DCIT, TIRUPPUR vs. KESHARINANDAN KNIT FABRICS (P) LTD., TIRUPPUR

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ITA 1982/CHNY/2016Status: DisposedITAT Chennai30 September 2016AY 2013-143 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that unabsorbed depreciation from prior years, which had already been set off, did not need to be notionally carried forward and set off again against profits for the purpose of calculating the Section 80IA deduction.

What were the facts?

The Revenue appealed against the CIT(A)'s order allowing deduction under Section 80IA. The core issue was whether unabsorbed depreciation from prior years should be set off before claiming the Section 80IA deduction.

What were the issues?

Whether unabsorbed depreciation from earlier years must be set off before granting deduction under Section 80IA, even if it was notionally carried forward.

Which sections of the Income-tax Act were involved?

Section 80IA

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Income Tax Appellate Tribunal, ‘ B’ BENCH : CHENNAI

Before: SHRI ABRAHAM P. GEORGE & SHRI G. PAVAN KUMAR

For Respondent: Shri. M. Narayanan, Addl

Heard together (2 matters)

I.T.A. No. 1980/Mds/2016
I.T.A. No. 1982/Mds/2016

Read from the judgment's own cause title. This page is filed under one of them.

आदेश / O R D E R

PER SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER:

1.

These appeals filed by the Revenue are directed against the orders of the ld. Commissioner of Income Tax (Appeals), Coimbatore granting the claim for deduction u/s.80IA of the Income Tax Act, 1961 (herein after referred to as ‘the Act’), before setting of earlier year’s notional losses.

2.

Ld. Commissioner of Income Tax (Appeals) had taken a view that unabsorbed depreciation of years, prior to the initial year of preferring a claim under deduction u/s.80IA of the Act was not to be notionally carried forward and set off before granting such deduction.

The ld. Commissioner of Income Tax (Appeals) had followed the judgment of Hon’ble Jurisdictional High Court in the case of M/s. Sri Valayuthasamy Spinning Mills Ltd vs. ACIT 340 ITR 477. The contention of the Revenue before us is that the assessees had claimed deduction u/s 80IA(4) of the Act without setting off of the depreciation of the said units for the earlier years. As against this, claim of the assessees are that such depreciation loss was already adjusted and therefore, notional loss could not be brought forward and forcibly set off against the profits of the impugned assessment years.

We find that the issue raised in these appeals is squarely covered by ITA No.1980 & 1982/2016. :- 3 -: the judgment of the Jurisdictional High Court in the case of Velayudhaswamy Spinning Mills P. Ltd (supra). Once earlier losses had been set off against other income, there was no question of notional adjustment of such losses against the profits of a given year as per the above judgment, while working out deduction claimed u/s 80IA of the Act. Since the CIT(A) had followed the judgment of the Jurisdictional Madras High Court, we do not find any reason to interfere with the order of the CIT(A).

In the result, the appeals of the of the Revenue are 3. dismissed.

Order pronounced on Friday, the 30th day of September, 2016, at Chennai.

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