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TMI Blog2010 (7) TMI 789X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh it was a balancing charge under section 41(2) of the Act. 3.The appellant begs to rely upon the submissions and case law relied on before both the lower authorities in regard to the main two grounds. 4.The revised return for the assessment years 2002-03 and 2003-04 ought to have taken into account and even otherwise the assessee ought to have been granted the set off of unabsorbed depreciation. 5.That the entire reasoning on facts and in law by both the authorities on the aforesaid point are otherwise unwarranted, of facts, bad in law and, therefore, the appeal of the appellant be allowed in full as prayed for." 4. The assessee challenged the disallowance of set off of unabsorbed depreciation of Rs. 31,64,143 and Rs. 4,29,600 being short-term capital loss before the learned CIT(A). It was noticed by the Assessing Officer that the assessee had debited Rs. 38,42,000 under the head Motor Tanker Sales Loss in respect of closed business of transportation which was started on 31-1-2002 and wound up on 31-1-2003. During the course of assessment proceedings, the assessee filed revised returns of income for assessment years 2002-03 and 2003-04 and requested that set off of u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trucks Rs. 1,65,89,900 Add: Cost of body building Rs. 13,22,000 Rs. 1,79,11,900 Less: Cash discount Rs. 8,49,900 W.D.V. as on 31-3-2003 Rs. 1,70,62,000 W.D.V. as on 1-4-2003 Rs. 1,70,62,000 Less: Sale proceeds Rs. 1,32,20,000 Short-term capital loss Rs. 38,42,000 On the other hand the appellant had made the claim as under : Cost of truck Rs. 1,70,62,000 Depreciation @ 40 per cent for 6 months Rs. 34,12,400 (for A.Y. 2002-03) W.D.V. as on 31-3-2002 Rs. 1,36,49,600 W.D.V. as on 1-4-2002 Rs. 1,36,49,600 Less: sale value Rs. 1,32,20,000 Rs. 4,29,600 4.3-1 Original return in this case was filed on 31-10-2003. The valid revised return could have been filed till 31-3-2005. The assessment was completed on 28-3-2006. In the original return, the income from business or profession was disclosed at Rs. 2,91,430. Motor tanker sales loss was shown at Rs. 38,42,000. In the revised return, net business income is shown as Rs. 4,88,443 as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riginal return for assessment year 2002-03 filed on 30-7-2002 did not reflect any income from business or profession. The revised return was invalid return and, thus, the loss was not determined by the department. Since the unabsorbed depreciation was not determined at all there is no question of carrying it forward and setting it off against the next year s income. In the case of Garden Silk Weaving Factory v. CIT - 189 ITR 512 (SC), it has been held that unabsorbed depreciation is a species of business loss and both are not mutually exclusive. In my considered view, therefore, the Assessing Officer was justified in not taking cognizance of the revised returns filed on 23-3-2006 and working out the short-term capital loss as per provisions of section 50(2) of the Income-tax Act. Ground Nos. 1 and 3 are, accordingly, dismissed." 6. The learned counsel for the assessee submitted that the assessee has filed bifurcated profit and loss account for the period from 31-1-2002 to 31-1-2003 before the Assessing Officer for the assessment years 2002-03 and 2003-04 at the assessment stage copy of which is filed at page 1 of the paper book. He has submitted that the Assessing Officer h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... since no claim was filed in the assessment year under appeal also with regard to claim of unabsorbed depreciation for the earlier year in the original return of income, therefore, the assessee cannot claim the same in the invalid revised return. He has submitted that the assessee made a claim of set off of unabsorbed depreciation under section 32(2) of the Income-tax Act only in the revised return which was admittedly invalid. Therefore, in the absence of any valid claim, before the Assessing Officer; the Assessing Officer was justified in not entertaining the claim of the assessee. The learned DR submitted that since the return of income was originally filed at Rs. 2,91,434 on 31-10-2003 in which no claim of unabsorbed depreciation was made, therefore, the Assessing Officer was justified in rejecting the claim of the assessee for unabsorbed depreciation on the basis of invalid revised return. 7. We have considered the rival submissions and the materials available on record. Section 32(2) of the Income-tax Act provides : "[(2) Where, in the assessment of the assessee, full effect cannot be given to any allowance under sub-section (1) in any previous year, owing to there bein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot challenged the above findings of the authorities below that both the revised returns were invalid under the law. Therefore, the authorities below have not rightly taken cognizance of the same while passing the assessment order or passing the impugned order. PB-3 is the copy of computation of income filed with original return for assessment year 2002-03 in which only interest income has been declared without disclosing any business income or depreciation. The learned counsel for the assessee referred to the note given in the computation of income to show that the assessee started business of transportation and purchased chassis of trucks of which body had been constructed. However, it is nowhere mentioned as to if any business income was earned on account of the same. In the absence of any specific narration in the note it is not clear whether actually the assessee started the business of transportation. The learned counsel for the assessee submitted that since the Assessing Officer directed the assessee to file recasted accounts for both the assessment years and he has filed the same at the assessment stage (PB-1) to show business income would not help the assessee because there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this sub-section shall apply whether or not the assessee has claimed the deduction in respect of depreciation in computing his total income. The above provision was inserted in the Act with effect from 1-4-2002 and is applicable from the assessment year 2003-04. Therefore, it would not apply to the assessment year 2002-03. Further, the assessee has not made any claim of unabsorbed depreciation in the original return for the assessment year 2003-04 under appeal and the revised return of income was also invalid and that the issue of depreciation did not arise from the return of income for assessment year 2002-03. Therefore, there was no question of giving set off of unabsorbed depreciation in the assessment year under appeal. The Hon ble Supreme Court in the case of Goetze (India) Ltd. v. CIT [2006] 284 ITR 323 1 held that "deduction claimed after return filed - no power in Assessing Officer to entertain claim made otherwise than by way of revised return". Moreover, no appeal is pending for assessment year 2002-03 in this regard. The decisions cited by the assessee before the learned CIT(A) have already been distinguished by the learned CIT(A) on which the learned counsel fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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