Tribunal allows revised statement for Book Profit calculation & sets off unabsorbed depreciation against other income.

The Tribunal upheld the CIT(A)'s decision in the case, allowing the consideration of the revised statement of unabsorbed depreciation and book loss for computing Book Profit under Section 115JB. Additionally, the Tribunal affirmed the CIT(A)'s directive to permit the set-off of unabsorbed depreciation for the assessment years 1995-96 to 1999-2000 against 'Income from Other Sources,' in line with the Gujarat High Court's ruling. The Revenue's appeal was dismissed on both issues.

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Issues Involved:

1. Consideration of revised statement of unabsorbed depreciation and book loss for computation of Book Profit under Section 115JB of the Income Tax Act, 1961.
2. Legality of allowing set-off of unabsorbed depreciation pertaining to Assessment Years 1995-96 to 1999-2000 against 'Income from Other Sources'.

Issue-wise Detailed Analysis:

Issue 1: Consideration of Revised Statement of Unabsorbed Depreciation and Book Loss

The Revenue challenged the CIT(A)'s direction to the Assessing Officer (AO) to consider the revised statement of unabsorbed depreciation and book loss furnished by the assessee for computing Book Profit under Section 115JB of the Income Tax Act, 1961. The AO had initially rejected the revised statement because it was not reconciled with the statement of accounts of the respective years and was different from the one claimed in the return of income. The CIT(A), however, directed the AO to consider the revised figures, ignoring the positive income of certain years, and to aggregate the lower of the business loss or unabsorbed depreciation for computing the book profit.

Upon appeal, the Tribunal upheld the CIT(A)'s decision, referencing the Hon'ble Bombay High Court's ruling in CIT v. Pruthvi Brokers & Shareholders (P) Ltd., which allows taxpayers to raise additional claims before the AO even if such claims were not made in the original return of income. The Tribunal found no infirmity in the CIT(A)'s order, dismissing the Revenue's grounds of appeal on this issue.

Issue 2: Set-off of Unabsorbed Depreciation for Assessment Years 1995-96 to 1999-2000

The Revenue contended that the CIT(A) erred in directing the AO to allow the set-off of unabsorbed depreciation for the assessment years 1995-96 to 1999-2000 against 'Income from Other Sources,' arguing that the time period for claiming such depreciation had expired. The AO had disallowed these brought forward depreciation losses based on the ITAT Special Bench decision in DCIT v. Times Guaranty Ltd., which limited the carry-forward period to eight years.

The CIT(A), however, relied on the Gujarat High Court's decision in General Motors India P. Ltd., which held that unabsorbed depreciation available as of April 1, 2002, should be carried forward and set off without any time limit, as per the amended provisions of Section 32(2) of the Act. The Tribunal affirmed the CIT(A)'s decision, referencing its own earlier decisions in similar cases that followed the Gujarat High Court's ruling. Consequently, the Tribunal dismissed the Revenue's appeal on this ground as well.

Conclusion:

The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s directions to consider the revised statement of unabsorbed depreciation and book loss for computing Book Profit under Section 115JB, and to allow the set-off of unabsorbed depreciation for the assessment years 1995-96 to 1999-2000 in accordance with the Gujarat High Court's decision in General Motors India P. Ltd.

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