TMI Blog2016 (1) TMI 753X X X X Extracts X X X X X X X X Extracts X X X X ..... 4C of the Act is not applicable. Accordingly, no disallowance by invoking the provisions of section 40(a)(ia) of the Act can be made. - Decided in favour of assessee. Disallowance of set off of unabsorbed depreciation loss against current year’s income - CIT(A) allowed the claim - Held that:- In view of the ratio laid down in the case of General Motors India Pvt. Ltd V DCIT (2013) [2012 (8) TMI 714 - GUJARAT HIGH COURT ] we are of the considered view that the unabsorbed Depreciation loss of A.Y. 1997-98 & 1998-99 is allowable and should be adjusted with the total computed income unabsorbed Depreciation loss should be carried forward. The CIT(A) has rightly allowed the claim of unabsorbed depreciation loss of the assessee and we confirm the same - Decided in favour of assessee. - ITA No. 622/Kol/2013 - - - Dated:- 16-12-2015 - Mahavir Singh, JM And M. Balaganesh, AM For the Appellant : Shri Shital C Das, JCIT, Sr. DR For the Respondent : Shri Manoj Kataruka, Adv ORDER Per Mahavir Singh This appeal by revenue is arising out of order of CIT(A)-VIII, Kolkata in Appeal No. 305/CIT(A)-VIII/Kol/11-12 dated 07.12.2012. Assessment was framed by ITO, Wd-7(2), Kolk ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is applicable for supply of printed materials as per prescribed specification. He observed from the bills submitted by the assessee company that the assessee had made the above payments under the head 'procuring printed materials from various parties and the suppliers had done the job work of printing on the materials submitted by them as per specifications of the assessee. The materials obtained from the above parties, according to AO, were printed labels, foils and cartons used for labeling and packing bottles of beer manufactured by the assessee. The AO further observed from the bills submitted by the assessee it is quite clear, that the above parties have supplied the printed materials to the assessee after performing exactly specified job work of printing on various materials as per direction of the assessee. Thus, according to AO, the parties had done the job work in such cases and hence, Section 194C of the Act was applicable on above payments of ₹ 1,10,42,997/-. Accordingly, he made addition by invoking the provisions of section 40(a)(ia) of the Act on account of disallowance of job work charges without deduction of TDS u/s. 194C of the Act. Aggrieved, assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... establishment was engaged in the business of supplying printed packaging material to various units and was not a captive unit of the assessee, the printing work though carried out to the specifications of the assessee cannot be a contract for work bit was only purchase of material and therefore, there was no need to deduct tax at source under Section 194C. The Bombay High Court held that when the-printing work was being-carried out in the premises of M, though as per the specifications of the assessee, supply was limited to the quantity specified in the purchase order. There was nothing on record to show that, all mother ancillary costs like the labels, ink, papers, screen-printing, screens, etc. were being supplied by the assessee to M. In the facts of this case, the supply of printed labels by M to the assessee was a contract of sale and it could not be termed a ''works contract Hence the provisions of section 194C were not applicable. 5.2.7 While delivering the judgment the Hon.ble Bombay High Court had considered the observations of the Supreme Court in State of Tamilnadu v. Annandam Viswanathan (1989) 73 STC 1 (SC), where the Hem. Supreme Court observed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction of tax at source. We are of the view that it was only when the contract is for printing of materials and not for purchasing of material that the circular may be applicable. It is a fact that the assessee made outright purchases of goods for ₹ 1,10,42,997/- from various suppliers on which sales tax stands paid and as such, the transaction is one of the sale and not work and does not fall under the scope and ambit of section 194C of the Act. Details of expenses of ₹ 11042997 are contained in the paper book along with sample photocopies of some bill. All the original bills were produced at the time of hearing. From the perusal of the bill it is very much apparent that all the expenses are for outright contract of purchases and supplier has charged VAT/Excise in their sale bill. The provisions of section 194C of the Act are applicable only in relation to work contract and does not cover contract of sale of goods. When all the amounts were for outright purchase and in the sale bills the vendor has charged VAT and as such the transaction amounts to contract of sale and section 194C of the Act is not applicable. Even in view of Circular no. 681 dated 08.03.1994, sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -2000 claimed by the assessee is not allowed to be set off this year since as per the Act, unabsorbed depreciation allowance for the above assessment years are only allowed to be carried forward for 8 subsequent assessment years. As per the scrutiny assessment order for assessment year 2008-09 only the unabsorbed depreciation for assessment year 2002-03 ₹ 1,47,98,454/- and unabsorbed depreciation for assessment year 2003-04 of ₹ 18,76,759/- were allowed to be carried forward and the same is allowed to be set-off with the income of the assessment year 2009-10. Further, no unabsorbed depreciation is allowed to be carried forward. Aggrieved, assessee preferred appeal before CIT(A), who allowed the claim of the assessee by observing as under:- I have considered the facts of the case and the submission behalf of the appellant. I have also gone through the decision rendered Gujrat High Court. On a plain reading of provisions of section 32(2), it is amply clear that this section does not prescribe any time limit for carry forward an unabsorbed depreciation. In CIT v. Jaipuria China Clay Mines (P) Ltd. [1966] 59 ITR 555 (SC), the Hon'ble Supreme Court has held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer is hereby directed to allow the same on the basis of the steps given above in accordance with law while giving effect to this order. Aggrieved, revenue came in second appeal before Tribunal. 8. We have heard rival submissions and gone through facts and circumstances of the case. We find that the assessee made a claim of unabsorbed depreciation loss of several years starting from A.Y. 1998-99 to 2004-05. The unabsorbed depreciation loss for assessment year 1988-89 is ₹ 19696049/- and for assessment year 1999-2000 is ₹ 25777920/- but the AO in the immediate preceding year i.e. in the assessment year 2008-09 also did not allow the claim of set off unabsorbed depreciation loss of assessment year 1998-99 and 1999-2000. The claim for the said two years was not allowed on the ground that unabsorbed depreciation loss could be carried forward further for 8 years only. Accordingly, in the assessment year 2008-09 the assessed total income of ₹ 37850399/- (inclusive of addition of ₹ 22401596/-) u/s. 40(a)(ia) was fully adjusted with the unabsorbed depreciation of assessment year 2001-2002 to assessment year 2002-03 without adjusting unabsorbed depreciation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r eight subsequent assessment years even after the amendment of s. 32(2) by Finance Act, 2001 it would have incorporated a provision to that effect. However, it does not contain any such provision and so a purposive and harmonious interpretation has to be taken. Therefore, the unabsorbed depreciation pertaining to AY 1997-98 can be carried forward for set-off indefinitely (A.Y'2006-07). It is pointed out that in this case, which is as under:- 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 provision 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 up to 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 provision 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 lim ..... X X X X Extracts X X X X X X X X Extracts X X X X
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