2013 (10) TMI 1363 - AT - Income Tax

Set off of unabsorbed depreciation pertaining to assessment years 1997-98 to 1999-2000 against business income of the assessment years under consideration allowed

Summary

Issues:
Disallowance of unabsorbed depreciation against business income for assessment year 2008-09.

Analysis:
The appellant filed an appeal against the order of the ld. CIT(A) disallowing unabsorbed depreciation of Rs.4,76,81,470/- pertaining to AYs 1997-98 to 1999-2000 against the business income of AY 2008-09. The appellant claimed set off of brought forward unabsorbed depreciation of earlier years amounting to Rs.14,97,78,668/-, which included unabsorbed depreciation of Rs.4,76,81,470/-. The Assessing Officer disallowed the unabsorbed depreciation beyond 8 years, leading to the appeal. The CIT(A) upheld the AO's decision based on the Special Bench of Tribunal's decision in the case of DCIT V/s Times Guarantee Ltd. The appellant argued that the issue was covered by the decision of the Hon'ble Gujarat High Court in the case of General Motors India Pvt.Ltd V/s DCIT, emphasizing the applicability of the law as prevailing on the first day of the Assessment year. The ITAT Mumbai Bench also decided a similar issue in favor of the assessee in the case of Confidence Petroleum India Ltd V/s DCIT. The ITAT considered the decision of the Hon'ble Gujarat High Court and previous ITAT judgments, allowing the set off of unabsorbed depreciation for an indefinite period.

The ITAT Mumbai Bench further referenced the case of ITO V/s Graham Firth Steel Products (I) Ltd, which highlighted the provisions of section 32(2) regarding the treatment of unabsorbed depreciation. The ITAT reiterated that unabsorbed depreciation up to assessment year 2001-02 could be carried forward for set off for an indefinite period. Additionally, the issue was also addressed in the case of M/s Arch Fine Chemicals Pvt.Ltd.V/s ACIT, where the appellant was allowed to claim set off of unabsorbed depreciation against business income for the relevant assessment years. The ITAT concluded that the appellant was entitled to claim the set off of unabsorbed depreciation from assessment years 1997-98 to 1999-2000 against the business income for the assessment years under consideration, thereby allowing the appeal and reversing the decisions of the authorities below.

In summary, the ITAT Mumbai Bench, considering the decisions of the Hon'ble Gujarat High Court and previous ITAT judgments, allowed the appellant to claim the set off of unabsorbed depreciation against business income for the relevant assessment years, emphasizing the treatment of unabsorbed depreciation as per the provisions of section 32(2) and the applicable legal principles.