TaxTMI 
TaxTMI 
TaxTMI 
2023 (4) TMI 1107
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....o construction business in 2007, with a concomitant change of name. For the year under consideration, it returned business income at Rs. 35,85,037, which was adjusted in full against unabsorbed depreciation, claimed at Rs. 1,88,52,496, returning thus nil income on 30/09/2011, claiming carry forward of the balance unabsorbed depreciation (UAD), working to Rs. 1,52,67,459. The Assessing Officer (AO) noting that the assessee's business is of a Builder, disallowed the said claim, holding that there was no business (of Aqua Farm Culture), income of which could be computed. Relying on Perfect Pottery Co. Ltd. v. CIT [1987] 166 ITR 196 (Ker);S.P.V. Bank Ltd. v. CIT [1980]126 ITR 773 (Ker); and International Marketing Ltd. v. ITO [2007] 292 ITR 504 (Del), he held that it is only where a business is in existence that it's profits and gains, allowing expenditure incurred for it's purposes, could be computed. Income, accordingly, was assessed at Rs. 35,85,037, i.e., without allowing any claim qua unabsorbed business loss or depreciation. In appeal, the ld. CIT(A) upheld the same in principle, holding as under after a detailed discussion on the various aspects of the matter, allowing part reli....
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....e taken by the AO for the respective AY 2010-11 and AY 2012-13 onwards. The Tribunal has to confine itself to examination of the issue concerning the current year, namely AY 2011-12." (emphasis, supplied) That is, it found absence of any material on record to dispel the factual finding by the ld. CIT(A), as well as absence of any grievance arising out of his direction to the AO for taking remedial course for the years,other than the year before him, impacted, i.e., AY 2010-11, and AY 2012-13 onwards. The matter, at the assessee's instance, was carried before the Hon'ble High Court which, vide it's judgment dated 17/11/2021 (in ITA No. 11/2018), set aside the Tribunal's order, holding as under: "11. We have anxiously considered the rival submissions made at the Bar. On going through Annexure - D, it is evident that the appellant challenges the order of the first appellate authority on the ground that the first appellate authority exceeded its jurisdiction which was limited to the assessment year 2011-12 and by giving direction or (of) re-opening the assessment for the years 2010-11 and 2012-13 onwards, was without jurisdiction. On going through the order of the Tribunal, w....
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....t the right to challenge an assessment arises to the assessee only for the year for which the grievance by way of disallowance (adjustment to the returned income) is caused, and not the year for which the finding in respect thereof is made, he would, while agreeing, seek time to locate the said decision/s,whereupon he would place on record the decision in CIT v. Manmohan Das (Decd.) [1965] 59 ITR 699 (SC). 4. We have heard the parties, and perused the material on record. 4.1 The short question that arises in the instant case is if the appellate authority, in directing the AO to consider reopening the assessment for years other than the current assessment year, i.e., the years impacted by the assessee's claim of unabsorbed depreciation, being AY 2010-11, and AY 2012-13 onwards, had exceeded his jurisdiction? 4.2 Our first observation in the matter is that there is nothing on record; in fact, not even a contention to that effect at any stage, of the assessee having returned the income for the intervening years, i.e., prior to AY 2010-11, for it to contend that the ld. CIT(A) could not have given a finding for the AO to reopen assessments which had attained finality. The merits of ....
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....bsequent year to determine whether the loss of the previous year may be set off against the profits of that year. A decision recorded by the ITO who computes the loss in the previous year under section 24(3) of the Act that the loss cannot be set off against the income of the subsequent year is not binding on the assessee." In other words, the non-preference of appeal by the assessee for AY 1950-51 would not in any manner impact it's right to claim the set off of assessed loss for that year in AY 1951-52, i.e., the year in which the actual denial of set-off takes place. This, it may be noted, is precisely what the Tribunal had held in the first instance. 4.5 The direction by the ld. CIT(A) to the AO in the facts of the instant case, on the contrary, is not, as is being construed, for making a disallowance for any other year (i.e., other than AY 2011-12, the year under appeal before him), but only to, given his factual findings, consider taking remedial course by reopening the assessments for the years impacted by the assessee's claim for UAD for the earlier years. The reopening for those years is liable to be challenged, and would have to be justified, both on facts and in la....
