2016 (12) TMI 1638 - HC - Income Tax

Unabsorbed depreciation - to be dealt with in accordance with the provisions of section 32(2) as Amended by Finance (No.01) Act, 2001 OR by the provisions of section 32(2) as it stood before the said Amendment? - scope of amendment - Held that - An identical issue raised by the appellant herein stands concluded in favour of the respondent assessee and against the Revenue by the Order of this Court in The Commissioner of Income Tax-1, Mumbai vs. M/s. Hindustan Unilever Ltd. 2016 (7) TMI 1245 - BOMBAY HIGH COURT as held held that the unabsorbed depreciation for the Assessment Year 1997-98 upto Assessment Year 2001-02 could be allowed to be set off, if it was still unabsorbed on 1st April, 2001. The above decision also placed upon the CBDT circular No.14 of 2001 dated 22nd November, 2001 to hold that any unabsorbed depreciation which is available on 1st day of April, 2001 would be dealt with in accordance with the provisions of Section 32(2) of the Act as amended by the Finance Act of 2001. Moreover, the Circular No.14 of 2001 issued by the CBDT clarifies that restriction of eight years to carry forward and set off the unabsorbed depreciation has been dispensed with. Consequently, unabsorbed depreciation for the intervening periods between assessment 1997-98 upto 2001-02, if available in the assessment year 2002-03 would be allowable as part of carried forward depreciation from Assessment Year 2002-03 onwards. No substantial question of law

Summary

Issues Involved:
1. Interpretation of provisions related to unabsorbed depreciation under the Income Tax Act, 1961.

Analysis:
The High Court of Bombay heard an appeal challenging the order of the Income Tax Appellate Tribunal regarding the treatment of unabsorbed depreciation for Assessment Year 2008-09. The main issue raised was whether the Tribunal was correct in applying the amended provisions of section 32(2) of the Income Tax Act, 1961, instead of the provisions as they stood before the amendment. The Tribunal had allowed the respondent assessee's claim for set-off of unabsorbed depreciation from Assessment Year 1997-98, considering the limitation of eight years in carrying forward depreciation. This decision was based on the CDBT Circular No.14 of 2001 and a judgment of the Gujarat High Court. The appellant contended that a similar issue had been decided in favor of the respondent assessee in a previous case. The High Court, relying on the previous judgment, held that the proposed question did not raise any substantial question of law and dismissed the appeal without costs.

This judgment primarily revolves around the interpretation of provisions related to unabsorbed depreciation under the Income Tax Act, 1961. The Court considered the application of amended section 32(2) of the Act and its implications on the set-off of unabsorbed depreciation. The decision also relied on a previous judgment involving a similar issue, where the Court had ruled in favor of the respondent assessee. The Court's analysis focused on the specific facts and circumstances of the case, along with the relevant legal provisions and precedents cited by both parties.

The Court's ruling underscores the importance of consistency in interpreting tax laws and applying relevant provisions to specific cases. By referring to past judgments and legal circulars, the Court ensured that the decision was in line with established principles and precedents. The dismissal of the appeal without costs indicates a clear and definitive resolution of the issue at hand, based on the existing legal framework and judicial interpretations. Overall, the judgment provides clarity on the treatment of unabsorbed depreciation and sets a precedent for future cases involving similar questions of law under the Income Tax Act, 1961.