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TMI Blog2016 (7) TMI 1002X X X X Extracts X X X X X X X X Extracts X X X X ..... s in Companies to get more interest than from the bank. If the companies are paying the same rate of interest as the bank are paying then the public would not see any benefit in making deposits with the Company and they will go for bank interest. Further, by no stretch of imagination rate of interest of 15% can be considered as excessive. We, accordingly, set aside the findings of the ld. CIT(A) and direct the A.O. to delete the addition of ₹ 3,00,544/-.- Decided in favour of assessee. - ITA. No. 1384/AHD/2012 - - - Dated:- 11-7-2016 - Shri Rajpal Yadav, Judicial Member And Shri N. K. Billaiya, Accountant Member For the Appellant : Shri M.K. Patel, AR For the Respondent : Shri K. Madhusudan Sr. D.R ORDER Per N. K. Billaiya, Accountant Member 1. This appeal by the Assessee is preferred against the order of Ld. CIT(A)-III, Baroda dated 17.04.2012 pertaining to A.Y. 2008-09. 2. The substantive grievance of the assessee reads as under:- 1. That on facts, and in law, the ld. CIT(A) has grievously erred in not allowing the carry forward of business loss of ₹ 74,44,271/-. 2. That, on facts and in law, the ld. CIT(A) has grievously erred i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the notice, this Court chose to consider whether unabsorbed depreciation could be carried forward and set off after a period of eight years and would that be governed by section 32 as amended by the Finance Act 2 of 1996. This Court has chosen to answer the same in the following manner: '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 the maximum period of 8 years from the year in which it was first computed. According to the Assessing Officer, 8 years expired in the A.Y. 2005-06 and only till then, the assessee was eligible to claim unabsorbed depreciation of A.Y. 1997-98 for being carried forward and set off against the income for the A.Y. 2005-06. But the assessee was not entitled for unabsorbed depreciation of &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 subclause (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 ending with the assessment year relevant to the previous year in which the entire net worth of such company becomes equal to or exceeds the accumulated losses. Explanation.- For the purposes of this clause, net worth shall have the meaning assigned to it in clause (ga) of sub-section (1) of section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mported 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 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) as it stood before the said amendment. Had the intention of the Legislature been to allow the unabsorbed depreciation allowance worked out in A.Y. 1997-98 only for eight subsequent assessment years even after the amendment of section 32(2) by Finance Act, 2001 it would have incorporated a provision to that effect. However, it does not contain any such p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance 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.I997-98 up to 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. 8. As, no distinguishing decision has been brought to the notice by the ld. D.R. in favour of the revenue. Respectfully following the decision of the Hon ble Jurisdictional High Court (supra), we direct the A.O to allow set off/carry forward of unabsorbed depreciation as claimed by the assessee. Ground no. 2 is accordingly allowed. 9. Ground no. 3 relates to the disallowance of ₹ 3,00,544/- out of interest payment. 10. On scrutinizing the financial statements of the assessee, the A.O found that the assessee has paid interest @ 15% to the parties listed in the register maintaine ..... X X X X Extracts X X X X X X X X Extracts X X X X
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