2018 (4) TMI 1683 - AT - Income Tax

Unabsorbed depreciation and carried forward unabsorbed depreciation - beyond eight years against the income of the assessee in subsequent years - HELD THAT - No substantial question of law arises against the Tribunal order in allowing set-off of unabsorbed depreciation pertaining to Assessment Years 1996-97 and 1997-98 beyond eight years against the income of the assessee in subsequent years. While holding so the Hon ble Jurisdictional High Court considered the decision of the Hon ble Gujarat High Court in the case of General Motors India (P) Ltd v. Dy. CIT 2012 (8) TMI 714 - GUJARAT HIGH COURT . Therefore, in view of the above discussion we uphold the order of the CIT(A) and reject the grounds raised by the Revenue.

Summary

Issues:
Allowance of set-off of carried forward depreciation from previous years against current year's income.

Analysis:
The appeal was filed by the Revenue against the order of the Ld. Commissioner of Income-tax (Appeals) for the Assessment Year 2009-10. The Revenue raised grounds challenging the direction of the Ld. CIT(A) to allow set-off of carried forward depreciation from previous years against the income of the current year. The main contention was whether the unabsorbed depreciation for Assessment Years 1997-98 to 2000-01 could be carried forward beyond the usual eight-year period and set-off against the income of the assessee for the years 2007-08, 2008-09, and 2009-10.

The Learned Counsel for the assessee argued that the issue was covered by a decision of the Hon'ble Jurisdictional High Court in a similar case, where the set-off of brought forward depreciation loss was allowed. The Ld.CIT(A) also relied on a circular and previous judicial decisions to support the assessee's claim for adjusting unabsorbed depreciation from earlier years against the current year's income. The Assessing Officer had denied the set-off based on the limitation of carrying forward depreciation to only eight assessment years immediately succeeding the year in which the loss was first computed.

Upon reviewing the orders of the authorities below, the Tribunal found that the issue had been settled in favor of the assessee by the decision of the Hon'ble Jurisdictional High Court. The High Court had ruled that no substantial question of law arose against the Tribunal's order allowing the set-off of unabsorbed depreciation beyond the eight-year limit. The Tribunal upheld the order of the Ld.CIT(A) and dismissed the appeal of the Revenue, concluding that the unabsorbed depreciation from the earlier years could be set-off against the current year's income, as per the relevant legal provisions and judicial precedents.

In light of the detailed analysis and the legal principles applied by the Tribunal, the appeal of the Revenue was ultimately dismissed, affirming the decision to allow the set-off of carried forward depreciation from previous years against the current year's income.