TaxTMI 
TaxTMI 
2012 (11) TMI 21
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.... However, the learned AR did not press ground No.2 of the appeal since alternative remedy was pursued and further he did not press ground No.5. Therefore both those grounds are dismissed as not pressed. The other three effective grounds are grounds No.1, 3 and 4 of the appeal and they are reproduced herein below for reference:- "1. (i) The order passed by the learned CIT u/s 263 of the Act bad in law as the order of learned A. O. u/s 143(3) was neither erroneous nor prejudicial to the interest of revenue. It is submitted that it be so held now and order passed u/s 263 be quashed. (ii) The learned CIT erred in law in applying provisions of section 263 of the Act to the allowance of set-off of unabsorbed depreciation for A. Ys. 1997-....
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....r u/s 263 of the Act." 3. The assessee company is engaged in manufacture of high speed draw film which is used in textile industries. The assessee also does business by selling spare parts manufactured by it and sourced locally and imported, filed its return of income for the assessment the previous year 2006-07 on 29-10-2007 declaring total income at nil. Initially, the return was processed u/s 143(1) of the Act on 27-11- 2008. Subsequently, the case was selected for scrutiny and assessment was completed on 24-12-2009 wherein the learned AO granted deduction of unabsorbed depreciation accumulated since 1994-1995 to 2003-04 for Rs.13,36,45,631/-. Thereafter, the learned CIT issued a show cause notice as to why the assessment order dat....
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....ide letter dated 14-09-2009 at item No.19 had directed the assessee to furnish the details of carry forward losses as per returned income and assessed income year wise (Reference Page 21 of the Paper Book) pursuant to which the assessee furnished such details and based on such submission and examining the issue the learned AO had judiciously allowed the claim of the assessee. The learned AR further submitted that on merits also the issue is squarely covered in favour of the assessee by the decision of the Hon'ble Jurisdictional High Court in the case of General Motors India (P) Ltd. Vs DCIT [2012] 25 taxmann.com 364 (Guj.) wherein it was held that unabsorbed depreciation pertaining to assessment year 1997-98 could be allowed to be carried f....
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....ation furnished by the assessee, the learned AO considering the issue of unabsorbed depreciation had judiciously set off the unabsorbed depreciation for the assessment year 1997-98 and 1998-99 of Rs.1,19,49,810/- and Rs.1,20,78,798/- respectively. On merit, the issue is held in favour of the assessee by the Hon'ble Jurisdictional High Court of Gujarat in the case of General Motors India (P) Ltd. Vs DCIT wherein it is held as under: "The provision of section 32(2) was introduced by Finance (No.2) Act, 1996 and further amended by the Finance Act, 2000. The provision introduced by Finance (No.2) Act was clarified by the Finance Minister to be applicable with prospective effect. [Para 34] The said CBDT Circular clarifies the intent of the....
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....r section 32(20, in computing the profits and gains of business or profession for any previous year, deduction of depreciation under section 32 shall be mandatory. Therefore, the provisions of section 32(2) as amended by Finance Act, 2001 would allow the unabsorbed depreciation allowance available in the assessment years 1997-98, 1999-2000, 2000-01 and 2001-02 to be carried forward to the succeeding years, and if any unabsorbed depreciation or part thereof could not be set off till the assessment year 2002-03 then it would be carried forward till the time it is set off against the profits and gains of subsequent years. [Para 37] Therefore, it can be said that, current depreciation is deductible in the first place from the income of th....
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...., without any limit whatsoever. [Para 38] For the aforesaid reasons, this writ petition succeeds and is allowed. [Para 39]" 6. Considering the above facts, it is apparent that the learned AO had considered the issue while passing the assessment order and had adopted a possible view. Therefore, the decision rendered by the Hon'ble Supreme Court in Malabar Industrial Co. Ltd. Vs CIT reported in 243 ITR 83 is squarely applicable to the facts of this case. In these circumstances, we are of the considered view that the learned CIT was not justified by passing order invoking Section 263 of the Act by holding that the unabsorbed depreciation of assessment year 1997- 98 and 1998-99 set off by the learned AO in the relevant assessment year ....