2018 (8) TMI 521 - HC - Income Tax

Court Upholds Precedent on Tax Appeal, Rejects Larger Bench Reference Request

The Pr. Commissioner of Income Tax-9, Mumbai Versus M/s. Associated Cables Pvt. Ltd, Mumbai

The court dismissed the appeal challenging the Income Tax Appellate Tribunal's order on carry forward and set-off of unabsorbed depreciation, citing the ... Carry forward and set-off of unabsorbed depreciation - unabsorbed depreciation eligibility for carry forward and set-off against business profits - Held that:- Question raised herein stands finally concluded by the decision of this Court in Hindustan Unilever [2016 (7) TMI 1245 - BOMBAY HIGH COURT] wherein on identical facts it was held that the unabsorbed depreciation for the Assessment Year 1997-98 upto Assessment Year 2001-02 could be allowed to be set off, if it was still unabsorbed on 1st April, 2001. The above decision also placed upon the CBDT circular No.14 of 2001 dated 22nd November, 2001 to hold that any unabsorbed depreciation which is available on 1st day of April, 2001 would be dealt with in accordance with the provisions of Section 32(2) of the Act as amended by the Finance Act of 2001. Moreover, the Circular No.14 of 2001 issued by the CBDT clarifies that restriction of eight years to carry forward and set off the unabsorbed depreciation has been dispensed with. Consequently, unabsorbed depreciation for the intervening periods between assessment 1997-98 upto 2001-02, if available in the assessment year 2002-03 would be allowable as part of carried forward depreciation from Assessment Year 2002-03 onwards - decided against revenue Issues involved:1. Challenge to the order of the Income Tax Appellate Tribunal regarding the carry forward and set-off of unabsorbed depreciation.2. Interpretation of Section 32(2) of the Income Tax Act prior to the amendment by Finance Act, 2001.3. Request for reference to a larger bench due to contradictory views of the court.4. Validity of the court's decision in Hindustan Unilever case.5. Dismissal of the appeal based on the precedent set by the Hindustan Unilever case.Detailed Analysis:1. The appeal challenged the order of the Income Tax Appellate Tribunal related to the Assessment Year 2009-10, specifically focusing on the issue of allowing carry forward and set-off of unabsorbed depreciation from Assessment Year 1999-2000 and 2000-2001 against the profits of 2009-2010. The appellant contended that such depreciation was only eligible for carry forward and set-off against business profits for a further period of eight years under Section 32(2) of the Income Tax Act.2. The court referred to previous decisions and highlighted that the issue raised in the appeal was conclusively settled by the court's decision in Commissioner of Income-Tax-1, Mumbai v. Hindustan Unilever Ltd. The court noted that the Revenue failed to provide any reasons to deviate from the precedent set by the Gujarat High Court and the Central Board of Direct Taxes Circular. The court dismissed the appeal based on the established legal position.3. The appellant requested a reference to a larger bench due to perceived contradictory views of the court, citing cases admitted for further consideration. However, the court rejected this request, emphasizing that the decision in Hindustan Unilever case was final and conclusive, unlike the cases at the admission stage. The court found no merit in the submission for a larger bench reference.4. The appellant argued that the court's decision in Hindustan Unilever case was incorrect but failed to provide any supporting arguments. The court reiterated that the decision in Hindustan Unilever case was binding and valid, emphasizing that the mere filing of a Special Leave Petition did not invalidate the court's order. The court highlighted that the Delhi High Court also supported the view taken by the Gujarat High Court on a similar issue.5. Ultimately, the court concluded that the question raised in the appeal was definitively settled by the Hindustan Unilever case against the Revenue. Therefore, the court dismissed the appeal based on the established legal precedent, emphasizing the finality and binding nature of the previous decision.