TaxTMI 
TaxTMI 
2021 (7) TMI 868
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....ng, the assessment order under Section 143(3) was issued on 22.12.2009, accepting the loss return of Rs. 65,22,677/- and determining the losses carried forward for set off against future profits as Rs. 18,39,06,826/-. The Assessing Officer, thereafter, on 01.02.2011, proposed to withdraw under Section 154 of the Income Tax Act, the depreciation allowance of Rs. 13,71,60,209/-, as according to him, the depreciation relating to the Assessment Year 1997-98 and 1998-99 are required to be withdrawn. The assessee, by their letter dated 22.03.2011, has objected to the proposed rectification under Section 154 as the same was not a matter of "mistake apparent on the face of the record". Based on the objection, the Assessing Officer has dropped the proceedings under Section 154. Thereafter, notice under Section 148 for the Assessment Year 2007-08 was issued on 23.03.2011, which was served on the assessee on 28.03.2011 citing the same reason as in the proposal under Section 154 of the Act. The assessee thereafter contested the said notice and the re-opening of the assessment. However, the Assessing Officer completed the assessment on 29.12.2011, withdrawing the carry forward of unabsorbed dep....
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....Tribunal was right in law in holding that the unabsorbed depreciation relating to Assessment Year 1997-98 to 2000-2001 is not eligible for set off against any income of the appellant for the Assessment Year 2005-06?" 6.1.Mr. R. Sivaraman, learned counsel appearing for the appellant submitted that he is not making any submission with regard to questions of law Nos. 1 and 2 and therefore, this court need not give any finding with regard to the same in this Tax Case. The learned counsel made his submission only with regard to 3rd question of law i.e. with regard to unabsorbed depreciation relating to assessment year 1997-98 to 2000-2001 is not eligible for set off against any income of the appellant for the Assessment Year 2005-06. 6.2.The learned counsel further submitted that the Hon'ble Division Bench of this court, in identical circumstances, in the Judgment reported in CIT v. S & S Power Switchgear Ltd. 2009 (318) 187 (Mad.) held that in view of the amended provisions of section 32(2), with effect from 1-4-1997, the deeming fiction of treating the earlier years' unabsorbed depreciation as current year depreciation was removed and the period available for....
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....s set aside. The 3rd question of law is decided in favour of the appellant. The Tax Case Appeal stands allowed. No costs. Consequently, the connected Miscellaneous Petition is closed." (ii)[2020] 122 taxmann.com 212 (Madras) [Commissioner of Income Tax, Chennai Vs. Sanmar Speciality Chemicals Ltd.] wherein the Division Bench held as follows: "... 3.The appeal was admitted on 2-12-2019 on the following substantial question of law : "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee is entitled for carry forward of the depreciation loss pertaining to the assessment year 1997-98 to the present assessment year 2006-07, which is beyond the eight year period mandated under the provisions of section 32 of the Act?" 4.The short issue, which falls for consideration, is as to whether, in the facts and circumstances of the case, the Tribunal was right in permitting the assessee to carry forward the depreciation loss pertaining to the assessment year 1997-98 to the present assessment year namely 2006- 07, which is beyond the eight year period mandated under the provisions of section 32 of....
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....or cars acquired on or after 1st April, 2001. 30.5 These amendments will take effect from the 1st April, 2002, and will, accordingly apply in relation to the assessment year 2002-2003 and subsequent years." 8. From paragraph 30.2 of the above circular, it is clear that the restriction of 8 years for carry forward and setoff of unabsorbed depreciation was dispensed with, with a view to enable the industries to conserve sufficient funds to replace plant and machinery. 9. The learned Senior Standing Counsel appearing for the Revenue would point out that those amendments took place with effect from 1-4-2002 and would accordingly apply in relation to the assessment year 2002-03 and the subsequent years whereas in the assessee's case, the depreciation loss, which they sought to carry forward is for the assessment year 1997-98. 10. The proper manner, in which, the modification has to be understood, is to the effect that from the assessment year 2002-03, if the eight years' period was not lapsed, then the assessee would be entitled to carry forward the loss without any restriction on the time limit. This aspect has been dealt with elaborately in ....
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....t-off against the profits and gains of subsequent years. 38.Therefore, it can be said that, current depreciation is deductible in the first place from the income of the business to which it relates. If such depreciation amount is larger than the amount of the profits of that business, then such excess comes for absorption from the profits and gains from any other business or business, if any, carried on by the assessee. If a balance is left even thereafter, that becomes deductible from out of income from any source under any of the other heads of income during that year. In case there is a still balance left over, it is to be treated as unabsorbed depreciation and it is taken to the next succeeding year. Where there is current depreciation for such succeeding year the unabsorbed depreciation is added to the current depreciation for such succeeding year and is deemed as part thereof. If, however, there is no current depreciation for such succeeding year, the unabsorbed depreciation becomes the depreciation allowance for such succeeding year. We are of the considered opinion that any unabsorbed depreciation available to an assessee on 1st day of April 2002 (A.Y. 2002-03) wil....
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....ess loss was removed last year. 22.2 With a view to harmonise the provisions relating carry forward and set-off of unabsorbed depreciation and unabsorbed loss, the Act has dispensed with the condition of continuance of same business for the purpose of carry forward and set-off of unabsorbed depreciation. 22.3 This amendment will take effect from 1st April, 2001, and will, accordingly, apply in relation to the assessment year 2001-2002 and subsequent years." 9. The CIT(A) and the Tribunal, thus, rightly allowed unabsorbed depreciation relevant to the assessment year 1996-97 to be set-off against the income from long term capital gains and income from other sources for the assessment year 2001-2002.' 13. Recently, in the decision of a Division Bench of the Bombay High Court in the case of Pr. Commissioner of Income Tax v. Gunnebo India (P.) Ltd. [2019] 104 CCH 227, the issue was considered in favour of the assessee after referring to the decision of the Division Bench of the Gujarat High Court in the case of General Motors India (P.) Ltd., wherein the relevant portions read thus : "3. The Revenue carried the matter in appeal. The Appel....
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....rom the profits and gains from any other business or business, if any, carried on by the assessee. If a balance is left even thereafter, that becomes deductible from out of income from any source under any of the other heads of income during that year. In case there is a still balance left over, it is to be treated as unabsorbed depreciation and it is taken to the next succeeding year. Where there is current depreciation for such succeeding year the unabsorbed depreciation is added to the current depreciation for such succeeding year and is deemed as part thereof. If, however, there is no current depreciation for such succeeding year, the unabsorbed depreciation becomes the depreciation allowance for such succeeding year. We are of the considered opinion that any unabsorbed depreciation available to an assessee on 1st April, 2002 (asst. yr. 2002-03) will be dealt with in accordance with the provisions of section 32(2) as amended by Finance Act, 2001. And once the Circular No. 14 of 2001 clarified that the restriction of 8 years for carry forward and set-off of unabsorbed depreciation had been dispensed with, the unabsorbed depreciation from asst. yr. 1997-98 up to the asst. yr. 200....