TMI Blog2015 (7) TMI 982X X X X Extracts X X X X X X X X Extracts X X X X ..... and gains of subsequent years. In view of this, I agree with the order of the CIT(A) and reiterate that assessee is entitled to set-off the carried forward depreciation of AY 1996-97 and 1997-98. In view of this, we direct the AO to modify the orders if not done so far and allow the set-off accordingly. - Decided against revenue. - ITA Nos. 1478 & 1480/HYD/2013 - - - Dated:- 30-6-2015 - B. Ramakotaiah, AM,J. For the Appellant : Shri Rajat Mitra, DR For the Respondent : Shri M V Anil Kumar, AR ORDER These two are Revenue's appeals against the order of the Commissioner of Income Tax (Appeals)-II, Hyderabad dated 21-08-2013, for Assessment Years (AYs) 2004-05 2006-07 allowing the carry forward depreciation to asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny time limit. 3. The CIT(A) should have dismissed the appeal as the order u/s. 263 of the IT Act which is cause of action u/s. 154 is upheld by the jurisdictional ITAT . 3. The material Ground No.2 is with reference to the carried forward depreciation of earlier years and Ground No.3 is with reference to the fact that CIT(A) should have dismissed the appeal as the order was passed consequent to the order u/s. 263 which was upheld by the jurisdictional ITAT. 4. Ld. DR referring to the sequence of events submitted that order of the CIT u/s. 263 was subject matter of appeal before the Hon'ble ITAT and in ITA No. 807 and 809/Hyd/2011 dt. 30-04-2013 Ld. ITAT upheld the order of the CIT u/s. 263. Therefore, CIT(A) is not empowered t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this year. In other words, the unabsorbed depreciation allowance of assessment year 1996-97 shall be added to the allowance of 1997-98 and will be deemed to be the allowance of that year. The limitation of eight years shall start from the assessment year 1997-98. 23.6 These amendments take effect from the 1st day of April, 1997, and win accordingly, apply in relation to assessment year 1997-98 and subsequent years . 6.1 The Finance Act, 2001 removed the restriction of 8 years. According to this amendment of unabsorbed depreciation can be carried forward without any limit. Circular No.14 of 2001 dated 22.11.2001 explains the effect of Finance Act, 2001. The relevant portion is reproduced as under: 30.1 Under the existing provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Finance Act, 2001 the Hon'ble Gujarat High Court held that 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 worked out in A. Y.1997-98 only for eight subsequent assessment years even after the amendment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;ble Gujarat High Court in the case of General Motors India Pvt. Ltd. Vs. DCIT, the unabsorbed depreciation of earlier years including A.Y. 1996-97 can be carried forward to the succeeding years without any time limit. Accordingly, the first three grounds of appeal are allowed . 7. As things stand now, the restriction of eight years was removed. Even though Special Bench decision of the ITAT in the case of DCIT Vs. Times Guaranty Ltd., [ITA No.4917 4918/Mum/2008] [TTJ 257 (Mum) (SB)] was relied on by the CIT at the time of passing the order u/s. 263, subsequently, Hon'ble Gujarat High Court in the case of General Motors India Pvt. Ltd., Vs. DCIT (supra) has held that restriction is not valid and unabsorbed depreciation could be s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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