2016 (6) TMI 1424 - AT - Income Tax

Unabsorbed depreciation set off against the long term capital gain - HELD THAT - We find that the issue is squarely covered by the decision of the Mumbai Special Bench in the case of DCIT Vs. Times Guaranty Ltd. 2010 (6) TMI 516 - ITAT MUMBAI the Hon ble High Court of Gujarat in the case of General Motors India Ltd. 2012 (8) TMI 714 - GUJARAT HIGH COURT and the Chennai Bench of the Tribunal 2013 (8) TMI 1149 - ITAT CHENNAI for the assessment year 2008-09. As pointed out by the learned assessee s Representative before the learned Assessing Officer which is extracted hereinabove. Assessing Officer had made the addition only on the ground that the aforesaid decisions were not accepted by the Department and they are in appeal before higher judicial forum. This view of the learned Assessing Officer is not appreciable. Therefore following the above mentioned decisions and taking note of section 71(2) of the Act we hereby direct the learned Assessing Officer to allow the claim of set off carry forward of depreciation against the long term capital gain of the assessee in the relevant assessment year. - Decided in favour of assessee.

Summary

Issues involved:
1. Appeal and cross objection against the orders of the Commissioner of Income Tax (Appeals).
2. Revenue's appeal regarding the set off of depreciation loss against long term capital gains.
3. Assessee's cross objection against the reopening of assessment under section 147 of the Act.

Analysis:
1. The appeal and cross objection were filed against the orders of the Commissioner of Income Tax (Appeals). The Revenue raised concerns regarding the direction to allow set off of depreciation loss against long term capital gains. On the other hand, the assessee disputed the sustaining of the order for reopening the assessment under section 147 of the Act.

2. The main issue in the Revenue's appeal was the direction given by the Commissioner of Income Tax (Appeals) to allow the set off of brought forward depreciation loss against long term capital gains. The Revenue contended that the Assessing Officer had denied the set off as the carried forward depreciation loss could only be set off up to the assessment year 2001-02. However, the assessee cited relevant legal precedents and provisions to support their claim for the set off beyond the specified limit.

3. In response to the Revenue's appeal, the Tribunal referred to significant decisions, including those of the Mumbai Special Bench and the High Court of Gujarat, supporting the assessee's position on the issue of depreciation set off against long term capital gains. The Tribunal emphasized that the Assessing Officer's rejection of the legal precedents cited by the assessee was not acceptable. Consequently, the Tribunal directed the Assessing Officer to allow the claim of set off and carry forward of depreciation against the long term capital gain for the relevant assessment year.

4. Regarding the cross objection raised by the assessee against the reopening of the assessment, the Tribunal deemed it unnecessary to adjudicate on this issue as the appeal of the Revenue was dismissed on its merits. Therefore, the Tribunal also dismissed the cross objection raised by the assessee, considering it as merely academic in the given context.

5. In conclusion, the Tribunal dismissed the appeal of the Revenue and the cross objection of the assessee, based on the merits of the case and the decision to allow the set off and carry forward of depreciation against long term capital gains. The judgment was pronounced on 22nd June 2016.