2015 (7) TMI 643 - AT - Income Tax

Unabsorbed depreciation adjustment against Long Term Capital Gain - CIT(A) allowed claim - Held that - As relying on CIT Vs.Pioneer Asia Packing P. Ltd. 2007 (11) TMI 285 - MADRAS HIGH COURT wherein held the Tribunal has rightly come to the conclusion that the assessee is entitled to the unabsorbed depreciation brought forward as on April 1, 1997, and could be set off against the business profits and in order to give effect to that finding, the case was remitted to the file of the Assessing Officer for verification as to how much depreciation was available up to April 1, 1997, that could be included in the income of the assessee. Also see GENERAL MOTORS INDIA PVT. LTD Versus DEPUTY COMMISSIONER OF INCOME-TAX 2012 (8) TMI 714 - GUJARAT HIGH COURT -Decided in favour of assessee.

Summary

Issues:
Revenue's appeal against the order allowing unabsorbed depreciation adjustment against Long Term Capital Gain for relevant assessment year.

Analysis:

1. Issue of Unabsorbed Depreciation Adjustment:
The appeal was filed by the Revenue against the order of the Learned Commissioner of Income Tax(A)-I, Coimbatore, regarding the adjustment of unabsorbed depreciation against Long Term Capital Gain for the assessment year. The Revenue contended that the amendments in sec.32(2) of the Act from 2002-03 onwards restricted the allowance period for unabsorbed depreciation. However, the Ld. CIT (A) allowed the adjustment in favor of the assessee, citing the principle that the law applicable to any assessment year is the law prevailing on the 1st day of April of the relevant assessment year. The Ld. CIT (A) directed the Assessing Officer to allow the setting off of the carry forward of depreciation against the Long Term Capital Gain, supported by judicial decisions and relevant legal provisions.

2. Judicial Precedents and Arguments:
The Ld. A.R. supported the order of the Ld. CIT (A) and referred to the decisions of the Jurisdictional High Court in cases such as CIT Vs. Pioneer Asia Packing P. Ltd. and General Motors India P. Ltd. Vs. DCIT. These judgments emphasized the provisions of section 32(2) allowing the carry forward of unabsorbed depreciation to subsequent years for set off against profits and gains. The Ld. D.R. did not contest the submissions made by the Ld. A.R., indicating agreement with the arguments presented.

3. Decision and Rationale:
After hearing both parties and examining the case details, the Tribunal found that the issue of carry forward of unabsorbed depreciation from assessment years 1999-2000 to 2000-2001 for adjustment in the relevant assessment year 2010-11 was similar to cases decided by the Hon'ble High Courts. Citing the precedents and the provisions of section 32(2) allowing such adjustments, the Tribunal confirmed the order of the Ld. CIT (A) in favor of the assessee. Consequently, the appeal of the Revenue was dismissed, and the order was pronounced on 10th July 2015 at Chennai.

This detailed analysis of the judgment highlights the key issues, legal arguments, judicial precedents, and the final decision rendered by the Tribunal in favor of the assessee regarding the adjustment of unabsorbed depreciation against Long Term Capital Gain for the relevant assessment year.