TMI Blog2023 (8) TMI 807X X X X Extracts X X X X X X X X Extracts X X X X ..... n pertaining to Asst. Year 2002-03 to 2005-06 and that does not mean that earlier year depreciation had all being absorbed. The ld. CIT(A) has mis-appreciated facts of the case, and in view of the same, we hold that the assessee is entitled to claim of unabsorbed brought-forward depreciation to be set off against income from other sources as available during the year. Appeals of the assessee are allowed. - SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER For the Appellant : Shri Mehul K. Patel, AR For the Respondent : Shri B.P. Makwana, Sr. DR ORDER The present three appeals have been filed by the assessee against order passed by the Commissioner of Income Tax (Appeals)- 1, Vadodara (in short referred to as ld.CIT(A)) under section 250(6) of the Income Tax Act, 1961 ( the Act for short) of even dated 24.9.2020pertaining to the above three assessment years. 2. It is common ground that the issues involved in all the appeals are identical relating to the denial of set off of brought forward unabsorbed depreciation of earlier orders. Therefore, all the appeals were heard together and are being disposed of by this common consolidated order. For the sake of conveni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the ld. CIT(A) has followed the order in the AY 2004- 05, but this issue was not raised by the assessee before the Tribunal in ITA No.170/Ahd/2008(supra). The reasoning given by the ld. CIT(A) is that since the appellant had no business activity since AY 1997-98, depreciation for earlier years cannot be set off from income from other sources . In the absence of any business, no income is taxable in business head and, hence, the depreciation of earlier years cannot be allowed under business head. The contention of the ld. counsel for the assessee is that this reason of the authorities below is erroneous in the light of the judgement of the Hon'ble Apex Court rendered in the case of CIT vs. Virmani Industries Pvt. Ltd.(supra). The Hon'ble Supreme Court following the earlier judgement held that if the profits of business are not sufficient to absorb the depreciation allowance, the allowance to the extent to which it is not absorbed would be set off against the profits of any other business and if a part of the depreciation allowance still remains unabsorbed, it would be liable to be set off against the profits or gains chargeable under any other head and it is only if so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reme Court in the case of CIT vs. Virmani Industries Pvt. Ltd.(supra). In the case in hand, the assessee-company is under liquidation and, therefore, no activity is being carried out by the assessee. However, the ratio laid down by the Hon'ble Apex Court in the case of CIT vs. Virmani Industries Pvt. Ltd. would be applicable to the extent for availing the benefit u/s. 32(2) of the Act. The assessee need not carry on any business or profession. It is not coming out of the records that from which year the depreciation was being carried forward by the assessee and why the assessee has accepted the decision of the ld.CIT(A) in the Asst. Year 2004-05 since no ground against the rejection of claim was raised by the assessee before the Tribunal in ITA No.170/Ahd/2008 for AY 2004-05(supra). In the present year, the CIT(A) has followed the decision rendered in the AY 2004-05. Under these facts, we are unable to accept the claim of the assessee and, therefore, this ground is rejected. 8. In the result, assessee's appeal in ITA No.411/Ahd/2012 for AY 2006-07 is partly allowed for statistical purposes. 4. The ld. counsel for the assessee contended that thereafter a Miscella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee, decide the issue in light of judgment of the Hon'ble Supreme Court rendered in case of CIT Vs. Virman Industries P. Ltd. (supra). In light of above, we hereby modify our order accordingly. 5. The ld. counsel for the assessee contended that in consequence to the direction of the ITAT, the AO considered the matter afresh in the second round and went on to deny the claim of set off of brought- forward unabsorbed depreciation distinguishing the assessee s case from that of CIT Vs. Virman Industries P. Ltd. (supra) rendered by the Apex Court. He drew our attention to para -2.6 of the assessment order as under: 2.6 Facts of the assessee's case can be distinguished from the facts of the cases of M/s Virmani Pvt. Ltd and M/s Estate Finance Ltd. The assessee in hand i.e. M/s Petrofils Co-operative Society Ltd. is a co-operative society and was engaged in the manufacturing of polymer filament yarn and was making heavy losses and therefore the Central Registrar of co-operative society has appointed the Liquidator to windup the society vide order dtd. 11.04.2001. The assessee is under the process of liquidation and no activity is carried out by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim was denied by the ITAT since the denial of claim in Asst. Year 2004-05 was not contested by the assessee, and the assessee now having been allowed its claim in Asst. Year 2004- 05, there was no reason for the AO to deny the claim of set off of brought-forward unabsorbed depreciation against other incomes in the impugned year. 8. The ld. DR however relied on the order of the ld. CIT(A) at para 8- 8.2 of the order as under: 8. Ground No. 2 relates to disallowance of claim of set off of brought forward unabsorbed depreciation and also not allowing carrying forward of such unabsorbed depreciation to subsequent years. From the record, it transpires that this is the 2nd round of appellate proceedings in this case. In the first round, my predecessor has rejected this ground vide appellate order dated 08.02.2012. Appellant carried the matter before the ITAT, but could not succeed. Claim of brought forward depreciation was rejected in ITA No. 411/Ahd/2012 dated 27.06.2014. Once again, appellant filed MA No.130 to 133/Ahd/2014 in ITA No. 411/Ahd/2012, 2661/Ahd/2013, 2662/Ahd/2013 2088/Ahd/2012 for AY 2006-07 to 2009-10. In the MA Ld. Counsel for the appellant submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reciation for AY under consideration. Therefore, I fail to understand why the appellant has raised the issue of unabsorbed depreciation before the Tribunal and subsequently before the 8.2 Further, from the assessment order, it is seen that the appellant has not explained the acceptance of rejection of set off of brought forward depreciation in AY 2004-05. During the appellate proceedings, appellant did not submit anything on this aspect. I also find that the Hon'ble tribunal in MA filed by appellant bearing No. 130 to 133/Ahd/2014 dated 21.09.2015 has also raised the issue of acceptance of rejection of brought forward unabsorbed depreciation for AY 2004-05. Ld Counsel of the appellant has time and again referred the order of the tribunal to allow the set off of brought forward unabsorbed depreciation. Since, there was specific direction of the tribunal for the appellant to demonstrate that it was entitled for set off of brought forward depreciation and the fact that appellant has accepted the rejection of claim of brought forward set off of depreciation hence, there is no reason to claim brought forward depreciation in subsequent year including the assessment year under c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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