2019 (2) TMI 1678 - AT - Income Tax

Disallowance of carry forward unabsorbed depreciation - HELD THAT - Unabsorbed depreciation prior to the Asstt.Year 2002-03 would become depreciation of the Asstt.Year 2002-03 and thereafter it will be available to assessee endlessly upto and until it is utilized. In this way the CIT(A) has directed the AO to recompute the set off and carry forward of unabsorbed depreciation accordingly. In response to the notice of hearing no one has come present on behalf of the assessee. With the assistance of the DR we have gone through the record. We find that view taken by the ld.CIT(A) is in line with the decision of Hon ble jurisdictional High Court in the case of General Motors Ltd. Vs. DCIT 2012 (8) TMI 714 - GUJARAT HIGH COURT . Putting reliance upon the decisions of the Hon ble jurisdictional High Court we do not find any merit in this appeal of the Revenue. It is dismissed. Appeal of the Revenue is dismissed.

Summary

Issues:
Appeal against deletion of addition of unabsorbed depreciation by the ld.CIT(A)

Analysis:
The Revenue appealed to the Tribunal against the order of the ld.CIT(A)-12, Ahmedabad for the Assessment Year 2013-14. The appeal was regarding the deletion of an addition of ?5,17,72,276 made by the Assessing Officer (AO) on account of disallowance of carry forward unabsorbed depreciation. The AO had directed the assessee to provide details of brought forward business loss and unabsorbed depreciation, and upon examination, restricted the carry forward unabsorbed depreciation and business loss to ?75,05,867 based on the amendment in section 32(2) of the Income Tax Act, 1961. However, the ld.CIT(A) disagreed with the AO's view. The ld.CIT(A) noted that post the amendment in section 32(2) from the Assessment Year 2002-03, the unabsorbed depreciation from earlier years would merge with the depreciation for the current year and would be available to the assessee perpetually until utilized. Thus, the ld.CIT(A) directed the AO to recompute the set off and carry forward of unabsorbed depreciation accordingly.

Upon the hearing, no representative appeared on behalf of the assessee. The Tribunal, with the assistance of the ld. DR, reviewed the case and found that the ld.CIT(A)'s decision was consistent with the judgment of the Hon'ble jurisdictional High Court in the case of General Motors Ltd. Vs. DCIT, wherein it was held that unabsorbed depreciation from previous years would merge with the current year's depreciation and remain available indefinitely. Relying on this precedent, the Tribunal dismissed the Revenue's appeal, finding no merit in it.

In conclusion, the Tribunal upheld the ld.CIT(A)'s decision and dismissed the Revenue's appeal. The order was pronounced in the Court on 4th February 2019 at Ahmedabad.