2013 (5) TMI 866 - AT - Income Tax

Tribunal rules in favor of assessee on set-off of unabsorbed depreciation, allows set-off against capital gain.

The Tribunal partially allowed the appeal filed by the assessee-company, ruling in favor of the assessee on the issues related to the entitlement to claim ... Carry forward of unabsorbed depreciation - Held that:- Intention of the Legislature was to allow unabsorbed depreciation allowance for an indefinite period of time since it was for enabling the industry to conserve sufficient funds to replace plant and machinery and, bearing in mind the intention of incentive, restriction of 8 years was dispensed with by an amendment. See General Motors India Pvt. Ltd. Vs. DCIT [2012 (8) TMI 714 - GUJARAT HIGH COURT] Issues:1. Whether the order passed by the Assessing Officer is erroneous or prejudicial to the interest of revenue under section 263 of the Act.2. Entitlement to claim set off of unabsorbed depreciation under the Finance Act 2001.3. Allowance of set off of unabsorbed depreciation against capital gain.4. Interpretation of the law regarding the carry forward of unabsorbed depreciation.Analysis:1. The appeal was against the order passed by the Commissioner of Income Tax under section 263 of the Act. The assessee contended that the Assessing Officer's order was not erroneous or prejudicial to the revenue's interest. The Tribunal considered the arguments but ultimately decided against the assessee, stating that the assessee was entitled to set off unabsorbed depreciation from certain assessment years.2. The assessee claimed entitlement to set off unabsorbed depreciation under the Finance Act 2001 for specific assessment years. The Tribunal, after considering the arguments presented by both parties, referred to the decision of the Hon'ble Gujarat High Court and the ITAT Mumbai Bench. The Tribunal concluded that the assessee was indeed entitled to claim the set off of unabsorbed depreciation from the specified assessment years.3. The issue of allowing set off of unabsorbed depreciation against capital gain was raised by the assessee. The Tribunal examined the arguments presented and, based on its decision regarding the entitlement to claim set off of unabsorbed depreciation, found in favor of the assessee on this issue as well.4. The interpretation of the law regarding the carry forward of unabsorbed depreciation was crucial in this case. The Tribunal extensively discussed the legislative changes and judicial precedents related to this issue. Ultimately, the Tribunal relied on the decision of the Hon'ble Gujarat High Court and the ITAT Mumbai Bench to conclude that the assessee was entitled to claim the set off of unabsorbed depreciation from the specified assessment years.In conclusion, the Tribunal partially allowed the appeal filed by the assessee-company, ruling in favor of the assessee on the issues related to the entitlement to claim set off of unabsorbed depreciation and allowing set off against capital gain. The Tribunal deemed certain grounds as academic since the main issue had been decided in favor of the assessee.