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2019 (6) TMI 713 - HC - Income TaxCarry forward and set off of unabsorbed depreciation of the amalgamating company - set off unabsorbed depreciation prior to A.Y. 1994-95 to 1998-99 beyond 8 years - HELD THAT - As decided in GENERAL MOTORS INDIA PVT. LTD VERSUS DCIT 2012 (8) TMI 714 - GUJARAT HIGH COURT any unabsorbed depreciation available to an assessee on 1st day of April 2002 (A.Y. 2002-03) will be dealt with in accordance with the provisions of section 32(2) as amended by Finance Act, 2001, thus once the Circular No.14 of 2001 clarified that the restriction of 8 years for carry forward and set off of unabsorbed depreciation had been dispensed with, the unabsorbed depreciation from A.Y.1997-98 upto the A.Y.2001-02 got carried forward to the assessment year 2002-03 and became part thereof, it came to be governed by the provisions of section 32(2) as amended by Finance Act, 2001 and were available for carry forward and set off against the profits and gains of subsequent years, without any limit whatsoever - Decided in favour of assessee.
Issues:
1. Whether the ITAT was justified in allowing the set off of unabsorbed depreciation against the income for a subsequent assessment year? 2. Whether the ITAT was correct in directing the AO to set off unabsorbed depreciation beyond 8 years based on a decision of the Gujarat High Court? Issue 1: The High Court examined whether the ITAT was justified in allowing the carried forward and set off of unabsorbed depreciation of a specific amount for certain assessment years against the income of a later assessment year. The Revenue challenged this decision, arguing that the losses from certain years could not be carried forward beyond a specified number of assessment years. The High Court noted that the issue raised by the Revenue was covered by the judgment of the Gujarat High Court in the case of General Motors India P. Ltd. The High Court observed that its previous decisions had consistently followed the view taken by the Gujarat High Court. The Court cited specific instances where appeals on similar questions of law were dismissed based on the precedent set by previous judgments. The Revenue's contention that the matter should be referred to a larger bench due to contradictory views within the Court was rejected. The Court emphasized that the decision in the Hindustan Unilever case was final and binding, dismissing the Revenue's appeal based on established precedents. Issue 2: Regarding the second issue, the High Court examined whether the ITAT was correct in directing the Assessing Officer to set off unabsorbed depreciation prior to a certain assessment year beyond the stipulated 8-year period. The Court reiterated that the decision in the Hindustan Unilever case was conclusive and binding, dismissing the Revenue's appeal on this ground as well. The Court emphasized that the Revenue had not provided any substantive reasons to challenge the established precedent set by the Hindustan Unilever case. Additionally, the Court highlighted that the Delhi High Court had also adopted the view of the Gujarat High Court in a similar case. Consequently, the High Court dismissed the Income Tax Appeals, upholding the decisions based on established legal precedents and consistent judicial interpretations.
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