TaxTMI 
TaxTMI 
TaxTMI 
2015 (8) TMI 265
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....laimed set off of brought forward losses/depreciation. The Assessing Officer vide assessment order passed u/s. 143(3) r.w.s. 144C dated 28-10-2010 accepted the claim of assessee with respect to brought forward losses and depreciation. The Commissioner of Income Tax (Appeals) issued show cause notice to the assessee u/s. 263 on 08-03-2013 on the ground that the brought forward depreciation loss for the assessment years 1996-97 and 1997-98 cannot be allowed to be set off in the assessment year 2005-06. The relevant extract of the show cause notice is reproduced here-in-under: "In your case, it is seen that, return of income declaring total income Rs. 25,14,19,400/- under regular provisions and declaring tax liability of Rs. 66,65,50,598/- under 115JB of the Income Tax Act were filed The Scrutiny assessment has been completed u/s. 143(3) r.w.s. 144C(13) determining the taxable income at Rs. 88,21,27,827/- after adjustment made by Transfer Pricing Authority under various heads. Against this income set off of b/f business losses of Rs. 27,48,19,358/- and unabsorbed depreciation of Rs. 32,44,92,804/- aggregating to Rs. 59,93,12,162/- pertaining to AY 1996-97 to 2000-01 were allowed and....
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....dicial to the interest of Revenue. 3. Shri Pramod Achuthan appearing on behalf of the assessee submitted that the Commissioner of Income Tax has erred in exercising the jurisdiction u/s. 263 of the Act and directing the Assessing Officer to redo the assessment. In the show cause notice the Commissioner of Income Tax has held that the assessee has wrongly carried forward unabsorbed depreciation relevant to assessment years 1996-97 and 1997-98 up till assessment year 2006-07. The ld. AR submitted that the case of the assessee is squarely covered by the decision of Co-ordinate Bench of the Tribunal rendered in the case of M/s. SAB Miller Breweries Pvt. Ltd. Vs. ACIT in ITA No. 1176/PN/2013 for Assessment Year 2008-09 decided on 27-02-2015, wherein identical issue of unabsorbed depreciation was raised in revision proceedings u/s. 263. The Tribunal by placing reliance on the decision of Hon'ble Gujarat High Court in the case of General Motors India Pvt. Ltd. Vs. DCIT reported as 354 ITR 244 (Guj) and various others judgments supporting the similar view had allowed the claim of the assessee therein. The Tribunal further held that the Commissioner of Income Tax has erred in exercisin....
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....f General Motors India Pvt. Ltd. Vs. DCIT (supra) and various other decisions held that the assessee can set off unabsorbed depreciation relating to assessment year 1999-2000 in assessment year 2008-09. The Tribunal further held that the Commissioner of Income Tax has wrongly assumed jurisdiction u/s. 263 to deny the benefit of unabsorbed depreciation to the assessee. The relevant extract of the order of the Tribunal is reproduced here-in-below: "26. The case of the assessee before Commissioner was that the said set off of unabsorbed depreciation carried forward from assessment year 1999-2000 could be set off against the business income for assessment year 2008-09. Reliance in this regard was placed on the ratio laid down by the Delhi Bench of Tribunal in Jai Ushin Ltd. vs DCIT (2008) 117 TTJ (Del) 330, wherein it was held that the issue relating to setting off the unabsorbed depreciation of assessment year 1999-2000 against the income for assessment year 2003-04 is required to be considered and decided in accordance with the provisions of se.32(2) as amended w.e.f. 32(2) by the Finance Act 2001 which are applicable to that year. Another aspect raised by the assessee before the Co....
