TaxTMI 
TaxTMI 
2016 (5) TMI 1138
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....of the case and in law, the Ld. CIT(A) has erred in allowing the business loss of Rs. 45,53,906/- to set off against the income of assessment year 2001-02 i.e. beyond eight years without appreciating the provisions of section 72(3) of the Act." "2. That in the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in holding that the correct position of carry forward of depreciation and loss from A.Y 2000-01 can be decided in appeal for A.Y 2001-02 which is not conformity of the provisions of Section 31(12) of the Act and also the appeal before him was for A.Y 2001-02." The effective issue raised by Revenue in ground number 1 & 2 is that Ld CIT(A) erred in deciding the issue of carried forward depreciation and loss pertaining to the assessment year 2000-01 in the appeal for the assessment year 2001-02. Before coming to the specific issue let us understand the brief history of the case. The assessee was having brought forward losses and unabsorbed depreciation for the earlier years as depicted in the tax audit report of the assessment 2000-01 which is reproduced below:- Details of unabsorbed business losses & Depreciation From the above that it was observed ....
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....missions of the appellant. I find that the dispute has arisen on account of set off of the income of Assessment Year 2000-01 against the brought forward losses and brought forward depreciation of earlier years. In Assessment Year 2000-01, appellant has returned a business income of Rs. 82,17,845/- and in the tax audit report filed in form 3CD with this return of income, at para 25 of this report, the auditor has set off the income of Rs. 82,17,845 with the depreciation of Assessment Years prior to Assessment Year 1989-90 clubbed together at Rs. 86,65,509. This set off left the depreciation of Assessment Years prior to Assessment Year 1989-90 at Rs. 86,65,509 - Rs. 82,17,845 = Rs.447664/- for the next Assessment year, i.e. Assessment year 2001-02, which is the Assessment Year under appeal. The appellant has argued before the undersigned that the set off of income of Rs. 82,17,845/- of Assessment Year 2000-01 should have been made against the business loss of Rs. 9602352/- of Assessment Year 1992-93 instead of the depreciations of Assessment years prior to Assessment Year 1989-90 and if auditor has made a mistake in this regard then Assessing Officer should have applied the correct s....
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....ment order therefore stands corrected as under:- Assessment Year Business loss Depreciation 1999-00 221678 193374 1998-99 1846932 212475 1997-98 2121308 --- 1996-97 363988 246369 1992-93 594253 1991-92 ---- 1990-91 780223 1989-90 2625627 Earlier years 8665509 Total 4553906 13317830 Being aggrieved by this order of Ld CIT(A) Revenue is in appeal before us. 5. We have heard rival contentions of both the parties and perused the materials available on record. Before us Ld. AR submitted a paper book which is running from pages 1 to 97 and stated that the AO has relied on the tax audit report for working out the business loss and unabsorbed depreciation without considering the year-wise detail of such losses and unabsorbed depreciation available with Revenue authorities. The AO was to allow the brought forward business loss and unabsorbed depreciation in the following sequence. 1. Depreciation for the Current Year 2. Unabsorbed business loss of the earlier years 3. Unabsorbed depreciation of the earlier years Ld AR relied on the order of learned CIT(A) and stated that the issue may be decid....
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....r that the loss cannot be set off against the income of the subsequent year is not binding on the assessee. Relying on the aforesaid judgments, we have no hesitation in upholding the order of learned CIT(A). Hence this ground of appeal of Revenue is dismissed. Coming to assessee's CO No. 98/Kol/2010. 7. During the course of hearing before us, Ld. AR did not press for ground No.1 & 2 same stand dismissed as not pressed. 8. Coming to ground No.3 of assessee's CO is that Ld. CIT(A) erred in holding that the unabsorbed depreciation upto the AY 1996-97, for this, assessee has raised following ground:- "3) That the learned Commissioner of Income Tax (Appeals) erred in holding that the unabsorbed depreciation up to the Assessment Year 1996-97 will be added to the depreciation allowance of 1997-98 and that such unabsorbed depreciation could be carried forward for set off for a maximum period of eight years from the Assessment year 1997- 98." Regarding the dispute of unabsorbed depreciation and its carry forward to the subsequent years, we rely in the decision of Hon'ble High Court of Gujrat in the case of General Motors India Pvt. Ltd. Vs DCIT 25 taxmann.com 364 where it was held as....
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....ing taxing statutes, rule of strict interpretation has to be applied, giving fair and reasonable construction to the language of the section without leaning to the side of assessee or the revenue. But if the Legislature fails to express clearly and the assessee becomes entitled for a benefit within the ambit of section by the clear words used in section, the benefit accruing to the assessee cannot be denied. However, Circular No. 14 of 2001 had clarified that under section 32(2), 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 t....