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2024 (12) TMI 264 - HC - Income TaxDeduction for the provision made for leave salary u/s 43B(f) - HELD THAT - In the present case, it is an admitted position, as seen from the order of the Tribunal dated 09.06.2017, that the appellant had made a provision, which, in light of the clear language of Section 43B(f) calls for disallowance. The question of law is hence answered in favour of the revenue and against the assessee. Fixing eight years limitation for setting off the unabsorbed depreciation when section 32(2) - HELD THAT - This issue is covered by a decision of this Court in Tamil Nadu Small Industries Corporation Limited 2021 (7) TMI 849 - MADRAS HIGH COURT decided against the Revenue and in favour of the assessee as held 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 asst. yr. 1997-98 up to the asst. yr. 2001-02 got carried forward to the asst. yr. 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. Deduction for provision made for leave salary under section 43B(f) of the Income Tax Act, 1961. 2. Fixing limitation for setting off unabsorbed depreciation under section 32(2) of the Income Tax Act. 3. Reopening of assessment under section 147 of the Income Tax Act, 1961. Issue 1: Deduction for provision made for leave salary under section 43B(f) of the Income Tax Act, 1961: The case involved a question of law regarding the deduction for provision made for leave salary under section 43B(f) of the Income Tax Act, 1961. The court referred to a similar issue addressed by the Kerala High Court in Dhanalakshmi Bank Ltd. v. Commissioner of Income-tax, Cochin. The court noted that the provision under Section 43B(f) allows deduction only on actual payment, and in the present case, the appellant had made a provision that called for disallowance under this section. The court ruled in favor of the revenue and against the assessee, based on the clear language of the provision. Issue 2: Fixing limitation for setting off unabsorbed depreciation under section 32(2) of the Income Tax Act: The second issue involved the fixing of a limitation for setting off unabsorbed depreciation under section 32(2) of the Income Tax Act. The court cited a decision in The Commissioner of Income Tax V. Tamil Nadu Small Industries Corporation Limited, where it was held that the Tribunal was right in permitting the carry forward of depreciation loss beyond the eight-year period mandated under section 32 of the Act. The court referred to relevant provisions and held in favor of the assessee, dismissing the appeal and answering the substantial question of law against the revenue. Issue 3: Reopening of assessment under section 147 of the Income Tax Act, 1961: The final issue addressed the reopening of assessment under section 147 of the Income Tax Act, 1961, and whether it was affected by the principle of merger theory. The court considered the arguments presented and referred to previous judgments. It ultimately decided in favor of the assessee, following the precedent set in previous cases and dismissing the appeal against the revenue. The court did not award any costs in these Tax Case (Appeals) and closed the connected Miscellaneous Petition.
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