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....s or it would be governed by section 32 as amended by the Finance Act, 2001 ? The reason given by the Assessing Officer under section 147 is that section 32(2) of the Act was amended by the Finance (No. 2) Act of 1996, with effect from the assessment year 1997-98 and the unabsorbed depreciation for the assessment year 1997-98 could be carried forward up to the maximum period of eight years from the year in which it was first computed. According to the Assessing Officer, eight years expired in the assessment year 2005-06 and only till then, the assessee was eligible to claim unabsorbed depreciation of the assessment year 1997-98 for being carried forward and set off against the income for the assessment year 2005-06. But the assessee was not entitled for unabsorbed depreciation of Rs. 43,60,22,158 for the assessment year 1997-98, which was not eligible for being carried forward and set off against the income for the assessment year 2006-07. 31. Prior to the Finance (No. 2) Act of 1996 the unabsorbed depreciation for any year was allowed to be carry forward indefinitely and by a deeming fiction became allowance of the immediately succeeding year. The Finance (No. 2) Act of 1996 rest....
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....not being more than eight assessment years immediately succeeding the assessment year for which the aforesaid allowance was first computed: Provided that the time limit of eight assessment years specified in sub-clause (b) shall not apply in case of a company for the assessment year beginning with the assessment year relevant to the previous year in which the said company has become a sick industrial company under sub-section (1) of section 17 of the Sick Industrial Company (Special Provisions) Act, 1985 (1 of 1986), and ending with the assessment year relevant to the previous year in which the entire net worth of such company becomes equal to or exceeds the accumulated losses. Explanation.-For the purposes of this clause, 'net worth' shall have the meaning assigned to it in clause (ga) of sub-section (1) of section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985." 34. The aforesaid provision was introduced by the Finance (No.2) Act, 1996, and further amended by the Finance Act, 2000. The provision introduced by the Finance (No. 2) Act was clarified by the Finance Minister to be applicable with prospective effect. 35. Section 32(2) of the Act was amend....
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....the industry to conserve sufficient funds to replace plant and machinery and accordingly the amendment dispenses with the restriction of eight years for carry forward and set off of unabsorbed depreciation. The amendment is applicable from the assessment year 2002-03 and subsequent years. This means that any unabsorbed depreciation available to an assessee on the 1st day of April, 2002 (the assessment year 2002-03), will be dealt with in accordance with the provisions of section 32(2) as amended by the Finance Act, 2001, and not by the provisions of section 32(2) as it stood before the said amendment. Had the intention of the Legislature been to allow the unabsorbed depredation; allowance worked out in the assessment year 1997-98 only for eight subsequent assessment years even after the amendment of section 32(2) by the Finance Act, 2001, it would have incorporated a provision to that effect. However, it does not contain any such provision. Hence, keeping in view the purpose of the amendment of section 32(2) of the Act, a purposive and harmonious interpretation has to be taken. While construing the taxing statutes, rule of strict interpretation has to be applied, giving fair and re....
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.... unabsorbed depreciation had been dispensed with, the unabsorbed depreciation from the assessment year 1997-98 up to the assessment year 2001-02 got carried forward to the assessment year 2002-03 and became part thereof, it came to be governed by the provisions of section 32(2) as amended by the Finance Act, 2001, and were available for carry forward and set off against the profits and gains of subsequent years, without any limit whatsoever. For the aforesaid reasons, this writ petition succeeds and is allowed. The 41 notice issued under section 148 of the Income-tax Act, 1961, dated March 29, 2011, annexure A and the assessment order dated December 27, 2011, passed by the Assessing Officer annexure F respectively to the writ petition are quashed. Rule is made absolute. The parties shall bear their own costs." 29. Similar proposition has been laid down by the Hon'ble Gujarat High Court in CIT Vs. Gujarat Themis Biosyn Ltd. (2014) 44 taxmann.com 204 (Guj) vide judgment dated 24.02.2014. The Visakhapatnam Bench of the Tribunal in JCIT Vs. M/s. Alufluoride Ltd in ITA No.134/Vizag/2013 relating to assessment year 2007-08, vide order dated 05.03.2014 applying the ratio laid down by th....