AI Drafter 
TaxTMI 
TaxTMI 
2020 (7) TMI 718
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.... amended provision of section 32[2] of the Income Tax Act? 2. Whether the Tribunal was correct in deleting the dis-allowance on the claim of setting off of brought forward unabsorbed depreciation amounting to Rs. 1,19,02,780/- pertaining to Asst Years 1999-2000 and 2000-2001 ? 4. The learned Tribunal, in paragraphs 13 and 14 of its order, has given the following finding in this regard :- 13. We have heard both sides, perused the materials on record and gone through the orders of authorities below. The assessee has claimed unabsorbed depreciation of the assessment years 1999-2000 and 2000-01 in the assessment year under consideration. In view of the modification to the provisions of section 32(2) of the Act with effect from 01.04.2002, whereby, the unabsorbed depreciation loss gets merged with subsequent years' depreciation and becomes current depreciation of subsequent year, the assessee can claim the unabsorbed depreciation loss only from the assessment year 2002-03. In other words, the unabsorbed depreciation losses, starting from assessment year 2002-03 will be carried forward to subsequent assessment and becomes part of subsequent year's depreciation. There....
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.... 2001? The reason given by the Assessing Officer under section 147 is that Section 32(2) of the Act was amended by Finance Act No.2 of 1996 w.e.f. A.Y. 1997- 98 and the unabsorbed depreciation for the A.Y. 1997-98 could be carried forward up to the maximum period of 8 years from the year in which it was first computed. According to the Assessing Officer, 8 years expired in the A.Y. 2005-06 and only till then, the assessee was eligible to claim unabsorbed depreciation of A.Y.1997-98 for being carried forward and set off against the income for the A.Y. 2005-06. But the assessee was not entitled for unabsorbed depreciation of Rs. 43,60,22,158/- for A.Y. 1997-98, which was not eligible for being carried forward and set off against the income for the A.Y. 2006-07. Prior to the Finance Act No.2 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 Act No.2 of 1996 restricted the carry forward of unabsorbed depreciation and setoff to a limit of 8 years, from the A.Y.1997-98. Circular No.762 dated 18.2.1998 issued by the Central Board of Direct Taxes (C....
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....y 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." The aforesaid provision 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. Section 32 (2) of the Act was amended by Finance Act, 2001 and the provision so amended reads as under :- "Where, in the assessment of the assessee, full effect cannot be given to any allowance under sub-section (1) in any previous year, owing to there being no pro....
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....rbed depreciation. The amendment is applicable from assessment year 2002-03 and subsequent years. This means that any unabsorbed depreciation available to an assessee on 1st day of April, 2002 (A.Y. 2002-03) will be dealt with in accordance with the provisions of section 32(2) as amended by 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 depreciation allowance worked out in A.Y. 1997-98 only for eight subsequent assessment years even after the amendment of section 32(2) by 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 amendment of section 32(2) of the Act, a purposive and harmonious interpretation has to be taken. While construing 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 the section ....
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.... carry forward and set off against the profits and gains of subsequent years, without any limit whatsoever." In view of this, we are of the opinion that carry forward of unabsorbed depreciation concerning assessment year 2001-02 and assessment years prior thereto can be set off in subsequent years without any set time limit. Accordingly, this ground of appeal is allowed." 13. At the time of hearing, the ld. DR could not controvert the above findings of the Tribunal or filed any order of higher Court decision having modified or reversed the above order of the Tribunal. Hence, respectfully following the above decision, we are of the opinion that the ld. CIT(A) has rightly directed the Assessing Officer to allow the unabsorbed depreciation of the assessment years 1999-2000 and 2000-01 in the assessment year under consideration. Thus, the ground raised by the Revenue is dismissed. 5. The learned counsel for the Revenue also brought to our notice the findings of the learned Commissioner of Income Tax (Appeals) in its order dated 21.12.2015 for the next assessment year 2007-08 in which the learned Commissioner of Income Tax (Appeals) has given a categorical finding t....
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....stalled capacity of CSL 6 Maintenance of 50% production required up to 5^th Year, AY 2008-09 6,000 7 Production of toffees by Lotte India in AY200809 being the fifth year since amalgamation C 76,749 8 Actual increase in production achieved by Lotte India consequent to amalgamation by AY 2008-09 (C-A) 14,864 On comparing (8) and (6) it can be ascertained that Lotte India's production is more than 100% of installed capacity of CSL. Thus Lotte India has maintained the minimum production level in the fifth year, despite the recession and market slump, increase in raw material price which lowered the production The production of toffees by Lotte India in the years mentioned above can be verified from the audited financial statements of the relevant years. In this regard, we have enclosed the following for your kind reference - Particulars Annexure Copy of extract of relevant page of the financial statement for the year ended 31 March 2003, showing production of toffees by Lotte India in FY 2002-03, prior to amalgamation 5 Copy of extract of relevant page of the financial statement for the year ended 31 Marc....