2018 (8) TMI 724 - HC - Income Tax

Set-off of carried forward unabsorbed depreciation - Held that - We are informed that the Revenue has filed an SLP to the Apex Court, challenging the order of this Court in M/s. Hindustan Unilever Ltd., (2016 (7) TMI 1245 - BOMBAY HIGH COURT). However, mere filing of an SLP would not by itself make the decision in Hindustan Unilever Ltd., (supra) not binding. Needless to state that in case the Revenue is aggrieved by this order, it is always open to challenge the same before the Apex Court and tag it along with the pending SLP in case of Hindustan Unilever Ltd. - Decided against the revenue.

Summary

Issues:
Challenge to order of Income Tax Appellate Tribunal regarding set off of carried forward unabsorbed depreciation for Assessment Years 2003-04 and 2004-05.

Analysis:
The Appeals under Section 260A of the Income Tax Act, 1961 were filed challenging the order of the Income Tax Appellate Tribunal (the Tribunal) dated 30th June, 2010, which disposed of the Appeals for Assessment Years 2003-04 and 2004-05. The key question raised in both Appeals was whether the set off of carried forward unabsorbed depreciation from A.Y. 1997-98 to 1999-2000 should be dealt with under the provisions of section 32(2) as applicable for those years or under the provisions applicable to A.Y. 2003-04 and 2004-05. The Appeals were admitted on 5th January, 2012 based on this substantial question of law.

The Appellant's Counsel relied on the decision of the Court in CIT v/s. Hindustan Unilever Pvt. Ltd. and subsequent cases to argue that the issue was concluded in favor of the Appellant-Assessee. On the other hand, the Revenue's Counsel requested the matter to be referred to a Larger Bench citing similar questions admitted in other cases. The Court noted that the decision in Hindustan Unilever Ltd. had disposed of the Appeal by relying on the Gujarat High Court's decision and a Circular by the Central Board for Direct Taxes. The Court found no valid reason presented by the Revenue to challenge the decision or refer the question to a larger bench.

The Court highlighted that the mere filing of a Special Leave Petition (SLP) by the Revenue challenging the decision did not make the decision in Hindustan Unilever Ltd. non-binding. The Court emphasized that the Revenue could challenge the decision before the Apex Court and tag it along with the pending SLP. Ultimately, the Court ruled in favor of the Appellant-Assessee, answering the substantial question of law in both Appeals in their favor and against the Respondent-Revenue. Consequently, both Appeals were allowed.