TaxTMI 
TaxTMI 
2010 (7) TMI 789
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....ge under section 41(2) of the Act. 3.The appellant begs to rely upon the submissions and case law relied on before both the lower authorities in regard to the main two grounds. 4.The revised return for the assessment years 2002-03 and 2003-04 ought to have taken into account and even otherwise the assessee ought to have been granted the set off of unabsorbed depreciation. 5.That the entire reasoning on facts and in law by both the authorities on the aforesaid point are otherwise unwarranted, of facts, bad in law and, therefore, the appeal of the appellant be allowed in full as prayed for." 4. The assessee challenged the disallowance of set off of unabsorbed depreciation of Rs. 31,64,143 and Rs. 4,29,600 being short-term capital loss before the learned CIT(A). It was noticed by the Assessing Officer that the assessee had debited Rs. 38,42,000 under the head 'Motor Tanker Sales Loss' in respect of closed business of transportation which was started on 31-1-2002 and wound up on 31-1-2003. During the course of assessment proceedings, the assessee filed revised returns of income for assessment years 2002-03 and 2003-04 and requested that set off of unabsorbed depreciation of Rs. 31,....
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....ng Rs. 13,22,000 Rs. 1,79,11,900 Less: Cash discount Rs. 8,49,900 W.D.V. as on 31-3-2003 Rs. 1,70,62,000 W.D.V. as on 1-4-2003 Rs. 1,70,62,000 Less: Sale proceeds Rs. 1,32,20,000 Short-term capital loss Rs. 38,42,000 On the other hand the appellant had made the claim as under : Cost of truck Rs. 1,70,62,000 Depreciation @ 40 per cent for 6 months Rs. 34,12,400 (for A.Y. 2002-03) W.D.V. as on 31-3-2002 Rs. 1,36,49,600 W.D.V. as on 1-4-2002 Rs. 1,36,49,600 Less: sale value Rs. 1,32,20,000 Rs. 4,29,600 4.3-1 Original return in this case was filed on 31-10-2003. The valid revised return could have been filed till 31-3-2005. The assessment was completed on 28-3-2006. In the original return, the income from business or profession was disclosed at Rs. 2,91,430. Motor tanker sales loss was shown at Rs. 38,42,000. In the revised return, net business income is shown as Rs. 4,88,443 as under: Net profit Rs. 33,85,438 Unabsorbed depreciation Rs. 28,96,995 Net income Rs. 4,88,443 4.3-2 Similarly the return for assessment year 2002-03 was also revised in which depreciation of Rs. 34,12,400 was claimed and the balance of Rs. 28,96,9....
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....rying it forward and setting it off against the next year's income. In the case of Garden Silk Weaving Factory v. CIT - 189 ITR 512 (SC), it has been held that unabsorbed depreciation is a species of business loss and both are not mutually exclusive. In my considered view, therefore, the Assessing Officer was justified in not taking cognizance of the revised returns filed on 23-3-2006 and working out the short-term capital loss as per provisions of section 50(2) of the Income-tax Act. Ground Nos. 1 and 3 are, accordingly, dismissed." 6. The learned counsel for the assessee submitted that the assessee has filed bifurcated profit and loss account for the period from 31-1-2002 to 31-1-2003 before the Assessing Officer for the assessment years 2002-03 and 2003-04 at the assessment stage copy of which is filed at page 1 of the paper book. He has submitted that the Assessing Officer has computed the income in the assessment order by taking the net profit of Rs. 36,52,586 which figure was taken from the recasted consolidated profit and loss account. He has submitted that since PB-1 bifurcated figures of the profit and loss account for both the years was before the Assessing Officer in wh....
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....orbed depreciation under section 32(2) of the Income-tax Act only in the revised return which was admittedly invalid. Therefore, in the absence of any valid claim, before the Assessing Officer; the Assessing Officer was justified in not entertaining the claim of the assessee. The learned DR submitted that since the return of income was originally filed at Rs. 2,91,434 on 31-10-2003 in which no claim of unabsorbed depreciation was made, therefore, the Assessing Officer was justified in rejecting the claim of the assessee for unabsorbed depreciation on the basis of invalid revised return. 7. We have considered the rival submissions and the materials available on record. Section 32(2) of the Income-tax Act provides : "[(2) Where, in the assessment of the assessee, full effect cannot be given to any allowance under sub-section (1) in any previous year, owing to there being no profits or gains chargeable for that previous year, or owing to the profits or gains chargeable being less than the allowance, then, subject to the provisions of sub-section (2) of section 72 and sub-section (3) of section 73, the allowance or the part of the allowance to which effect has not been given, as the ....
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....n for assessment year 2002-03 in which only interest income has been declared without disclosing any business income or depreciation. The learned counsel for the assessee referred to the note given in the computation of income to show that the assessee started business of transportation and purchased chassis of trucks of which body had been constructed. However, it is nowhere mentioned as to if any business income was earned on account of the same. In the absence of any specific narration in the note it is not clear whether actually the assessee started the business of transportation. The learned counsel for the assessee submitted that since the Assessing Officer directed the assessee to file recasted accounts for both the assessment years and he has filed the same at the assessment stage (PB-1) to show business income would not help the assessee because there was no assessment proceeding pending before the Assessing Officer for the preceding assessment year 2002-03. Therefore, filing of consolidated profit and loss account for the earlier year and in assessment year under appeal would not prove the case of the assessee that the assessee had business income in assessment year 2002-....
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....ther, the assessee has not made any claim of unabsorbed depreciation in the original return for the assessment year 2003-04 under appeal and the revised return of income was also invalid and that the issue of depreciation did not arise from the return of income for assessment year 2002-03. Therefore, there was no question of giving set off of unabsorbed depreciation in the assessment year under appeal. The Hon'ble Supreme Court in the case of Goetze (India) Ltd. v. CIT [2006] 284 ITR 3231 held that "deduction claimed after return filed - no power in Assessing Officer to entertain claim made otherwise than by way of revised return". Moreover, no appeal is pending for assessment year 2002-03 in this regard. The decisions cited by the assessee before the learned CIT(A) have already been distinguished by the learned CIT(A) on which the learned counsel for the assessee has not made any further submissions. The learned counsel for the assessee also submitted that ground No. 2 of the appeal is consequential in nature and is connected with unabsorbed depreciation on which no separate finding is required. Crux of finding would be, in absence of computation of depreciation in assessment year....