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2016 (7) TMI 30 - ITAT JAIPUR

2016 (7) TMI 30 - ITAT JAIPUR - TMI - Carry forward unabsorbed depreciation against the profits and gains of subsequent years without any limit - Held that:- CIT (A) has rightly decided the issue in the light of the judgments of the Hon’ble Gujarat High court in the case of General Motors (India) Pvt. Ltd. (2012 (8) TMI 714 - GUJARAT HIGH COURT ). Therefore, we do not see any reason to interfere with the order of ld. CIT (A) wherein held Any unabsorbed depreciation available to an assessee on 1s .....

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s 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 - Decided in favour of assessee - ITA No. 860/JP/2014 - Dated:- 7-6-2016 - SHRI KUL BHARAT, JM & SHRI T.R. MEENA, AM For The Revenue : Shri Raghuvir Singh Dugar (Addl.CIT) For The Assessee : Shri Madhukar Garg (C.A.) ORDER PER SHRI KUL BHARAT, JM. This appeal by the Revenue is directed against the order of ld. CIT (Appeals)- II, Jaipu .....

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ed depreciation brought forward from A.Y. 2001-02 and earlier years against the income of ₹ 1,52,16,223/- determined in the order u/s 143(3)/154. (iii) The appellant craves its right to add, amend or alter any of the grounds on or before the hearing. 2. The only effective ground in this appeal is against directing the AO to allow carry forward of unabsorbed depreciation of ₹ 67,06,559/- against the Profits and Gains of subsequent years without any limit. The ld. D/R supported the ord .....

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78 (Guj.). 3. We have heard rival contentions and perused the material available on record. The ld. CIT (A) has decided the issue by following the judgments of the Hon ble Gujarat High Court in the cases of General Motors India Pvt. Ltd. vs. DCIT, 354 ITR 244 (Guj.) and Ausom Enterprises Ltd. vs. DCIT, 105 DTR 78 (Guj.) by observing as under :- 2.3. I have perused the facts of the case, the assessment order and the submissions of the appellant. In the order 143(3), the income declared in the re .....

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ons of Section 32(2) as amended by the Finance Act, 2001, w.e.f. A.Y. 2002-03. This question also arose in the case of General Motors India (P) Ltd. vs. DCIT (2012) 25 Taxmann.com 364 (Guj.) It has been held in this order as under :- 35. Section 32(2) of the Act was amended by the Finance Act, 2001, and the provision so amended reads as under : "Where, in the assessment of the assessee, full effect cannot be given to any allowance under sub-section (1) in any previous year, owing to there b .....

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ce for that previous year, be deemed to be the allowance of that previous year, and so on for the succeeding previous years." 36. The purpose of this amendment has been clarified by the Central Board of Direct Taxes in Circular No. 14 of 2001 (see [2001] 252 ITR (St.) 65, 90). The relevant portion of the said Circular reads as under : "Modification of provisions relating to depreciation 30.1 Under the existing provisions of section 32 of the Income-tax Act, carry forward and set off of .....

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shall be mandatory. … 30.5 These amendments will take effect from the 1st 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 eight years for carry forward and set off of unabsorbed depreciation. The amendment .....

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sment year 1997-98 only for eight subsequent assessment years even after the amendment of section 32(2) by the 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 the amendment of section 32(2) of the Act, a purposive and harmonious interpretation has to be taken. While construing the taxing statutes, rule of strict interpretation has to be applied, giving fair and reasonable construction .....

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der section 32 shall be mandatory. Therefore, the provisions of section 32(2) as amended by the Finance Act, 2001, would allow the unabsorbed depreciation allowance available in the assessment years 1997-98, 1999-2000, 2000-01 and 2001-02 to be carried forward to the succeeding years, and if any unabsorbed depreciation or part thereof could not be set off till the assessment year 2002-03 then it would be carried forward till the time it is set off against the profits and gains of subsequent year .....

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income during that year. In case there is a still balance 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 ye .....

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