TaxTMI 
TaxTMI 
2016 (4) TMI 907
X X X X Extracts X X X X
X X X X Extracts X X X X
....avour of the assessee by placing reliance upon the decision in CIT vs Shri Subhu Laxmi Mills Ltd. 249 ITR 795(SC), CIT vs Govind Nagar Sugar Ltd. 334 ITR 13 (Del.), CIT vs Haryana Hotels Ltd. 276 ITR 521 (P & H). This claim of the assessee was not controverted by the ld. DR and he relied upon the assessment order. 2.1. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee is engaged in the business of manufacturing of computers stationary, ATM Cards, ITC Cards, PIN Mailers, Scratch Cards, Smart Cards, RFID Tags and labels, etc, declared loss of Rs. 4,45,13,818/- in its return filed on 01/10/2009. However, the assessee paid the tax on book profit u/s 114JB amounting to Rs. 5,72,44,278/-. The return was processed u/s 143(1) of the Act. The case of the assessee was selected for scrutiny under CASS, therefore, notice u/s 143(2) and 142(1) were served upon the assessee. The assessee complied with the notices and duly attended the assessment proceedings. The assessee filed the return on 01/10/2009 i.e. after the due date of filing of return of income. The assessee sought carried forward of entire loss, which w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t proviso to clause (iia)], as the case may be, is acquired by the assessee during the previous year and is put to use for the purposes of business or profession for a period of less than one hundred and eighty days in that previous year, the deduction under this sub-section in respect of such asset shall be restricted to fifty per cent of the amount calculated at the percentage prescribed for an asset under clause (i) or clause (ii) or clause (iia), as the case may be : Following third proviso shall be inserted after the second proviso to clause (ii) of sub-section (1) of section 32 by the Finance Act, 2015, w.e.f. 1-4-2016 : Provided also that where an asset referred to in clause (iia) or the first proviso to clause (iia), as the case may be, is acquired by the assessee during the previous year and is put to use for the purposes of business for a period of less than one hundred and eighty days in that previous year, and the deduction under this sub-section in respect of such asset is restricted to fifty per cent of the amount calculated at the percentage prescribed for an asset under clause (iia) for that previous year, then, the deduction for the balance fifty ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d in any previous year the deduction calculated at the prescribed rates as if the succession or the amalgamation or the demerger, as the case may be, had not taken place, and such deduction shall be apportioned between the predecessor and the successor, or the amalgamating company and the amalgamated company, or the demerged company and the resulting company, as the case may be, in the ratio of the number of days for which the assets were used by them. Explanation 1.-Where the business or profession of the assessee is carried on in a building not owned by him but in respect of which the assessee holds a lease or other right of occupancy and any capital expenditure is incurred by the assessee for the purposes of the business or profession on the construction of any structure or doing of any work in or in relation to, and by way of renovation or extension of, or improvement to, the building, then, the provisions of this clause shall apply as if the said structure or work is a building owned by the assessee. Explanation 2.-For the purposes of this sub-section "written down value of the block of assets" shall have the same meaning as in clause* (c) of sub-section&dagg....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Provided 13[further] that no deduction shall be allowed in respect of- (A) any machinery or plant which, before its installation by the assessee, was used either within or outside India by any other person; or (B) any machinery or plant installed in any office premises or any residential accommodation, including accommodation in the nature of a guest-house; or (C) any office appliances or road transport vehicles; or (D) any machinery or plant, the whole of the actual cost of which is allowed as a deduction (whether by way of depreciation or otherwise) in computing the income chargeable under the head "Profits and gains of business or profession" of any one previous year; (iii) in the case of any building, machinery, plant or furniture in respect of which depreciation is claimed and allowed under clause (i) and which is sold, discarded, demolished or destroyed in the previous year (other than the previous year in which it is first brought into use), the amount by which the moneys payable in respect of such building, machinery, plant or furniture, together with the amount of scrap value, if any, fall short of the written down value ther....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing previous year and deemed to be part of that allowance, or if there is no such allowance for that previous year, be deemed to be the allowance for that previous year, and so on for the succeeding previous years." 2.3. If the aforesaid sub-section (2) to section 32 is analyzed speaks about not giving full effect 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 profit or gains chargeable being less than the allowance. Whereas, section 80 of the Act requires that return be filed as per section 139(3) of the Act to carry forward losses within due date, as envisaged u/s 139(1) of the Act, however, within the ambit of section 80 for carry forward losses, section 32(2) is not included. In the present case, the assessee has claimed set of and carry forward of unabsorbed depreciation against the profit & gains of business of the succeeding year. The business loss determined in the hands of the assessee under the head "profit & gains of business" stands of different footing then unabsorbed depreciation determined in the hands of the assessee, thus, the assessee having claimed the se....
X X X X Extracts X X X X
X X X X Extracts X X X X
....axman 204 (Delhi), g) CIT v. Nagapatinam Import & Export Corpn. [1975]119 ITR 444/[1980)3 Taxman 150 (Mad.) h) CIT v. Singh Transport Co. [1980)123 ITR 698/4 Taxman 86 (Gauhati) and i) Garden Silk Wvg. Factory v CIT [1991] 189 itr 512/56 Taxman 4K (SC) 2.5. According the newly substituted (w.e.f 01/04/2002) section 32 (2) by the Finance Act, 2001 (14 of 2001) , which is operative for and from A.Y. 2002-03, certain conditions, inter-alia, the restriction of eight years for carry forward and set off of unabsorbed depreciation was dispensed with, reverting to pre-1997 position. It may be noted that the legal fixation of treating unabsorbed depreciation as the depreciation of the subsequent years has been specifically made subject to the provisions of section 72(2) and 73(3) (Mysore Paper Mills Ltd. vs CIT) (1979) 117 ITR 132, 135 (Karnatka) and CIT vs Gujarat State warehousing corporation (1976) 104 ITR 1(Guj.). Thus, if an assessee has unabsorbed depreciation u/s 32(2) of the Act as well as unabsorbed business loss carried forward u/s 72(1), section 72(2) provided the unabsorbed losses shall have precedence, and be set off first, so far as the sufficienc....