked with sale of a capital asset.As far as liquidated damage is concerned we find that as per the supplementary MOU the amount received by the assessee is penal in nature.Any receipt of penal nature cannot 7574/M/12(08-09) New Holland Fiat(I) Pvt.Ltd.(Now CNH Industrial Ltd.) be treated as other receipts. Interest and penalty are two different concepts.Section 37 deals with residuary expenses and it provides that any payment of penal nature cannot be allowed while computing taxable income,however compensatory payment is an allowable expenditure.We know that issue before us is about receipt and not of expenditure.But,what we want to emphasise is that nature of receipts or expenses of penal nature are totally different from normal expenses and receipts.We have gone through the supplementary MOU.In our humble opinion,liquidated damage received by the assessee,in pursuance of the said MOU,was penal in the nature i.e. it was in nature of compensation/damages on account of the breach committed by the purchaser of the plot of land.The amount received as penalty-not a compensatory receipt-has to be taxed as income earned from other sources as defined u/s. 56(1) read with section 14. We have carefully perused the cases relied upon by the assessee.We find that none of them deal with penal nature of receipts or payments.In the cases referred before us,the issues were as to whether the liquidated damages had to be assessed under the head business income or not. Considering the peculiar facts and circumstances of the case,we hold that liquidated damage received by the assessee were penal in nature and has been rightly assessed under the head income from other sources.GOA-10 is decided against the assessee. 7.Last effective ground of appeal(GOA-11-13 & 20-21) pertains to allowability of unabsorbed depreciation and un-utilised scientific research allowance of the amalg -amating company and set off and carry-forward of business losses and unabsorbed depreciation of the earlier years in case of amalgamated company. The facts of the case are that New Holland Tractor India Private Ltd. (Amalgamating company) was amalgamated with the assessee with effect from 01/04/2007, that the assessee change it names to New Holland Fiat India Private Ltd.,that it claimed set off/carry - forward of three items in respect of amalgamating company, namely brought forward (B/F) business loss (Rs. 22.83 crores), unabsorbed appreciation (Rs. 111.79 crores) and un-absorbed scientific research expenses (Rs. 4.85 crores). 7.1.During the assessment proceedings, the AO did not allow the claim made by the assessee, as claimed by it, in the draft assessment order. The DRP did not issuing direction on the subject is the issue did not pertain any variation to the income of the assessee. While completing the assessment the AO allowed partial relief as under: Nature Amount Assessment Years Amounts Allowed/ Disallowed 7574/M/12(08-09) New Holland Fiat(I) Pvt.Ltd.(Now CNH Industrial Ltd.)
B/F business loss 22.83 lakhs AY.02-03 to 04-05 22.83 lakhs Unabsorbed Dep. 111.79 crores Allowed for AY.s. Allowed Rs. 39.98 lakhs, 02-03 to 04-05 disallowed Rs. 71.81 lakhs Disallowed for the AY.s. 97 – 98 to 2001 – 02 Unabsorbed 4.85 crores Allowed for AY.s.02-03 to Allowed Rs. 56.72 lakhs, scientific research 04-05 Disallowed Rs.4.29 crores. expenses Disallowed for the AY.s. 97 – 98 to 2001 – 02 Total 139, 00, 02,026/- ---- Allowed-Rs. 63.38 crores disallowed Rs. 75.61 crores. The AO did not allow the set off of unabsorbed depreciation and unabsorbed scientific research expenses for the assessment years 1997-98 to 2001-02, following the special bench decision in the case of Times Guarantee Ltd. (131 TTJ 257).
7.2.Before us, the assessee argued that the law laid by special bench in the case of Times Guarantee (supra) was no longer good law, that the Hon’ble Bombay High Court has held that carryforward and set off of unabsorbed appreciation of the earlier years is allowable. He referred to the cases of Arc Fine Chemicals Private Ltd. (ITA No. 1037 of 2014 of the Hon’ble Bombay High Court), Hindustan Unilever Ltd (72 taxmann.com).We find that question no.7,raised before the Hon’ble Court,was as under: “Whether on facts and in circumstances of the case and in law the Tribunal was right in directing to allow the set off of brought forward depreciation losses of amalgamating company for the Assessment Years 1996-97 and 1997-98 i.e. for the period prior to amendment in sub section (2) of Section 32 of the Act w.e.f. 1/4/2002 ?" The Hon’ble Court decided the issue as follow: “6. Regarding question No. 7 : (a) The impugned order of the Tribunal has allowed the respondent - assessee's appeal on the issue of allowing unabsorbed depreciation pertaining to Assessment Year 1996-97 and 1997-98 which was carried forward to be set off in the subject Assessment Year. (b) The grievance of the Appellant is that in view of the fetter (of eight years) in carrying forward depreciation for Assessment Year 1997-98 upto Assessment Year 2002-03, the set off of the same cannot be allowed in this Assessment year. (c) We find that the impugned order of the Tribunal while allowing the Assessee - respondents' claim follows the decision of the Gujarat High Court in General Motors India (P.) Ltd. v. Dy. CIT [2013] 354 ITR 244/[2012] 210 Taxman 20/25 taxmann.com 364 wherein on identical facts it was held that the unabsorbed depreciation for the Assessment Year 1997-98 upto Assessment Year 2001-02 could be allowed to be set off, if it was still unabsorbed on 1st April, 2001. The above decision also placed upon the CBDT circular No. 14 of 2001 dated 22nd November, 2001 to hold that any unabsorbed depreciation which is available on 1st day of April, 2001 would be dealt with in accordance with the provisions of Section 32(2) of the Act as amended by the Finance Act of 2001. Moreover, the Circular No. 14 of 2001 issued by the CBDT clarifies that 7574/M/12(08-09) New Holland Fiat(I) Pvt.Ltd.(Now CNH Industrial Ltd.) restriction of eight years to carry forward and set off the unabsorbed depreciation has been dispensed with. Consequently, unabsorbed depreciation for the intervening periods between assessment 1997-98 upto 2001-02, if available in the assessment year 2002-03 would be allowable as part of carried forward depreciation from Assessment Year 2002-03 onwards. No decision contrary to the decision of the Gujarat High Court has been shown to us. It is clarified that although the decision of the Gujarat High Court was rendered in context of re-opening notice it has also examined the issue on merits and drew support from the CBDT circular which is beneficial to the assessee to conclude as aforesaid. Nothing has been shown to us to indicate why the decision of the Gujarat High Court in General Motors (India) Ltd. should not be followed in the present facts.” Respectfully following the judgment of the Hon’ble jurisdictional High Court,we decide the issue of carry forward of losses/unabsorbed depreciation of the AY.s.1997 -98 to AY.2001-02 in favour of the assessee. Similarly, we hold that losses of the amalgamated company for the preceding eight assessment years has to be allowed as per the law and the unabsorbed depreciation is to be allowed as per amended provision of section 32 (2) and in line with the decision of the Hon’ble Bombay High Court in the case of Hindustan Unilever (supra). Last effective ground of appeal is decided in favour of the assessee.