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TMI Blog2014 (5) TMI 440X X X X Extracts X X X X X X X X Extracts X X X X ..... d or that the decision by a cognate Bench would not continue to bind – Decided in favor of Assessee. - Special Civil Application No. 3289 of 2014 - - - Dated:- 6-5-2014 - Akil Kureshi And Sonia Gokani,JJ. For the Appellant : Mr. S. N. Soparkar For the Respondent : Mr. KM Parikh ORDER (Per : Honourable Mr. Justice Akil Kureshi) Heard learned advocates for the parties for final disposal of the petition. Petitioner has challenged a notice dated 26th March 2013 issued by the respondent-Assessing Officer under Section 148 of the Income-tax Act, 1961 { the Act for short}. Brief facts are as under : The petitioner is a company registered under the Companies Act, 1956. For the Assessment year 2008-09, the petitioner filed its return of income on 31st March 2010 declaring total income of Rs. 1.77 Crores [rounded off]. In such return, the petitioner had claimed setoff of brought forward unabsorbed depreciation allowance of Rs. 4.26 Crores [rounded off] pertaining to the period between A.Y 1984-85 to A.Y 2007-08 against the petitioner s income from long term capital gains arising during the year under consideration. Such return was taken in scrutiny by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the assessment. In view of the decision of Supreme Court in case of GKN Driveshafts (India) Limited [Supra], therefore, the Assessing Officer was required to dispose of the objections of the petitioner before finalizing the assessment. In the present case, however, he passed an order of reassessment on 22nd January 2014 and disposed of the objections by an order dated 17th January 2014, but the copy of which was served on the petitioner on 23rd January 2014. At that stage, the petitioner approached this Court challenging the very notice of reopening on various grounds. Counsel for the petitioner has raised following contentions in support of the petition (i) that the Assessing Officer breached the directives of the Supreme Court given in case of GKN Driveshafts (India) Limited [Supra]. Under such mechanism, the Assessing Officer was not only required to supply reasons recorded for issuing notice for reopening, but also dispose of the objections raised by the assessee before finalizing the assessment. If the decision of the Assessing Officer is adverse, the assessee could take recourse to remedies under the law. In the present case, though the objections were disposed o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It may be that the order rejecting the objections was passed a couple of days before passing of the assessment order. The fact remains that such order of rejection was served on the petitioner after the assessment order was passed. This completely denies the assessee an opportunity to study the grounds of rejection of his objections and to take further measures, if so advised. This Court, in case of Garden Finance Limited vs. Assistant Commissioner of IncomeTax, reported in 268 ITR 48 repelled the contention of the revenue that after the decision of Supreme Court in case of GKN Driveshafts (India) Limited [Supra], it would not be open for the assessee to challenge a notice under Section 148 of the Act. The third member to whom, upon a difference of opinion between the two members of the Bench was made, observed as under : What the Supreme Court has now done in the GKN case [2003] 259 ITR 19 is not to whittle down the principle laid down by the Constitution Bench of the apex court in Calcutta Discount Co. Ltd case [1961] 41 ITR 191 but to require the assessee first to lodge preliminary objection before the Assessing Officer who is bound to decide the preliminary objections to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e notice was not at all justified. We do not elaborate on this issue since in our judgment dated 31st March 2014 in case of Sahkari Khand Udyog Mandali Limited v. Assistant Commissioner of Income Tax [Special Civil Application No. 3955 of 2014] we have provided detailed mechanism for curtailing the time lags at different stages of reassessment proceedings. We now come to the challenge to the notice for reopening itself. We have noted the reasons recorded by the Assessing Officer for issuing such notice. His objection is with respect to the assessee setting off the brought forward depreciation loss pertaining to earlier years against the income of the current year. In his opinion, such set off was irregular. Though no specific ground is mentioned why he holds a belief that the set off claimed was irregular, it appears that his reference is to the provision of Section 32 (2) of the Act and he objects to the loss being carried beyond eight years. We, however, find on similar issue when in case of General Motors India Private Limited [Supra], the Assessing Officer had issued notice for reopening, this Court quashed the same inter alia on the ground that the reason itself was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profits and gains of subsequent years. 38. Therefore, it can be said that, current depreciation is deductible in the first place from the income of the business to which it relates. If such depreciation amount is larger than the amount of the profits of that business, then such excess comes for absorption from the profits and gains from any other business or business, if any, carried on by the assessee. If a balance is left even thereafter, that becomes deductible from out of income from any source under any of the other heads of income during that year. In case there is a still balance left over, it is to be treated as unabsorbed depreciation and it is taken to the next succeeding year. Where there is current depreciation for such succeeding year the unabsorbed depreciation is added to the current depreciation for such succeeding year and is deemed as part thereof. If, however, there is no current depreciation for such succeeding year, the unabsorbed depreciation becomes the depreciation allowance for such succeeding year. We are of the considered opinion that any unabsorbed depreciation available to an assessee on 1st day of April 2002 (A.Y. 2002-03) will be dealt with in acco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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