Income Tax Appellate Tribunal - Delhi
M/S Central Electronics Ltd.,, New ... vs Ito, New Delhi on 11 April, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'B', NEW DELHI
BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER
AND
SHRI L.P. SAHU, ACCOUNTANT MEMBER
ITA Nos. 4501 & 4502/Del/2016
Assessment Years: 2007-08 & 2008-09
ITO, WARD 5(4), vs. M/S CENTRAL ELECTRONICS LTD.
ROOM NO. 229B, 781, DESH BANDHU GUPTA ROAD,
C.R. BUILDING, KAROL BAGH, NEW DELHI - 5
NEW DELHI (PAN: AAACC1261G)
(APPELLANT) (RESPONDENT)
AND
CROSS OBJECTION NOS. 45 & 46/Del/2018
(IN ITA NOS. 4501 & 4502/DEL/2016)
Assessment Years: 2007-08 & 2008-09
M/S CENTRAL ELECTRONICS LTD., VS. ITO, WARD 5(4),
781, DESH BANDHU GUPTA ROAD, NEW DELHI
KAROL BAGH, NEW DELHI - 5
(APPELLANT) (RESPONDENT)
Department by : Sh. Vijay Kr. Jiwani, Sr. DR
Assessee by : S/Sh. R.S. Singhvi, Satyajeet Goel &
Jitendra Nath, CAs'
ORDER
PER H.S. SIDHU, JM
The Department has filed these Appeals and Assessee has filed these Cross Objections which are emanate from the respective Orders both dated 30.6.2016of Ld. CIT(A)-14, New Delhi pertaining to assessment years 2007-08 & 2008-09. Since the issues involved in the Revenue's Appeals as well as Assessee's Cross Objection are identical, hence, the same are being consolidated with this common order for the sake of 2 convenience, by dealing with Revenue's Appeal & Assessee's Cross Objection for AY 2007-08.
2. The grounds raised in the revenue's appeal for assessment year 2007-08 read as under:-
1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition amounting to Rs. 2,44,90,263/- on account of unabsorbed depreciation claimed for AY 1997-98.
2. The appellant craves leaves for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal.
3. The grounds raised in the revenue's appeal for assessment year 2008-09 read as under:-
1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition amounting to Rs.
89,22,395/- on account of unabsorbed depreciation claimed for AY 1997-98.
2. The appellant craves leaves for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal.
4. The grounds raised in the Assessee's Cross Objection for assessment year 2007-08 read as under:-
3
1. That on the facts and circumstances of the case, the CIT(A) was not justified in confirming reassessment u/s. 148 even though same was not based on recording of proper satisfaction or requisite approval.
2. That the reassessment is merely based on change of opinion and same being after expiry of four years, there is no justification for assuming jurisdiction in the absence of any omission or failure on the part of the assessee in disclosure of requisite information in the context of proviso to sec. 147.
5. The grounds raised in the Assessee's Cross Objection for assessment year 2008-09 read as under:-
1. That on the facts and circumstances of the case, the CIT(A) was not justified in confirming reassessment u/s. 148 even though same was not based on recording of proper satisfaction or requisite approval.
2. That the reassessment is merely based on change of opinion and same being after expiry of four years, there is no justification for assuming jurisdiction in the absence of any omission or failure on the part of the assessee in disclosure of requisite information in the context of proviso to sec. 147.
