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M/s Bengal Tea and Fabrics Ltd. Versus CIT, Kolkta-2, P-7, Kolkata

2016 (3) TMI 749 - ITAT KOLKATA

Revision u/s 263 - CIT found that unabsorbed depreciation was not allowable to be carried forward for a period more than 8 years - Held that:- As decided in GENERAL MOTORS INDIA PVT. LTD Versus DEPUTY COMMISSIONER OF INCOME-TAX [2012 (8) TMI 714 - GUJARAT HIGH COURT ] held Where there is current depreciation for such succeeding year the unabsorbed depreciation is added to the current depreciation for such succeeding year and is deemed as part thereof. If, however, there is no current depreciatio .....

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ation from A.Y 1997-98 upto the A.Y 2001-002 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.

In this view of the matter, we find that the order passed by Assessing Officer is not only erroneous but also prejudicial to the interest of revenue .....

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)-2/Kol/263/2014-15/6036- 38 dated 24.03.2015. Assessment was framed by DCIT, Circle-4, Kolkata u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) vide his order dated 13.03.2013 for assessment year 2010-11. Assessee raised following grounds:- 1. For that in view of the facts and in the circumstances, the Ld. CIT is wholly wrong and unjustified in initiating proceeding u/s. 263 and passing an arbitrary order u/s. 263 of the Act directing revision of original assessment .....

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without prejudice and even otherwise, the Ld. CIT is wholly unjustified in passing order u/s 263 ignoring the decisions of different High Courts and there being no contrary decision, the Ld. CIT is bound to follow such decisions of different High Courts and in view of the facts and in the circumstances the Ld. CIT may kindly be directed accordingly. 4. For that in view of the facts and in the circumstances and the matter having been fully settled in favour of your appellant by decisions of Hon& .....

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e by amendment through Finance Act, 2001, the status quo having been restored and unabsorbed depreciation for AYs 1996-97 & 1997-98 and subsequent assessment years having become fully adjustable against income for AYs 2002-03 and onwards the present action of the Ld CIT is wholly bad, illegal, unjustified and uncalled for and in view of the facts and in the circumstances such order u/s. 263 may kindly be quashed / cancelled. 6. For that in view of the facts and in the circumstances, the AO h .....

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t the CIT erred in treating the order of the AO erroneous and prejudicial to the interest of Revenue on account of allowing the unabsorbed depreciation for the assessment years 2000-01 and 2001-02 to be carried forward for the subsequent assessment years. 2.1 The facts of the case are that the assessee in the present case is limited company and engaged in the business of manufacturer of tea, cloth and yarn. The AO framed the assessment for the year under consideration u/s 143(3) of the Act after .....

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633/-. As the unabsorbed depreciation for the assessment years 2000-01 and 2001-02 pertained to the years beyond the stipulated period of 8 years, therefore the adjustment / set off of the same with the current year i.e. AY 2010-11 the income of assessee was not allowable. However, the AO has allowed the same against the current year income which resulted in excess set off of unabsorbed depreciation amounting to ₹ 20,11,633/-. Accordingly the Ld. CIT issued notice u/s 263 to the assessee s .....

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year or years. It was also contended that as the words used any previous year would cover even previous years prior to A.Y. 2002-03. However the ld. CIT has disregarded the contention of the assessee by observing as under : The contention of the assessee cannot be accepted simply because a plain reading of the Act, as it stood prior to introduction of Finance Act, 2001, w.e.f. 01.04.2002 states that if the unabsorbed depreciation cannot be wholly set off, the amount not so set off shall be carri .....

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mited period thereafter. I am, therefore, setting aside the order u/s. 143(3) dated 13.03.2013, with the direction that the Assessing Officer examines this issue and pass a speaking order after giving the assessee adequate opportunity of being heard. Being aggrieved by this order passed u/s 263 of the Act of the Ld. CIT preferred an appeal before us. Shri Siddharth Jhajharia & Shri Sajay Sen Ld. Authorized Representatives appearing on behalf of assessee and Shri Sandeep Chaube, Ld. Departmen .....

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nt AY i.e. 2010-11 but Ld. CIT found that unabsorbed depreciation was not allowable to be carried forward for a period more than 8 years. Therefore, Ld. CIT opined that matter to be restored to file of AO for fresh adjudication. We further find that same issue has been decided by Hon'ble Gujarat High Court in the case of General Motors India (P) Ltd. vs. DCIT (2013) 354 ITR 244 (Guj) and head-note of extract portion is reproduced below:- Any unabsorbed depreciation available to an assessee o .....

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owever, it does not contain any such provision. Therefore, the provisions of section 32(2) as amended by Finance Act, 2001 would allow the unabsorbed depreciation allowance available in the A.Y 1997-98, 1999-2000, 2000-01 an 2001-2002 to be carried forward to the succeeding years, and if any unabsorbed depreciation or part thereof could not be set off till the A.Y 2002-03 then it would be carried forward till the time it is set off against the profits and gains of subsequent years. Current depre .....

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lance left over, it is to be treated as unabsorbed depreciation and it is taken to the next succeeding year. Where there is current depreciation for such succeeding year the unabsorbed depreciation is added to the current depreciation for such succeeding year and is deemed as part thereof. If, however, there is no current depreciation for such succeeding year, the unabsorbed depreciation becomes the depreciation allowance for such succeeding year. Thus any unabsorbed depreciation available to an .....

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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. 4. We find that Hon'ble Gujarat High Court has given relief to assessee on the same line of facts in the case of General Motors India (P) Ltd. (supra). We are also relying in the order of the assessee in assessee s own case in ITA No. 1745/Kol/2011 in A Bench dated 28.04.2014 for A.Y. 07-08 where the Tribunal has held .....

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