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....ee-appellant only raising the issue of the said directions by the ld. CIT(A) as being an excess of jurisdiction. Though therefore not required to, we consider ourselves obliged to, in view of the observation by the Hon'ble Court that the Tribunal had not considered all the questions raised and arising, allowing it liberty to look into the issue afresh, i.e., as only proper in the facts and circumstances of the case, to place on record our endorsement of the findings by the Tribunal in the first round, i.e., on the merits of the findings of the ld. CIT(A). He has made an exhaustive study of the matter, to none of which the assessee responded. There is nothing on record to show that the assets of the company on which depreciation is being claimed, even the details of which, much less their operative status, are conspicuous by their absence, were (being) kept in a state of readiness for being used so as to qualify, assuming so, for an allowance of depreciation. The argument of ready-to-use state, which has factual and legal aspects to it, is understandable in a scenario of a temporary disruption of business, justifying keeping them in a ready-to-use state. The assessee having disconti....
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.... for AY 1948-49. The Hon'ble Apex Court explained that under the Act the year was the unit of assessment, reiterated by it recently in Dy. CIT v. Ace-Multi Axes System Ltd. [2018] 400 ITR 141 (SC). Further, that the decision of the assessing authority for a particular year did not operate as res judicata in the matter of assessment of the subsequent years. The jurisdiction of the first appellate authority was strictly confined to the assessment order for the year under appeal. The jurisdiction of the Tribunal, in the hierarchy created by the Act, was no higher than that of the ITO, i.e., also confined to the year of assessment. It further went on to explain and dilate on the concept of 'finding' and 'direction' in section 34(3) of the said Act. It is only a 'finding' necessary for the disposal of the appeal in respect of an assessment for a particular year that can be regarded as such. And, accordingly, the direction to give effect thereto as the direction under contemplation u/s. 34(3), which the appellate authority was therefore empowered to give. It may be, it noted, that the assessing authority may, on evidence, hold that the income shown by the assessee was not the income ....
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....m carry forward of depreciation for the earlier years, i.e., AYs. 1998-99 to AY 2009-10, on account of it being unabsorbed for the said years. We find no specific claim for depreciation by the assessee in any of these intervening years, whose claim for depreciation for the current year, even as observed by the ld. CIT(A), is guided only by the availability of profits and gains of the new business. The same, on one hand, explains the observation and the direction by the ld. CIT(A) for the other years. On the other, it makes it abundantly clear that even the satisfaction of the conditions for the claim of depreciation on the assets of the erstwhile business for the current year, i.e., where they were actually put to use for any business carried out during the year, or kept in a state of readiness for the same, would imply a claim on the basis of the obtaining written down value of the relevant assets, i.e., actual cost less the depreciation actually allowed. Further still, while, it is true that the assessee is not impacted or prejudiced thereby, i.e., non-allowance of claim of carry forward of unabsorbed depreciation, which would, as explained in Manmohan Das(Decd.) (supra), stand t....
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.... in full, i.e., including for AYs. 1996-97 and 1997-98, amounting to Rs.62.65 lakhs, which though stood allowed in first appeal, where at the matter was considered at length and dilated upon by the ld. CIT(A), to again find no basis - factual or legal, to claim carry forward of UAD for the earlier years, i.e., AY 1998-99 onwards. Direction was accordingly issued by him to the AO to initiate reassessment proceedings for disallowance of the said claim from AY 2010-11 - from which year the claim of UAD was preferred by the assessee, onwards, save of course the current year. The same stands challenged before us as without jurisdiction, being limited only to the year under appeal. Valid in principle, we find the assessee's challenge without any factual or legal basis. True, unless a finding involving another year is necessary for the disposal of the issue before him, an appellate authority has no jurisdiction to issue directions for another year, i.e., other than that under appeal before him. Where, however, one may ask, is question of carry forward of any claim (for an earlier year) when there is no claim, much less an assessment or determination, for an earlier year? A carry forward o....