Tribunal allows set-off of unabsorbed depreciation, validates reassessment. Revenue and Assessee appeals dismissed.

The Tribunal upheld the decision to allow the set-off of unabsorbed depreciation for AY 1997-98 against the assessed income. The reassessment u/s. 148 for AY 2007-08 and AY 2008-09 was deemed valid, resulting in the dismissal of both Revenue's Appeals and Assessee's Cross Objections for these years.

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Issues involved:
1. Addition of unabsorbed depreciation for AY 1997-98.
2. Validity of reassessment u/s. 148 for AY 2007-08.
3. Validity of reassessment u/s. 148 for AY 2008-09.

Issue 1: Addition of unabsorbed depreciation for AY 1997-98 (Revenue's Appeal AY 2007-08):
The Revenue contended that unabsorbed depreciation for AY 1997-98, amounting to Rs. 2,44,90,263, should not be allowed as it exceeded the permissible carry-forward period. The AO withdrew the set-off, resulting in an increased tax liability for the assessee. However, the Ld. CIT(A) directed the AO to allow the set-off of b/f depreciation u/s. 32 of the Act against the assessed income, citing judicial precedents. The Tribunal upheld the Ld. CIT(A)'s decision, emphasizing that unabsorbed depreciation from years prior to AY 1997-98 could be carried forward indefinitely, as clarified by the CBDT circular and supported by court decisions. Therefore, the Revenue's Appeal was dismissed.

Issue 2: Validity of reassessment u/s. 148 for AY 2007-08 (Assessee's Cross Objection AY 2007-08):
The Assessee raised objections against the reassessment u/s. 148, arguing that it was not based on proper satisfaction or requisite approval. The reassessment was deemed to be a change of opinion and lacked justification after four years without any omission or failure on the part of the assessee. However, since the Revenue's Appeal was dismissed on its merits, the Cross Objection became infructuous and was consequently dismissed.

Issue 3: Validity of reassessment u/s. 148 for AY 2008-09:
The same issues as in AY 2007-08 were raised for AY 2008-09. However, since the decision on the AY 2007-08 issues was applicable to both years, the outcome for AY 2008-09 mirrored that of AY 2007-08. The Tribunal dismissed both the Revenue's Appeals and the Assessee's Cross Objections for AY 2008-09.

In conclusion, the Tribunal upheld the Ld. CIT(A)'s decision to allow the set-off of unabsorbed depreciation for AY 1997-98 against the assessed income, following judicial precedents and clarifications by the CBDT. The reassessment u/s. 148 for both AY 2007-08 and AY 2008-09 was deemed valid, and the appeals and cross objections related to these reassessments were dismissed accordingly.

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