ITAT Kolkata upholds AO's deletion on unabsorbed depreciation, remands stock provision issue.

The ITAT Kolkata upheld the deletion of the addition made by the AO on the claim for set off of unabsorbed depreciation based on the decision of the Hon'ble Gujarat High Court. However, the ITAT Kolkata remanded the issue of provisions for non-moving/obsolete stock and spares back to the AO for fresh consideration. The Revenue's appeal was treated as partly allowed for statistical purposes.

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Issues Involved:
1. Deletion of addition made by AO on account of disallowance of claim for set off of unabsorbed depreciation.
2. Deletion of addition made by AO on account of disallowance of provisions for non-moving/obsolete stock and spares.

Analysis:

Issue 1: Deletion of addition made by AO on account of disallowance of claim for set off of unabsorbed depreciation:
The appeal was filed by the revenue against the order of Ld. CIT(A) regarding the deletion of addition made by the AO on account of disallowance of the claim for set off of unabsorbed depreciation. The AO disallowed the claim for set off of unabsorbed depreciation pertaining to earlier years. However, the Ld. CIT(A) deleted the disallowance and allowed the claim based on the decision of the Hon'ble Gujarat High Court. The ITAT Kolkata upheld the decision of the Ld. CIT(A) citing the amendment made in the Finance Act, 2001, which allowed the balance of unabsorbed depreciation to be carried forward and set off. Since there was no contrary decision in favor of the revenue, the ITAT Kolkata dismissed the Revenue's appeal.

Issue 2: Deletion of addition made by AO on account of disallowance of provisions for non-moving/obsolete stock and spares:
The AO disallowed the provision made by the assessee for non-moving/obsolete stock and spares, considering it as a contingent liability. The Ld. CIT(A) allowed the claim of the assessee for deduction on this issue. The ITAT Kolkata noted that the Ld. CIT(A) accepted a new stand taken by the assessee without giving an opportunity to the AO to verify it. Therefore, the ITAT Kolkata set aside the Ld. CIT(A)'s order and remanded the matter to the AO for fresh consideration after verifying the stand of the assessee regarding the provision for non-moving/obsolete stock and spares. The Revenue's appeal was treated as partly allowed for statistical purposes.

In conclusion, the ITAT Kolkata upheld the deletion of the addition made by the AO on the claim for set off of unabsorbed depreciation based on the decision of the Hon'ble Gujarat High Court. However, the ITAT Kolkata remanded the issue of provisions for non-moving/obsolete stock and spares back to the AO for fresh consideration.

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