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TMI Blog2015 (9) TMI 336X X X X Extracts X X X X X X X X Extracts X X X X ..... estriction of 8 years for carry forward and set off of unabsorbed depreciation had been dispensed with, the unabsorbed depreciation from A.Y.1997-98 upto the A.Y.2001-02 got carried forward to the assessment year 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, which was binding to the learned ITAT. Under the circumstances, it cannot be said that the learned ITAT has committed any error and/or illegality and following binding decision of this Court in the case of General Motors India (P) Ltd Vs. Deputy Commissioner of Income Tax (supra) in passing the impugned judgment and order. - Decided in favour of assessee. - TAX APPEAL NO. 380 of 2013 - - - Dated:- 9-12-2013 - M.R. SHAH R.P.DHOLARIA , JJ. For The Appellant : MR KM PARIKH JUDGEMENT : [1] Feeling aggrieved and dissatisfied with the order dated 19.10.2012 passed by the learned Income Tax Appellate Tribunal (hereinafter referred to as ITAT ) in ITA No.1120/Ahd/2012 for A.Y. 2007-08, the revenue has preferred t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .O to reframe the assessment order after withdrawal of depreciation allowances, which was earlier granted in the manner. [3] Feeling aggrieved and dissatisfied with the order passed by the Commissioner of Income Tax whereby the learned Commissioner passed order in suo motu revision under section 263 of the Income Tax Act (hereinafter referred to as Act ), the assessee preferred an appeal before the learned ITAT. The learned ITAT by impugned judgment and order and relying upon the decision of the Division Bench of this Court in the case of General Motors India (P) Ltd Vs. Deputy Commissioner of Income Tax reported in [2013] 354 ITR 244 (Guj.), has allowed the said appeal and set aside the order passed by the learned Commissioner. [4] Mr.K. M. Parikh, learned counsel appearing on behalf of the appellant - revenue has vehemently submitted that at the relevant time when the A.O passed the order under section 143 of the Act, which was taken in suo motu revision by the learned Commissioner in exercise of powers under section 263 of the Act, there was no judgment and order passed by this Court in the case of General Motors India (P) Ltd Vs. Deputy Commissioner of Income Tax (supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this Court in the case of General Motors India (P) Ltd Vs. Deputy Commissioner of Income Tax (supra) in passing the impugned judgment and order. [7] It is required to be noted at this stage that as observed by the learned ITAT, when the A.O. considered the issue while passing the assessment order, the A.O. has adopted a possible view which is now correct view as per the decision of this Court in the case of General Motors India (P) Ltd Vs. Deputy Commissioner of Income Tax (supra). [8] In the case of General Motors India (P) Ltd Vs. Deputy Commissioner of Income Tax (supra), the Division Bench of this Court has observed and held in paragraph Nos.30 to 39 as under: 30. The last question which arises for consideration is that whether the unabsorbed depreciation pertaining to A.Y. 1997- 98 could be allowed to be carried forward and set off after a period of eight years or it would be governed by Section 32 as amended by Finance Act 2001? The reason given by the Assessing Officer under section 147 is that Section 32(2) of the Act was amended by Finance Act No.2 of 1996 w.e.f. A.Y. 1997-98 and the unabsorbed depreciation for the A.Y. 1997-98 could be carried forward up to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t off shall be set off from the income under any other head, if any, assessable for that assessment year; (iii) if the unabsorbed depreciation allowance cannot be wholly set off under clause (i) and Clause (ii), the amount of allowance not so set off shall be carried forward to the following assessment year and- (a) it shall be set off against the profits and gains, if any, of any business or profession carried on by him and assessable for that assessment year; (b) if the unabsorbed depreciation allowance cannot be wholly so set off, the amount of unabsorbed depreciation allowance not so set off shall be carried forward to the following assessment year not being more than eight assessment years immediately succeeding the assessment year for which the aforesaid allowance was first computed: Provided that the time limit of eight assessment years specified in sub-clause (b) shall not apply in case of a company for the assessment year beginning with the assessment year relevant to the previous year in which the said company has become a sick industrial company under sub-section (1) of section 17 of the Sick Industrial Company (Special Provisions) Act, 1985 (1 of 1986) and e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 shall be mandatory. 30.3 Under the existing provisions, no deduction for depreciation is allowed on any motor car manufactured outside India unless it is used (i) in the business of running it on hire for tourists, or (ii) outside in the assessee s business or profession in another country. 30.4 The Act has allowed depreciation allowance on all imported motor cars acquired on or after 1st April, 2001. 30.5 These amendments will take effect from the 1st April, 2002, and will, accordingly, apply in relation to the assessment year 2002-03 and subsequent years. 37. The CBDT Circular clarifies the intent of the amendment that it is for enabling the industry to conserve sufficient funds to replace plant and machinery and accordingly the amendment dispenses with the restriction of 8 years for carry forward and set off of unabsorbed depreciation. The amendment is applicable from assessment year 2002-03 and subsequent years. This means that any unabsorbed depreciation available to an assessee on 1st day of April, 2002 (A.Y. 2002-03) will be dealt with in accordance with the provisions of section 32(2) as amended by Finance Act, 2001 and not by the provisions of section 32(2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 accordance with the provisions of section 32(2) as amended by Finance Act, 2001. And 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 A.Y.1997-98 upto the A.Y.2001-02 got carried forward to the assessment year 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. 39. For the aforesaid reasons, this writ petition succeeds and is allowed. The notice issued under Section 148 of the Income Tax Act, 1961, dated 29.3.2011 Annexure A and the assessment order dated 27.12.2011 passed by the Assessing Officer An ..... X X X X Extracts X X X X X X X X Extracts X X X X
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