TMI Blog2013 (7) TMI 998X X X X Extracts X X X X X X X X Extracts X X X X ..... s to allow un-absorbed depreciation to be carried forward beyond period of eight years. For the AY under consideration, correct law applicable was the law that prevailed as on the first day of April of that AY. In our opinion during the assessment year under consideration, amended provisions were applicable and AO was supposed to calculate the un-absorbed depreciation as required by the Act. In our opinion, there was no bar to allow the un-absorbed depreciation of the earlier years in the AY 2007-08 - Decided in favour of the assessee-company. - ITA No. 1937/Mum/2012 - - - Dated:- 24-7-2013 - B. R. Mittal (Judicial Member) And Rajendra (Accountant Member) For the Petitioner : S. V. Joshi For the Respondent : None ORDER Rajendra (Accountant Member) Challenging the order dt.20-01-2012 of the CIT(A)-16,Mumbai,assessee has raised the following Grounds of Appeal: (i)That the learned Commissioner (Appeals) erred in not considering the b/f unabsorbed depreciation from AY 1995-96 to AY 1998-99 amounting to ₹ 2,57,26,751/- to be set off against the income for AY 2007-08. He has applied the provisions as applicable to AY 1995-96 to AY 1998-99 whereas a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epreciation of earlier years could not be considered as current depreciation and therefore such unabsorbed depreciation could not be allowed to be carried forward beyond eight years. Finally, the AO disallowed the claim of the assessee company with regard to unabsorbed depreciation up to AY 1998-99. 2.1. Assesee preferred an appeal before the First Appellate Authority(FAA).After considering the submissions of the assessee and the assessment order passed by the AO u/s.154 of the Act, he held that the provisions of section 32(2) as substituted by Finance Act 2001 was a deeming provision, that a deeming provision could not be extended beyond the purpose for which it was intended, that section 32(2) was a substantive provision and hence was prospective in nature, that it apply only for AY 2002-03onwards,that the Sec.32(1) dealt with depreciation allowance for the current year, that if depreciation allowance for a particular year u/s 32(i) could not be given full effect deeming provisions of the section would apply. Finally, he held that, considering the provisions of section 32 of the Act, the unabsorbed depreciation allowance could not be set off as requested by the assessee. 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allow un-absorbed depreciation to be carried forward beyond period of eight years. For the AY under consideration, correct law applicable was the law that prevailed as on the first day of April of that AY. In our opinion during the assessment year under consideration, amended provisions were applicable and AO was supposed to calculate the un-absorbed depreciation as required by the Act. In our opinion, there was no bar to allow the un-absorbed depreciation of the earlier years in the AY 2007-08. We find that similar issue has been discussed and decided by the Hon ble High Court of Gujarat on 23.08.2012.,in the case of General Motors India Pvt. Ltd. in following manner : 30. The last question which arises for consideration is that whether the unabsorbed depreciation pertaining to AY. 1997-98 could be allowed to be carried forward and set off after a period of eight years or it would be governed by Section 32 as amended by Finance Act 2001? The reason given by the Assessing Officer under section 147 is that Section 32(2) of the Act was amended by Finance Act No.2 of 1996 w.e.f. AY. 1997-98 and the unabsorbed depreciation for the A.Y. 1997-98 could be carried forward up to the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30.3 Under the existing provisions, no deduction for depreciation is allowed on any motor car manufactured outside India unless it is used (i) in the business of running it on hire for tourists, or (ii) outside in the assessee s business or profession in another country. 30.4 The Act has allowed depreciation allowance on all imported motor cars acquired on or after 1 st April, 2001. 30.5 These amendments will take effect from the 1 st April, 2002, and will, accordingly, apply in relation to the assessment year 2002-03 and subsequent years. 37. The CBDT Circular clarifies the intent of the amendment that it is for enabling the industry to conserve sufficient funds to replace plant and machinery and 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 Apr1, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear 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. We are of the considered opinion that any unabsorbed depreciation available to an assessee on 1 st 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 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 upto 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 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. Therefore, reversing the order of the FAA, effective Ground of appeal is decided in favour of the assessee-company. As a result, appeal filed by the assessee stands allowed Order pronounced in the open court on 24th July, 2013. - ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
