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The Dy. Commissioner of Income Tax Circle-1 (3) , Hyderabad Versus M/s Fenoplast Ltd.

2015 (7) TMI 982 - ITAT HYDERABAD

Carry forward depreciation to assessee disallowed u/s. 154/ rws 263 - CIT(A) allowed claim - Held that:- The restriction of eight years was removed. Even though Special Bench decision of the ITAT in the case of DCIT Vs. Times Guaranty Ltd., [2010 (6) TMI 516 - ITAT, MUMBAI ] 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 (2012 (8) TMI 714 - GUJARAT HIGH COURT ) has held that rest .....

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e 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 assessee disallowed u/s. 154/ rws 263 of the Income Tax Act [Act]. 2. Briefly stated, assessee is a company in which public are substantially interested. Assessee had un-absorbed depreciation .....

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cted the AO to modify the order accordingly. AO passed consequential order denying the depreciation which was appealed before the CIT(A) who by the impugned orders considered assessee's submissions and noted the amendment brought out by Finance Act, 2001 as supported by Circular of 14 of 2001 dt. 22-11-2001 and also the decision of Hon'ble Gujarat High Court in the case of General Motors India Pvt. Ltd., Vs. DCIT Special Civil Application No. 1773/2012 dt. 23- 08-2012, allowed assessee&# .....

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ial 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 .....

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s the law stands now, assessee is entitled for set-off of carried forward depreciation. This is analysed in the order of the CIT(A) in para 6, which is extracted as under: "6. The information on record, submissions of the appellant are carefully considered. As per the Finance Act 1996 the unabsorbed depreciation can be carried forward for the next 8 subsequent years. This amendment takes effect from 01.04.1997 and therefore, is applicable to A.Y. 1997-98 and subsequent years. Finance Act, 1 .....

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year 1997-98 and deemed to be part of the allowance for 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 .....

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s to replace plant and machinery, especially in an era where obsolescence takes place so often, the Act has dispensed with the restriction of 8 years for carry forward and set off of unabsorbed depreciation. The Act has also clarified that in computing the profits and gains of business or profession for any previous year, deduction of depreciation under section 32 shall be mandatory. 30.3 Under the existing provisions, no deduction for depreciation is allowed on any motor car manufactured outsid .....

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ussed the issue of carrying forward of unabsorbed depreciation at length in the case of General Motors India Pvt. Ltd., Vs. DCIT in the order dated 23.08.2012 and held that the unabsorbed depreciation can be carried forward to the subsequent years without any restriction. Referring to amendment through 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. T .....

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ht subsequent assessment years even after the amendment of section 32(2) by Finance Act, 2001 it would have incorporated a provision to that effect. However, it does not contain any such provision. Hence keeping in view the purpose of amendment of section 32(2) of the Act a purposive and harmonious interpretation has to be taken. While construing taxing statutes, rule of strict interpretation has to be applied, giving fair and reasonable construction to the language of the section without leanin .....

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