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THE HON’BLE SRI JUSTICE L.NARASIMHA REDDY AND THE HON’BLE SRI JUSTICE T.SUNIL CHOWDARY
R.C.No.85 of 2002
ORDER: (Per Hon’ble Sri Justice L.Narasimha Reddy)
This reference under Section 256(1) of the Income Tax Act, 1961 (for short ‘the Act’), at the instance of the assessee, is made by the Hyderabad Bench ‘A’ of the Income Tax Appellate Tribunal (for short ‘the Tribunal’).
The applicant is an assessee under the Act. In the returns filed by it for the Assessment Year 1988-89, the applicant invoked Section 155-J of the Act and claimed certain benefits thereunder. The Assessing Officer took the view that the applicant is not entitled to treat the unabsorbed depreciation as loss. As a consequence thereof, he disallowed the unabsorbed loss of the earlier Assessment Years. Aggrieved by that, the applicant filed an appeal before the Commissioner (Appeals). Through order, dated 04.12.1991, the Commissioner allowed the appeal and it was held that the applicant is entitled to treat the unabsorbed depreciation as loss. Thereupon, the department carried the matter in appeal by filing ITA.No.728/Hyd/1992 before the Tribunal. The Tribunal allowed the appeal through its order, dated 28.08.1995, and took the view that the unabsorbed depreciation cannot be treated as loss for the purpose of Section 115-J of the Act.
The applicant filed R.A.No.918/Hyd/1995 with a request to refer the matter to this Court by duly framing the questions. Accordingly, the following questions are referred:
“1. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is justified in holding that the word ‘loss’ does not include unabsorbed
depreciation, for the purposes of Section 115-J of the I.T.Act, 1961?
Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is justified in confirming the action of the Income Tax Officer who made adjustments to the income admitted while passing an order u/s. 143(1) of the I.T.Act?”
Heard Sri A.V.A. Siva Kartikeya, learned counsel for the applicant, and Sri S.R.Ashok, learned Senior Counsel for the respondent.
The Tribunal reversed the order passed by the Commissioner in view of the judgment of this Court in V.V.Trans-Investments (P) Ltd v. DCIT[1]. Therefore, the Tribunal cannot be said to have committed any factual or legal error in allowing the appeal. However, after the Tribunal allowed I.T.A.No.728/Hyd/1992, the Supreme Court reversed the judgment of V.V.Trans-Investments’ case (1 supra) in Surana Steels Ltd. v. DCIT & others[2].
In that view of the matter, both the questions referred to above are answered in favour of the applicant and against the respondent.
______________________ L.NARASIMHA REDDY,J
__________________ T.SUNIL CHOWDARY,J 12.08.2014 v v
[1] 207 ITR 508 [2] 237 ITR 777 (SC)