TMI Blog2014 (7) TMI 468X X X X Extracts X X X X X X X X Extracts X X X X ..... ing year, the unabsorbed depreciation becomes the depreciation allowance for such succeeding year. 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 - 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 A.Y.1997-98 upto the A.Y.2001-02 got carried forward to the assessment year 2002-03 and became part thereof, it came to be governed by the provisions of section 32(2) as amended by Finance Act, 2001 and were available for carry forward and set off against the profits and gains of subsequent years, without any limit whatsoever - unabsorbed depreciation relating to AY 1997-98 and upto AY 2001-02 would be eligible for carry forward and set off for an unlimited period. Provision for leave encashment u/s 43B(f) of the Act – Held that:- Deduction on account of any amount paid by an employer to its employee in lieu of any leave at the credit of the employee will be allowed only on actual payment basis - th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d partly in favour of Assessee. - ITA No.83/Hyd/2013, ITA No.106/Hyd/2013 - - - Dated:- 18-6-2014 - Shri B. Ramakotaiah And Shri Saktijit Dey,JJ. For the Petitioner : Shri V. Sivakumar For the Respondent : Shri Solgy Jose T. Kottaram DR ORDER Per Saktijit Dey, Judicial Member: These are cross-appeals for the assessment year 2008-09. They are directed against the order of the Commissioner of Income-tax(Appeals) III, Hyderabad dated 6.11.2012. Since the factual background and issues involved in these appeals are common, these appeals are being disposed of with this common order for the sake of convenience. 2. Facts of the case in brief leading to the filing of the present appeals are that the assessee is a company engaged in the business of manufacture and sale of Clinker an cement. It filed its e-return of income for the assessment year 2008-09 on 27.9.2008 declaring total income of ₹ 22,74,63,708. The Assessing Officer completed the assessment under S.143(3) of the Act, on a total income of ₹ 21,42,75,620, inter alia by disallowing expenditure claimed on account of leave encashment under S.43B(f) of ₹ 7,22,394; and by making addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been stayed by the Hon ble Apex Court, and consequently, the effect of the provisions of S.43B(f) has not been nullified and is in force. 5. As for the addition of ₹ 1,36,21,500 on account of suppression of receipts on sale of lands, by treating the same as income from other sources, though the CIT(A) upheld the addition made by the Assessing Officer, he directed that the unaccounted part of the receipt as per S.50C has to be assessed under the head Capital Gains . 6. Aggrieved by the order of the CIT(A) as above, assessee as well as the Revenue are in appeal before us. 7. The first issue involved in the appeal of the assessee as well as the Revenue relates to disallowance of claim for set off of unabsorbed depreciation brought forward from assessment years 1996-97 to 1999-00, and 2000-01 and 2001-02 against the income of the assessment year 2008-09. 8. The learned counsel for the assessee contesting the disallowance sustained by the CIT(A) submitted that the amendment made to S.32(2) by the Finance Act, 2001 restored the position of carry forward unabsorbed depreciation as it existed prior to 1.4.1997 and to the legal position applicable originally. He submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be carried forward and set off for an unlimited period. The Hon ble Gujarat High Court while considering the effect of amendment brought to S.32(2) of the Act, by Finance Act, 2001, in the case of General Motors V/s. DCIT(Supra), took into consideration the import of the amendment effected by Finance Act, 2001 as well as clarification issued by the Board held that the amendment brought to the statute by Finance Act, 2001 would apply to unabsorbed depreciation pertaining to assessment year 1997-98. The Hon ble Gujarat High Court held as under- 30. The last question which arises for consideration is that whether the unabsorbed depreciation pertaining to A.Y. 1997-98 could be allowed to be carried forward and set off after a period of eight years or it would be governed by Section 32 as amended by Finance Act 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d depreciation allowance cannot be wholly set off under clause (i) and Clause (ii), the amount of allowance not so set off shall be carried forward to the following assessment year and (a) it shall be set off against the profits and gains, if any, of any business or profession carried on by him and assessable for that assessment year; (b) if the unabsorbed depreciation allowance cannot be wholly so set off, the amount of unabsorbed depreciation allowance not so set off shall be carried forward to the following assessment year not being more than eight assessment years immediately succeeding the assessment year for which the aforesaid allowance was first computed: Provided that the time limit of eight assessment years specified in sub-clause (b) shall not apply 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 exce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red outside India unless it is used (i) in the business of running it on hire for tourists, or (ii) outside in the assessee s business or profession in another country. 30.4 The Act has allowed depreciation allowance on all imported motor 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 2002-03 and subsequent years. 