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The Assistant Commissioner of Income Tax, Company Circle-IV (2) , Coimbatore Versus M/s. Sri Ramakrishna Mills (Coimbatore) Ltd.

2015 (7) TMI 643 - ITAT CHENNAI

Unabsorbed depreciation adjustment against Long Term Capital Gain - CIT(A) allowed claim - Held that:- As relying on CIT Vs.Pioneer Asia Packing P. Ltd. [2007 (11) TMI 285 - MADRAS HIGH COURT ] wherein held the Tribunal has rightly come to the conclusion that the assessee is entitled to the unabsorbed depreciation brought forward as on April 1, 1997, and could be set off against the business profits and in order to give effect to that finding, the case was remitted to the file of the Assessing O .....

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ER A.MOHAN ALANKAMONY , ACCOUNTANT MEMBER: This appeal is filed by the Revenue, aggrieved by the order of the Learned Commissioner of Income Tax(A)-I, Coimbatore dated 04.07.2014 in ITA No.140/13-14 passed under Sec.143(3) read with section 250 of the Act. 2. The Revenue has raised four elaborate grounds in its appeal; however, the crux of the issue is that the Revenue is aggrieved by the order of the Ld. CIT (A), who had allowed unabsorbed depreciation pertaining to A.Y 1999-2000 to be adjusted .....

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in the relevant assessment year on the ground that the amendments made in sec.32(2) of the Act with effect from 2002-03 is substantive and prospective in operation and as per the earlier provisions of the Section-32(2) of the Act the allowable period of eight years has lapsed. However, on appeal, the Ld. CIT (A) allowed the issue in favour of the assessee by observing as under:- The issue relating to setting off of unabsorbed depreciation against the income for assessment year 2010-11 is require .....

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effect cannot be given to the provisions of section 32(2) . As seen from the provisions, it is very clear that the carry forward allowance shall be added to the amount of allowance for depreciation for the following previous year and deemed to be part of that allowance, or if there is no allowance for that previous year but deemed to be allowance for that previous year, and to on for the succeeding previous years. It is very clear that there is no restriction for carrying forward the unabsorbed .....

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CIT Vs. Pioneer Asia Packing P. Ltd., reported in [2009] 310 ITR 198 (Mad.) and Hon ble Gujarat High Court in the case of General Motors India P. Ltd. Vs. DCIT reported in [2013] 354 ITR 244(Guj.). Ld. D.R could not controvert to the submissions of the Ld. A.R. 5. We have heard both the parties and carefully perused the materials available on record. The case relied by the Ld. A.R. is squarely applicable to the facts of the case. The relevant gist/portion of the respective orders is stated herei .....

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nce of a business against profits and gains of any other business of the same assessment year. When the depreciation allowance of a business of the assessment year is not absorbed by any other business of the same assessment year, then the remaining unabsorbed depreciation allowance could be set off against the income under any other head that is assessable for the same assessment year. In the event of depreciation allowance of the year is unable to be absorbed by any other business income or fr .....

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The proviso provides that the business to which depreciation allowance is related to must be carried on in the succeeding year so as to allow such set off. Thus, by the amendment, the deeming fiction of treating the earlier years' unabsorbed depreciation as the current year depreciation was removed. The period available for absorbing the unabsorbed depreciation against the profit of the succeeding years was limited to eight years. The clarification of the Finance Minister in Parliament is al .....

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sted up to the assessment year 1996-97, provided that the unabsorbed depreciation of a year shall be added to the amount of the allowance for depreciation of the following previous year and deemed to be part of that allowance. Therefore, the unabsorbed depreciation allowance, if any, of the assessment year 1996-97 shall be added to the amount of the allowance for depreciation of the assessment year 1997-98 and deemed to be part of the allowance for this year. In other words, the unabsorbed depre .....

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