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TMI Blog2018 (2) TMI 267X X X X Extracts X X X X X X X X Extracts X X X X ..... any error in the order of the ld.CIT(A) as far as second fold of contention is concerned. We find that notice under section 148 was issued on 13.2.2012 i.e. after expiry of 4 years from the end of the assessment year. There was a scrutiny assessment under section 143(3) of the Act. Proviso appended to section 147 puts a restriction on the powers of AO to reopen the assessment by issuance of notice under section 148 in the cases where 4 years have expired and scrutiny assessment under section 143(3) was made. The income of the assessee has escaped from the assessment on account of failure of the assessee to disclose all material facts fully and truly, no notice under section 148 could be issued. All these facts were also in the knowledge of the AO when he passed the assessment under section 143(3). There is no failure at the end of the assessee. - Decided against revenue - ITA.No.3018/Ahd/2014 - - - Dated:- 1-2-2018 - SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER For The Revenue : Aprana M. agrawal, CIT-DR For The Assessee : Shri M.J. Shah ORDER PER RAJPAL YADAV, JUDICIAL MEMBER: Revenue is in appeal before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forward of unabsorbed depreciation and loss for the subsequent year. On appeal, the ld.CIT(A) has allowed the claim of assessee after relying on various judgements including decision in the case of General Motors India Ltd. (supra). 4. With the assistance of the ld.representatives, we have gone through the record carefully. We deem it appropriate to take note of the finings recorded by the AO in para 8. 8. I have gone through the submission of the assessee. However, the same is not tenable in law. The point wise explanation of the same is given hereunder: 8.01 It is assessee's interpretation that amendment in section 32(2) by the Finance (No. 2) Act, 1996 could not affect the unabsorbed depreciation as it stood at the end of the assessment year 1997-98. However, it was not the case. The amendment was brought to restrict the set off of unabsorbed depreciation on par with other losses. Hence, following the amendment, in the present case the limitation of 8 years for the carry-forward and set-off of such unabsorbed depreciation would start from A.Y. 1998-99 and expire in A.Y. 2005-06. 8.02 Secondly, the assessee has relied upon proviso to sub-clause (b) to sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... em it appropriate to take note of finding of the Hon ble Gujarat High Court on this issue. It reads 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 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 ₹ 43,60,22,158/- for A.Y. 1997-98, which was not eligible for being carried forward and set off against the income for the A.Y. 2006-07. 31. Prior to the Finance Act No.2 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly 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 subsection (1) of section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985. 34. The aforesaid provision was introduced by Finance (No.2) Act, 1996 and further amended by the Finance Act, 2000. The provision introduced by Financ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) 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 provision. Hence keeping in view the purpose of amendment of section 32(2) of the Act, a purposive and harmonious interpretation has to be taken. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Annexure F respectively to the writ petition are quashed. Rule is made absolute. The parties shall bear their own costs. 6. A bare perusal of the above finding would indicate that the Hon ble High Court has propounded that any unabsorbed depreciation available to an assessee on first day of April, 2002 i.e. Asstt.Year 2002-03 will be dealt with in accordance with provision of Section 32(2) as amended by Finance Act, 2001. The Hon ble High Court has observed that unabsorbed depreciation f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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