TMI Blog2021 (12) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... f the matter it appears to us that as to whether in allowing excess carry forwarded of unabsorbed depreciation and set off after a period of eight years in view of the amended Section 32 (2) of the Act is justified, the said issue is no longer res integra. We find that there is no error in the order passed by the Tribunal. Accordingly, the appeal fails and the same stands dismissed. The substantial questions of law are answered against the revenue. - IA NO:GA/2/2017 (OLD NO. GA/1419/2017) IN ITAT/162/2017 - - - Dated:- 25-11-2021 - THE HON'BLE JUSTICE T.S. SIVAGNANAM AND THE HON'BLE JUSTICE HIRANMAY BHATTACHARYYA Mr. P.K. Bhowmick, Adv. for the appellant Mr. Asim Choudhury, Adv. for the respondent ORDER The Court : This appeal filed by the revenue under Section 260A of the Income Tax Act, 1961 (the Act, in brevity) is directed against the order dated 1st June, 2016 passed by the Income Tax Appellate Tribunal D Bench, Kolkata in ITA No.1983/Kol/2013 for the Assessment Year 2008-09. The revenue has framed the following substantial questions of law for our consideration: (a) Whether on the facts and in the circumstances of the case the Learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court in Peerless General Finance Investment Co. Ltd vs. Commissioner of Income-tax [2016] 73 taxmann.com 258 (SC). This decision has been held to be inapplicable in the case of Commissioner of Income Tax, Chennai vs. Sanmar Speciality Chemicals Ltd. [2020] 122 taxmann.com 212 (Madras). In the said case the revenue took an identical stand by placing reliance on the decision in Peerless General Finance Investment Co. Ltd (supra). The said contention was rejected by the Court by ascertaining the following reasons : 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 taxmann.com 257/242 Taxman 209 and submitting that an identical issue was considered by the Calcutta High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carry forward and set-off 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 the intent of the amendment that it is for enabling the industr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 depreciation from A.Y.1997-98 upto the A.Y. 2001-02 got carri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pril, 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. CIT 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 and the total depreciation becomes current year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epreciation 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. In the light of the above, we find that there is no error in the order passed by the Tribunal. Accordingly, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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