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TMI Blog2021 (7) TMI 868X X X X Extracts X X X X X X X X Extracts X X X X ..... ) was issued on 22.12.2009, accepting the loss return of Rs. 65,22,677/- and determining the losses carried forward for set off against future profits as Rs. 18,39,06,826/-. The Assessing Officer, thereafter, on 01.02.2011, proposed to withdraw under Section 154 of the Income Tax Act, the depreciation allowance of Rs. 13,71,60,209/-, as according to him, the depreciation relating to the Assessment Year 1997-98 and 1998-99 are required to be withdrawn. The assessee, by their letter dated 22.03.2011, has objected to the proposed rectification under Section 154 as the same was not a matter of "mistake apparent on the face of the record". Based on the objection, the Assessing Officer has dropped the proceedings under Section 154. Thereafter, notice under Section 148 for the Assessment Year 2007-08 was issued on 23.03.2011, which was served on the assessee on 28.03.2011 citing the same reason as in the proposal under Section 154 of the Act. The assessee thereafter contested the said notice and the re-opening of the assessment. However, the Assessing Officer completed the assessment on 29.12.2011, withdrawing the carry forward of unabsorbed depreciation allowance to an extent of Rs. 13,7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1997-98 to 2000-2001 is not eligible for set off against any income of the appellant for the Assessment Year 2005-06?" 6.1.Mr. R. Sivaraman, learned counsel appearing for the appellant submitted that he is not making any submission with regard to questions of law Nos. 1 and 2 and therefore, this court need not give any finding with regard to the same in this Tax Case. The learned counsel made his submission only with regard to 3rd question of law i.e. with regard to unabsorbed depreciation relating to assessment year 1997-98 to 2000-2001 is not eligible for set off against any income of the appellant for the Assessment Year 2005-06. 6.2.The learned counsel further submitted that the Hon'ble Division Bench of this court, in identical circumstances, in the Judgment reported in CIT v. S & S Power Switchgear Ltd. 2009 (318) 187 (Mad.) held that in view of the amended provisions of section 32(2), with effect from 1-4-1997, the deeming fiction of treating the earlier years' unabsorbed depreciation as current year depreciation was removed and the period available for absorbing the unabsorbed depreciation against the profit of the succeeding years was limited to eight years. F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted Miscellaneous Petition is closed." (ii)[2020] 122 taxmann.com 212 (Madras) [Commissioner of Income Tax, Chennai Vs. Sanmar Speciality Chemicals Ltd.] wherein the Division Bench held as follows: "... 3.The appeal was admitted on 2-12-2019 on the following substantial question of law : "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee is entitled for carry forward of the depreciation loss pertaining to the assessment year 1997-98 to the present assessment year 2006-07, which is beyond the eight year period mandated under the provisions of section 32 of the Act?" 4.The short issue, which falls for consideration, is as to whether, in the facts and circumstances of the case, the Tribunal was right in permitting the assessee to carry forward the depreciation loss pertaining to the assessment year 1997-98 to the present assessment year namely 2006- 07, which is beyond the eight year period mandated under the provisions of section 32 of the Act. 5.The revenue is before us by referring to the decision of the High Court of Calcutta in the case of Peerless General Finance & Investment Co. Ltd. v. CIT [2016] 73 taxm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.2 of the above circular, it is clear that the restriction of 8 years for carry forward and setoff of unabsorbed depreciation was dispensed with, with a view to enable the industries to conserve sufficient funds to replace plant and machinery. 9. The learned Senior Standing Counsel appearing for the Revenue would point out that those amendments took place with effect from 1-4-2002 and would accordingly apply in relation to the assessment year 2002-03 and the subsequent years whereas in the assessee's case, the depreciation loss, which they sought to carry forward is for the assessment year 1997-98. 10. The proper manner, in which, the modification has to be understood, is to the effect that from the assessment year 2002-03, if the eight years' period was not lapsed, then the assessee would be entitled to carry forward the loss without any restriction on the time limit. This aspect has been dealt with elaborately in the decision of the Division Bench of the Gujarat High Court in the case of General Motors India (P.) Ltd. v. Dy. CIT [2012] 25 taxmann.com 364/210 Taxman 20/[2013] 354 ITR 244 wherein the relevant portions are as follows : "37.The CBDT Circular clarifies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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. We are of the considered opinion that any unabsorbed depreciation available to an assessee on 1st 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 dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mendment will take effect from 1st April, 2001, and will, accordingly, apply in relation to the assessment year 2001-2002 and subsequent years." 9. The CIT(A) and the Tribunal, thus, rightly allowed unabsorbed depreciation relevant to the assessment year 1996-97 to be set-off against the income from long term capital gains and income from other sources for the assessment year 2001-2002.' 13. Recently, in the decision of a Division Bench of the Bombay High Court in the case of Pr. Commissioner of Income Tax v. Gunnebo India (P.) Ltd. [2019] 104 CCH 227, the issue was considered in favour of the assessee after referring to the decision of the Division Bench of the Gujarat High Court in the case of General Motors India (P.) Ltd., wherein the relevant portions read thus : "3. The Revenue carried the matter in appeal. The Appellate Tribunal dismissed the appeal of the Revenue making the following observations- "16. We have observed that the current year's depreciation is allowed to be set-off against the income from business as well as against the other heads of income and unabsorbed depreciation in carry forward and become part of the depreciation of the subsequent year a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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. We are of the considered opinion that any unabsorbed depreciation available to an assessee on 1st April, 2002 (asst. yr. 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 asst. yr. 1997-98 up to the asst. yr. 2001- 02 got carried forward to the asst. yr. 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." 14. In our considered view, the above decisions will clearly enure to t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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