9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (11) TMI 1342 - AT - Income TaxSet-Off of brought forward unabsorbed depreciation against income from other sources and/or capital gains - CIT-A allowed the claim - HELD THAT - We find that the order of the CIT(A) is inconsonance with the decision of the Hon ble Supreme Court in the case of CIT vs. Virmani Industries Pvt. Ltd. 1995 (10) TMI 1 - SUPREME COURT and General Motors India P. Ltd. vs. DCIT 2012 (8) TMI 714 - GUJARAT HIGH COURT . The Hon ble Gujarat High Court in CIT vs. Gujarat Themis Biosyn Ltd. 2014 (5) TMI 194 - GUJARAT HIGH COURT has also expressed the view that claim of the assessee for carry forward of unabsorbed depreciation was to be allowed to be carried forward to the succeeding assessment years without any fetters of limitation of 8 years placed as per erstwhile provisions of Section 32(2) of the Act. The CIT(A) in our view has rightly reversed the action of the AO and directed him to allow the set off of unabsorbed depreciation allowance carried forward from earlier years against income from other sources after necessary verifications of quantum of brought forward unabsorbed depreciation. We see no error in the order of the CIT(A). - Decided against revenue
Issues Involved:
1. Set-off of unabsorbed depreciation allowance against income from other sources and capital gains. 2. Requirement of carrying on business activity for allowing set-off of unabsorbed depreciation. 3. Applicability of the restriction of 8 years for carry forward and set-off of unabsorbed depreciation. 4. Validity of the assessee's claim in light of previous disallowances and judicial precedents. Issue-wise Detailed Analysis: 1. Set-off of Unabsorbed Depreciation Allowance: The primary issue in the appeal was whether the assessee was entitled to claim set-off of unabsorbed depreciation carried forward from earlier years against income from other sources and capital gains. The Revenue argued that the assessee should not be allowed to claim set-off of unabsorbed depreciation against income arising under different heads other than 'business income'. The CIT(A) had directed the set-off, which the Revenue contested. 2. Requirement of Carrying on Business Activity: The Revenue contended that carrying on a business was an essential prerequisite for allowing set-off of unabsorbed depreciation, citing the case of Rajaratna Naranbhai Mills Ltd. and Dharti Dredging & Infrastructure Ltd. vs. Additional Commissioner of Income-tax. The AO had rejected the assessee's claim on the grounds that no business activities were carried out during the year under consideration, and thus, set-off of depreciation was not permissible. 3. Applicability of the Restriction of 8 Years: The Revenue submitted that the restriction of 8 years for carry forward and set-off of unabsorbed depreciation should apply to the unabsorbed depreciation related to the period before the amendment by the Finance Act, 2001. However, the CIT(A) and the Tribunal referred to judicial precedents, including the decision of the Hon’ble Supreme Court in CIT vs. Virmani Industries Pvt. Ltd. and the Hon’ble Gujarat High Court in General Motors India P. Ltd. vs. DCIT, which dispensed with the 8-year restriction due to subsequent amendments. 4. Validity of the Assessee's Claim: The Tribunal considered the rival submissions and the findings of the CIT(A). The CIT(A) had noted that the unabsorbed depreciation is deemed to be the depreciation of the year under consideration as per Section 32(2), even if no profit under the head business/profession was chargeable to tax. The Tribunal upheld the CIT(A)’s decision, stating that the CIT(A) had rightly appreciated the law concerning the issues raised by the Revenue. The Tribunal also referenced the Hon’ble Gujarat High Court's view that the claim for carry forward of unabsorbed depreciation should be allowed without the limitation of 8 years. Conclusion: The Tribunal found the CIT(A)'s order to be in consonance with the decisions of higher judicial authorities and upheld the CIT(A)’s direction to allow the set-off of unabsorbed depreciation allowance carried forward from earlier years against 'income from other sources' after necessary verifications. Consequently, all four appeals filed by the Revenue were dismissed. Final Pronouncement: The order was pronounced in Open Court on 27/11/2019, dismissing all the appeals filed by the Revenue.
|
