TMI Blog2016 (8) TMI 736X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed under section 154 for the assessment year 2010-11. The grounds raised by the assessee reads as under:- (1) That the learned CIT(A) has erred in law and facts of the case: (2) That the learned CIT(A) has erred in considering only a part of the submission, made before him, and has happened to totally ignore to take into consideration the submission of the Appellant vide its letter dated 08.09.2014 and also the ratio of the decisions of the cases referred to therein and relied upon the appellant. The order thus passed by the CIT(A) is improper and the decision taken unjust. (3) That the learned CIT(A) has grossly erred in ignoring to deal with the ground of appellant against the action as well as order passed u/s 154 of the Act by the Assessing Officer The action u/s 154 had been wrongly resorted by the assessing officer the issue involved being highly debatable rendering the order passed there under unsustainable the confirmation of the said order by the learned CIT(A) is improper and unjust. (4) That the learned CIT(A) has also erred in dismissing the appellant s appeal by wrongly applying the decision of the Honourable Special Bench of ITAT, Mumbai Bench ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the same is beyond the scope and ambit of section 154. However, the Ld. CIT(A) too relying upon the decision of ITAT Special Bench in the case of Times Guarantee Ltd, decided the issue against the assessee. 4. Before us, the Ld. Counsel had filed his written submission, wherein, firstly, it has been contended that the impugned issue cannot be raised within the scope of section 154 and secondly, the unabsorbed depreciation pertaining to the assessment years prior to the assessment year 2002-03 shall be allowed to be carried forward for more than the period of 8 years as per the amended provision. In support, strong reliance has been placed on the decision of Hon ble Gujarat High Court in the case of General Motors India Ltd vs DCIT, reported in 354 ITR 244. 5. On the other hand, Ld. DR strongly relied upon the order of the CIT(A). 6. After considering the relevant finding given in the impugned orders as well as the submissions made by the parties, we find that the Ld. Authorities below, while decided the impugned issue have merely relied upon the decision of Hon ble Special Bench in the case of DCTI vs Times Guarantee Ltd. (supra). It is an undisputed fact that the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unabsorbed depreciation allowance for any previous year to which full effect cannot be given in that previous year shall be carried forward and added to the depreciation allowance of the next year and be deemed to be part thereof. 32. So, the unabsorbed depreciation allowance of A.Y. 1996-97 would be added to the allowance of A.Y. 1997-98 and the limitation of 8 years for the carry-forward and setoff of such unabsorbed depreciation would start from A.Y. 1997-98. 33. We may now examine the provisions of section 32(2) of the Act before its amendment by Finance Act 2001. The section prior to its amendment by Finance Act, 2001, read as under:- 'Where in the assessment of the assessee full effect cannot be given to any allowance under clause (ii) of sub-section (1) in any previous year owning to there being no profits or gains chargeable for that previous year or owing to the profits or gains being less than the allowance, then, the allowance or the part of allowance to which effect has not been given (hereinafter referred to as unabsorbed depreciation allowance), as the case may be,- (i) shall be set off against the profits and gains, if any, of any business or pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or that previous year, owing to the profits or gains chargeable being less than the allowance, then, subject to the provisions of sub-section (2) of section 72 and sub-section (3) of section 73, the allowance or the part of the allowance to which effect has not been given, as the case may be, shall be added to the amount of the allowance for depreciation for the following previous year and deemed to be part of that allowance, or if there is no such allowance for that previous year, be deemed to be allowance of that previous year, and so on for the succeeding previous years. 36. The purpose of this amendment has been clarified by Central Board of Direct Taxes in the Circular No.14 of 2001. 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 unabsorbed depreciation is allowed for 8 assessment years. 30.2 With a view to enable the industry to conserve sufficient funds to replace plant and machinery, specially in an era where obsolescence takes place so often, the Act has dispensed with the restriction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 2001 had clarified that under Section 32(2), in computing the profits and gains of business or profession for any previous year, deduction of depreciation under Section 32 shall be mandatory. 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 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 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. 38. Therefore, it can be said that, current depreciation is deductible in the first place from the income of the business to which it relates. If such depreciation amount is larger than the amount of the profits of that business, then such excess comes for absorption from the profits and gains from any other business or business, if any, carried on by the assessee. If a balance is left even thereafter, that becomes deductible from out of income from any source under any of the other heads of income during that year. In case there is a still balance lef ..... X X X X Extracts X X X X X X X X Extracts X X X X
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