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TMI Blog2016 (4) TMI 907X X X X Extracts X X X X X X X X Extracts X X X X ..... upon the decision in CIT vs Shri Subhu Laxmi Mills Ltd. 249 ITR 795(SC), CIT vs Govind Nagar Sugar Ltd. 334 ITR 13 (Del.), CIT vs Haryana Hotels Ltd. 276 ITR 521 (P & H). This claim of the assessee was not controverted by the ld. DR and he relied upon the assessment order. 2.1. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee is engaged in the business of manufacturing of computers stationary, ATM Cards, ITC Cards, PIN Mailers, Scratch Cards, Smart Cards, RFID Tags and labels, etc, declared loss of Rs. 4,45,13,818/- in its return filed on 01/10/2009. However, the assessee paid the tax on book profit u/s 114JB amounting to Rs. 5,72,44,278/-. The return was processed u/s 143(1) of the Act. The case of the assessee was selected for scrutiny under CASS, therefore, notice u/s 143(2) and 142(1) were served upon the assessee. The assessee complied with the notices and duly attended the assessment proceedings. The assessee filed the return on 01/10/2009 i.e. after the due date of filing of return of income. The assessee sought carried forward of entire loss, which was on account of unabsorbed depreciation u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rposes of business or profession for a period of less than one hundred and eighty days in that previous year, the deduction under this sub-section in respect of such asset shall be restricted to fifty per cent of the amount calculated at the percentage prescribed for an asset under clause (i) or clause (ii) or clause (iia), as the case may be : Following third proviso shall be inserted after the second proviso to clause (ii) of sub-section (1) of section 32 by the Finance Act, 2015, w.e.f. 1-4-2016 : Provided also that where an asset referred to in clause (iia) or the first proviso to clause (iia), as the case may be, is acquired by the assessee during the previous year and is put to use for the purposes of business for a period of less than one hundred and eighty days in that previous year, and the deduction under this sub-section in respect of such asset is restricted to fifty per cent of the amount calculated at the percentage prescribed for an asset under clause (iia) for that previous year, then, the deduction for the balance fifty per cent of the amount calculated at the percentage prescribed for such asset under clause (iia) shall be allowed under this sub-section in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction shall be apportioned between the predecessor and the successor, or the amalgamating company and the amalgamated company, or the demerged company and the resulting company, as the case may be, in the ratio of the number of days for which the assets were used by them. Explanation 1.-Where the business or profession of the assessee is carried on in a building not owned by him but in respect of which the assessee holds a lease or other right of occupancy and any capital expenditure is incurred by the assessee for the purposes of the business or profession on the construction of any structure or doing of any work in or in relation to, and by way of renovation or extension of, or improvement to, the building, then, the provisions of this clause shall apply as if the said structure or work is a building owned by the assessee. Explanation 2.-For the purposes of this sub-section "written down value of the block of assets" shall have the same meaning as in clause* (c) of sub-section† (6) of section 43. Explanation 3.-For the purposes of this sub-section, the expression "assets" shall mean- (a) tangible assets, being buildings, machinery, plant or furniture; (b) intan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses or any residential accommodation, including accommodation in the nature of a guest-house; or (C) any office appliances or road transport vehicles; or (D) any machinery or plant, the whole of the actual cost of which is allowed as a deduction (whether by way of depreciation or otherwise) in computing the income chargeable under the head "Profits and gains of business or profession" of any one previous year; (iii) in the case of any building, machinery, plant or furniture in respect of which depreciation is claimed and allowed under clause (i) and which is sold, discarded, demolished or destroyed in the previous year (other than the previous year in which it is first brought into use), the amount by which the moneys payable in respect of such building, machinery, plant or furniture, together with the amount of scrap value, if any, fall short of the written down value thereof : Provided that such deficiency is actually written off in the books of the assessee. Explanation.-For the purposes of this clause,- (1) "moneys payable" in respect of any building, machinery, plant or furniture includes- (a) any insurance, salvage or compensation moneys payable in respect there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revious year, owing to there being no profits or gains chargeable for that previous year, or owing to the profit or gains chargeable being less than the allowance. Whereas, section 80 of the Act requires that return be filed as per section 139(3) of the Act to carry forward losses within due date, as envisaged u/s 139(1) of the Act, however, within the ambit of section 80 for carry forward losses, section 32(2) is not included. In the present case, the assessee has claimed set of and carry forward of unabsorbed depreciation against the profit & gains of business of the succeeding year. The business loss determined in the hands of the assessee under the head "profit & gains of business" stands of different footing then unabsorbed depreciation determined in the hands of the assessee, thus, the assessee having claimed the set of and carry forward of allowance of depreciation, unadjusted against the profit of current previous year cannot be denied such set of or carry forward of unabsorbed depreciation allowance as the provisions of section 139(3) of the act is not applicable, more specifically, when the assessee filed its return of income, though belatedly, but within the extended per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2-03, certain conditions, inter-alia, the restriction of eight years for carry forward and set off of unabsorbed depreciation was dispensed with, reverting to pre-1997 position. It may be noted that the legal fixation of treating unabsorbed depreciation as the depreciation of the subsequent years has been specifically made subject to the provisions of section 72(2) and 73(3) (Mysore Paper Mills Ltd. vs CIT) (1979) 117 ITR 132, 135 (Karnatka) and CIT vs Gujarat State warehousing corporation (1976) 104 ITR 1(Guj.). Thus, if an assessee has unabsorbed depreciation u/s 32(2) of the Act as well as unabsorbed business loss carried forward u/s 72(1), section 72(2) provided the unabsorbed losses shall have precedence, and be set off first, so far as the sufficiency of income to be set off against permits. It is only after the carried forward business loss is set off, and there yet remains positive income, that the unabsorbed depreciation would come in for a set off. This is beneficial to the assessee in as much as the unabsorbed business losses have a time bar of eight years while the unabsorbed depreciation has no time bar, it integrates with, and is treated as depreciation allowable for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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