37. The CBDT Circular clarifies the intent of the amendment that it is for enabling the industry to conserve sufficient funds to replace plant and machinery and accordingly the amendment dispenses with the restriction of 8 years for carry forward and set off of unabsorbed 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciation 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) 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 A.Y.1997-98 upto the A.Y.2001-02 got carried forward to the assessment year 2002-03 and became part thereof, it came to be governed by the provisions of section 32(2) as amended by Finance Act, 2001 and were available for carry forward and set off against the profits and gains of subsequent years, without any limit whatsoever. 11. On going through the judgment of the Hon ble Gujarat High Court, noted above, it is clearly evident that the Hon ble Gujarat High Court in no uncertain terms has held that unabsorbed depreciation relating to assessment year 1997-98 and upto assessment year 2001-02 would be eligible for carry forward and set off for an unlimited period. However, it appears, this iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acquired land measuring 6294 sq. yards situated at Plot No.40, IDA Balanagar, Hyderabad on 1.1.1993. Out of this land, 1294 sq. yards was sold during the financial year 2007-08 relevant to assessment year 2008-09. In the computation of capital gains, the value of the land has been shown as ₹ 96 lakhs, whereas the stamp duty was paid on the market value of the property of ₹ 2,32,21,500. Assessee stated that the actual sale value was less than the market value because there was an agreement with M/s. Vizag Steel Profiles to purchase the land at low price. Since the assessee had to honour that agreement, it had to accept the low price. The Assessing Officer did not agree with the contention of the assessee, inter-alia observing in para 6.2 of the impugned order as follows- 6.2 .On perusal of the documents furnished it clearly indicates that the agreement of sale dated 26.11.2001 was stand cancelled as the assessee company, had failed to get the consent and marketable title from IDBI Madras, therein the IDBI rejected request of the assessee company for sale of the above property. Afterwards, whatever the agreement continued is lessee and lessor relationship. There is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e taken for computation of capital gains. In support of such contention, he relied upon the decisions of coordinate benches of this Tribunal in the cases of (a) DCIT V/s. S.Venkat Reddy (2013) 32 Taxman.com.324; and (b) ACIT V/s. Suvarna Rekha (ITA No.743/Hyd/2009 dated 29.10.2010), duly filing copies thereof in the paper-book before us. Thus, it was contended by the learned counsel that without appreciating the aforesaid factual position and the legal principles laid down, the CIT(A) was not justified in upholding the action of the Assessing Officer in invoking the provisions of S.50C of the Act. 17. The Learned Departmental Representative, though supported the order of the Assessing Officer, in the context of the grounds raised by the assessee, submitted that the CIT(A) has not properly appreciated the action of the Assessing Officer in treating the income on account of suppression of receipts on sale of land as income from other sources. 18. We have heard the parties and perused the orders of the Revenue authorities and other material on record, on this issue. We have also carefully applied our mind to the decisions relied upon by the learned counsel for the assessee. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as given a categorical finding that the possession of the property was delivered in that case in the previous year in which the assessee admitted capital gain. Further, in the cited case, the agreement of sale as well as the final sale deed were executed in the same previous year, within a time span of four months, unlike the assessee s case where the time gap is more than one-and-half years. Same is also the factual position in the case of ACIT V/s. Suvarna Rekha (supra). In this view of the matter, we do not find any infirmity in the order of the CIT(A) in holding that capital gain has to be computed by applying the provisions of S.50C of the Act. In the course of hearing, learned Authorised Representative filed a petition for admission of certain additional evidence. On examining the same, we are of the view that they are neither necessary nor relevant for deciding the issue at hand. Further, assessee has not explained what prevented the assessee from producing the said additional evidence before the Assessing Officer and the CIT(A). In this view of the matter, we decline to admit the additional evidence sought to be filed for the first time before us. 19. So far as the griev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Co. Ltd. V/s., DCIT (ITA No.07/Coch/2010 dated 2.2.2012), duly furnishing a copy thereof before us. 23. Learned Departmental Representative on the other hand, strongly supported the orders of the Assessing Officer and the CIT(A). 24. We heard both the parties and perused the orders of the Revenue authorities and other material available on record. The CIT(A), as noted above, simply following the reasoning given by him, while dealing with the disallowance made in respect of provision for leave encashment, in the computation of income under the normal provisions, upheld the adding back of the same done by the Assessing Officer while computing the book profit under S.115JB of the Act. Thus, he did not independently examine the issue of justification of add-back of the provision, while computing the income in terms of S.115JB of the Act. At the same time, in the case of Highland Produce Co. Ltd. (supra), relied upon by the learned counsel for the assessee, the Cochin Bench of the Tribunal, has held as follows- 5. We have considered the rival submissions on either side and also perused the material available on record. The only contention of the ld. DR is that provision for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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