2016 (11) TMI 1697 - AT - Income Tax

Unabsorbed depreciation set off against the long term capital gain - HELD THAT - By placing reliance on the judgment of the Gujarat High Court in General Motors P Ltd. 2012 (8) TMI 714 - GUJARAT HIGH COURT this Tribunal in the assessee s own case for the assessment year 2007-08 2014 (1) TMI 1908 - ITAT CHENNAI allowed the claim of the assessee. The only contention of the department representative is that the decision of the Mumbai Special Bench of this Tribunal is against the assessee. This Tribunal is of the considered opinion that the judgment of the Gujarat High Court has to be preferred rather than the decision of the Mumbai Special Bench of this Tribunal. Therefore the CIT(A) has rightly placed his reliance on the judgment of the Gujarat High Court in General Motors P Ltd. (supra) rather than the decision of Mumbai Special Bench of this Tribunal in Times Guarantee Ltd. (supra). - Decided against revenue.

Summary

Issues: Set off unabsorbed depreciation against long term capital gain

Analysis:
1. The appeal was filed by the revenue against the order of CIT(A) -1, Chennai dated 11.02.2016, relating to the assessment year 2009-10. The only issue for consideration was the set off of unabsorbed depreciation against long term capital gain.

2. The assessing officer disallowed the claim of the assessee to set off unabsorbed depreciation against long term capital gain. The department representative relied on a decision of the Special Bench of Mumbai ITAT in the case of DCIT Vs. Times Guarantee Ltd., which disallowed the claim. However, the CIT(A) allowed the claim based on the judgment of the Gujarat High Court in General Motors P Ltd. Vs. DCIT. The department representative argued that the revenue had filed a special leave petition against the Gujarat High Court judgment, questioning the CIT(A)'s decision.

3. The assessee's representative cited previous Tribunal decisions in favor of allowing such claims, including one in the assessee's own case for the assessment year 2007-08. The Tribunal had also allowed a similar claim in another case. The representative argued that the CIT(A) rightly allowed the claim based on consistent Tribunal decisions and the Gujarat High Court judgment.

4. After considering the submissions, the Tribunal found that the unabsorbed depreciation was correctly set off against long term capital gain in the assessment year 2007-08 based on the Gujarat High Court judgment. The Tribunal preferred the Gujarat High Court judgment over the decision of the Mumbai Special Bench. Consequently, the Tribunal upheld the CIT(A)'s decision to allow the claim of the assessee.

5. The Tribunal concluded that there was no reason to interfere with the lower authorities' order, confirming the decision to allow the set off. As a result, the appeal of the revenue was dismissed. Subsequently, the cross objection by the assessee was also dismissed as it became infructuous in light of the Tribunal's decision.

6. In the final result, both the appeal of the revenue and the cross objection of the assessee were dismissed by the Tribunal. The order was pronounced on 30th November, 2016, in Chennai.