TaxTMI 
TaxTMI 
2017 (6) TMI 496
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....CIT II Kolkata having exercising his jurisdiction u/s. 263 of the Act declared that the said assessment was erroneous and prejudicial to the interest of revenue and directed the AO to examine the issue regarding the allowability of sum of Rs. 1,62,74,997/- claimed towards purchase of sales tax exemption certificates and to frame the assessment denovo vide his order dt. 14-03-2011. 5. During such proceedings the assessee produced necessary evidence in support of his contentions and contended that the sales tax exemption certificates were purchased from the three different Wind Power Projects for a consideration aggregating of Rs. 1,62,74,997/-. In pursuance of sales tax scheme 1998 introduced by the Govt. of Maharashtra the assessee claimed credit of sales tax payments by way of purchase of sales tax exemption certificates. But, according to AO, the assessee collected total sales tax of Rs. 68,23,30,482/- and deposited only of Rs. 60,94,00,944/- with the sales tax authorities. The said amount was not credited to P & L account and the assessee debited the amount incurred for purchase of the sales tax exemption certificates of Rs. 1,62,74,997/- to its P & L account as against sales t....
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....quired to be paid to the sales tax department, the appellant has, as explained by it, shown such sales at a gross value i.e. inclusive of sales tax. The appellant has produced a certificate from its auditor in support of this claim and has informed that the said certificate was produced before the assessing officer as well. Thus, the sales, which were cleared against the exemption certificate were booked at the amount inclusive of the exemption of Rs. 2,16,99,999/-. As against this, it claimed the amount of Rs. 1,62,74,997/-, which was the purchase price of the sales tax entitlement certificate, as an expenditure. Thus, the appellant had shown receipt of Rs. 2,16,99,999/- and expenditure of Rs. 1,62,74,997/-. The assessing officer has not specifically refuted this claim. He is, however, of the view that the cost of sales tax exemption entitlement certificate was capital in nature. For this, he has drawn strength from the decision of Special bench of tribunal in the case of Reliance Industries Ltd. (supra). However, on going through the said decision, it is seen, that the same was delivered in respect of an assessee who had received subsidy from government for setting up new industr....
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....eliance Industries Ltd (supra). The CIT-A distinguished the order. We find from the impugned order of the CIT-A that, the Special Bench decision in the case of Reliance Industries Ltd (supra) as rightly pointed out by ld. AR, decided the issue as to whether the subsidy receipt in that case is a revenue or capital receipt. We find that in the present case the assessee claimed expenditure from purchasing Certificates from third party under the scheme introduced by the Govt. of Maharshtra and with the permission of the concerned department. In such circumstances, we are of the view that the CIT-A was justified in deleting same. We uphold the order of the CIT-A. Therefore, the ground raised by the revenue is dismissed. 10. The appeal of the revenue in ITA No. 1936/K/14 for the A.Y 2006-07 is dismissed. 11. Now, we shall take up the other appeal in ITA No. 1937/K/14 A.Y 2007-08 by the revenue. 12. Ground no.1 relates to deletion of an addition of Rs. 4,27,18,750/- made on account of purchase of sales tax exemption certificates being revenue expenditure by the CIT-A. 13. We find that this issue is similar and identical to the facts of the above mentioned appeal in ITA No. 1936/Kol/20....
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....the succeeding years and if any unabsorbed depreciation or part thereof could not 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 without any limit whatsoever. In view of above decision of the Hon'ble Gujarat High Court and also considering the decision of ITAT, Mumbai Bench in the case of Graham Firth Steel Products (I) Ltd. (supra), we hold that Id. CIT(A) is not justified in not allowing set off of unabsorbed depreciation for the assessment years 1997-98 and 1998-99 against the profit for the assessment years 2005-06 and 2006- 07. Hence, we vacate the orders of authorities below and direct the AO to allow unabsorbed depreciation for the assessment years 1997-98 and 1998-99 against the profit for the assessment years under consideration and if any amount is left unabsorbed, the same should be allowed to be carried forward and be set off against the profit and gains of subsequent years till the entire amount of unabsorbed depreciation is set off." 4.4. Following the ratio given by the Hon'ble Gujarat High Court in the case of General Motor (India) Pvt. Ltd (supra) a....
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....ot been given, as the case may be, shall be added to the amount of the allowance for depreciation for the following 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". 13. The above provision in fact, is reinforcement of the provision as existing in the first period. Thus the law as existing in the second period was completely taken back and as a result of that the provision as prevailing in the first period was restored. The AO was of the view that the claim of the Assessee for carry forward of unabsorbed depreciation for 94-95 to 96-97 for set off after the period of 8 years cannot be allowed because unabsorbed depreciation for AY 94-95 and 95-96 totalling Rs. 8,77,48,743 becomes current year depreciation of AY 96-97 and as per the law applicable from AY 1996-97 (Second period) unabsorbed depreciation can be carry forward and set off only upto a period of 8 years. The period of 8 years would i.e., upto 2003-04 and from AY 2004-05 these unabsorbed depreciation cannot be carry forward for set off. Similar reasoning was ad....
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....epreciation. B. In the second period (i.e. asst. yrs. 1997-98 to 2001-02). (i) brought forward unadjusted depreciation allowance for and upto asst. yr. 1996-97 (hereinafter called the 'First unadjusted depreciation allowance'), which could not be set off upto asst. yr. 1996-97, shall be carried forward for set off against income under any head for a maximum period of eight assessment years starting from asst. yr. 1997-98. (ii) current depreciation for the year under s. 32(1) (for each year separately starting from asst. yr. 1997-98 upto 2001-02) can be set off firstly against business income and then against income under any other head. (iii) amount of current depreciation for asst. yrs. 1997-98 to 2001-02 which cannot be so set off as per (ii) above, hereinafter called the 'Second unabsorbed depreciation allowance' shall be carried forward for a maximum period of eight assessment years from the assessment year immediately succeeding the assessment year for which it was first computed, to be set off only against the income under the head 'Profits and gains of business or profession'. ITA Nos.815&816/Kol/2013 & C.O.Nos.57&58/Kol/2013 M/s.Epcos India Pri....
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....inance Act, 2001 and were available for carry forward and set off against the profits and gains of subsequent years, without any limit whatsoever. " 17. It was pointed out that the above decision in the case of General Motors India Pvt. Ltd. (supra) has been followed by the Hon'ble Gujarat High Court in the case of CIT - vs.- Gujarat Themis Biosyn Ltd. (2014) 44 taxmann.com 204 (Guj.). In this case the Hon'ble High Court upheld the view taken by the ITAT wherein, following the ITA Nos.815&816/Kol/2013 & C.O.Nos.57&58/Kol/2013 M/s.Epcos India Private Limited. A.Yrs.2004-05 & 2005-06 decision of the Hon'ble Gujarat High Court in the case of General Motors Ltd. (supra), it was held that carry forward of unabsorbed depreciation concerning AY. 2001-02 and assessment years prior thereto can be set off in subsequent years without any set time limit. 18. Reference was further made to the decision of the Hon'ble Jurisdictional Tribunal in the case of Bengal Tea & Fabrics Limited (ITA No 467/koll2012) dated 26th July, 2012 for the AY 2008-09, wherein the question arose as to whether in view of the amended provisions of section 32(2) of the Act the assessee would be enti....