EOU's Unabsorbed Depreciation Set-off Appeal Allowed, Delay Condonation Remanded

The Tribunal allowed the appeal regarding the disallowance of set-off of unabsorbed depreciation for the 100% Export Oriented Unit (EOU) for the relevant assessment year. The Tribunal held that the unabsorbed depreciation related to the EOU could be set off against profits for the assessment year, contrary to the lower authorities' decisions. Additionally, the matter of condonation of delay in filing the appeal was remanded back to the CIT(A) for fresh adjudication.

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Issues:
1. Disallowance of set-off of unabsorbed depreciation for a 100% Export Oriented Unit (EOU) against profit for the relevant assessment year.
2. Condonation of delay in filing appeal due to illness of the Accountant.

Issue 1: Disallowance of set-off of unabsorbed depreciation for a 100% EOU:
The case involved appeals by the assessee against the CIT(A)'s order confirming the AO's decision on unabsorbed depreciation set-off. The primary contention was whether unabsorbed depreciation related to a 100% EOU, Zenith Textiles, could be set off against profits for the assessment year. The AO disallowed the set-off based on provisions of section 10B(6) and section 32 of the Income-tax Act, 1961. The AO held that unabsorbed depreciation for years ending before 01.04.2007 cannot be carried forward. The CIT(A) upheld this decision. However, the Tribunal reversed the lower authorities' orders. The Tribunal noted that the assessee did not claim deduction u/s. 10B for AY 1997-98 and that Zenith Textiles was approved as a 100% EOU only from 26.09.1997. Therefore, the unabsorbed depreciation for AY 1997-98 was allowed to be carried forward, contrary to the AO and CIT(A)'s decisions.

Issue 2: Condonation of delay in filing appeal:
The second appeal related to the delay in filing the appeal for AY 2004-05. The CIT(A) rejected the appeal due to a delay of 6 months and 19 days. The assessee contended that the delay was due to the illness of the Accountant. The Tribunal considered the submissions and remanded the matter back to the CIT(A) for fresh adjudication on the delay issue. Both sides agreed to allow the assessee to prove the reasons for the delay. The Tribunal directed the CIT(A) to provide a reasonable opportunity for the assessee to establish the reasons for the delay and subsequently decide on the merits of the appeal. The appeal was allowed for statistical purposes.

In conclusion, the Tribunal allowed the appeal regarding the disallowance of set-off of unabsorbed depreciation for the 100% EOU, Zenith Textiles, for AY 1997-98. Additionally, the matter of condonation of delay in filing the appeal for AY 2004-05 was remanded back to the CIT(A) for fresh adjudication.

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