Revenue's Appeal (AY 2007-08)
6. The brief facts of the case are that assessee filed its return of income declaring Nil income on 31.10.2007. In the computation of income the company has set off total income of Rs. 2,18,51,939/- against the unabsorbed depreciation of earlier years. The assessment order u/s 143(3) of the I.T. Act was passed on 24.12.2009 at an additional income of Rs. 26,3.8,324/- which was also set off against the brought forward losses of 4 the earlier years. On perusal of records, it has been noticed that the assessee company has claimed unabsorbed depreciation of Rs. 3,23,32,157/-. It has been further revealed that out of the above unabsorbed depreciation of. Rs. 3,23,32,157/-, an amount of Rs.2,44,90,263/- has been set off pertaining to assessment year 1997-98. AO further observed that as per the amendment by the Finance (No.2) Act, 1996 w.e.f. A.Y. 1997- 1998, the unabsorbed depreciation for AY. 1997-98 could be carry forward upto a maximum period of 8 years from the year in which it was first computed and this period expired in 2005-06 and cannot be allowed in AY. 2006-07 onwards. Therefore, income chargeable to tax amounting to Rs. 2,44,90,263/- has escaped assessment within the meaning of provisions. of section 147 of the Income Tax Act. Accordingly, notice u/s 148 of the Income Tax Act was issued on 12.03.2013 after duly recording the reasons leading to the belief that income had escaped assessment. In response to notice issued u/s 148 of the LT. Act, 1961, Senior Manager (Finance) of the company Sh. K.K.Aggarwal vide his letter dated 24.10.2013 filed objections against the reopening of assessment u/s 147 of the I.T. Act,1961. The objections were disposed off through vide order F.No.ITO- Ward- 3(3)/2013-14/75 dated 09.01.2014. The company vide letter dated 20.03.2013 submitted that return of income filed on 31.10.2007 may be treated as return filed in pursuance to the notice issued u/s 148 of the Act. Notice u/s. 143(2) of the Act was also issued on 22.3.2013. The Senior Manager (Finance) of the Company attended the assessment proceedings from time to time and made the submissions. The submission made by the assessee has been considered on facts and merits of the case. The AO observed that the unabsorbed depreciation for AY 1997-98 could be carry forward upto a maximum period of 8 years from the year in which it was first computed and this period expired in 2005-06 and hence, cannot be allowed in AY 2006-07 onwards. Therefore, 5 the setting off unabsorbed depreciation of Rs. 2,44,90,263/- was withdrawn and accordingly, the income of the assessee was assessed at Rs. 1,47,50,530/- vide order dated 143(3)/147/250 of the Income Tax Act, 1961. Against the assessment order dated 30.01.2014, assessee appeal before the Ld. CIT(A), who vide his impugned order dated 30.6.2016 has directed the AO to allow the set off of b/f depreciation u/s. 32 of the Act against assessed income and partly allowed the appeal of the assessee. Aggrieved with the impugned order, the Revenue is in appeal before the Tribunal.
7. Ld. DR relied upon the order of the AO and reiterated the contentions raised in the grounds of appeal. He further stated that as per the amendment by the Finance (No.2) Act, 1996 w.e.f. A.Y. 1997-1998, the unabsorbed depreciation for AY. 1997-98 could be carry forward upto a maximum period of 8 years from the year in which it was first computed and this period expired in 2005-06 and cannot be allowed in AY. 2006-07 onwards. Therefore, income chargeable to tax amounting to Rs. 2,44,90,263/- has escaped assessment within the meaning of provisions of section 147 of the Income Tax Act. Therefore, the setting off unabsorbed depreciation of Rs. 2,44,90,263/- was withdrawn and accordingly, the income of the assessee was assessed at Rs. 1,47,50,530/-.
8. On the contrary, ld. AR of the assessee relied upon the orders of the Ld. CIT(A) and stated that Ld. CIT(A) has passed a well reasoned order which does not need any interference.
9. We have heard both the parties and perused the records especially the impugned order. We note that AO ignored the fact that unabsorbed depreciation of year prior to AY 1997-98 is allowed u/s. 32 of the I.T. Act to be c/f for indefinite period as judicially pronounced by the Hon'ble Gujarat High Court in the case of M/s General Motors India 6 Pvt. Ltd. vs. DCIT(2012) 25 taxmann.com 364/ 354 ITR 244 (Guj) wherein, the Court has held that any unabsorbed depreciation available to an assessee on the 1st day of April, 2002 (the assessment year 2002-03), will be dealt with in accordance with the provisions of section 32(2) as amended by the Finance Act, 2001. And once Circular No. 14 of 2001 of CBDT clarified that the restriction of eight years for carry forward and set off of unabsorbed depreciation had been dispense with, the unabsorbed depreciation from the assessment year 1997-98 upto the assessment year 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 the Finance Act, 2001, and were available for carry forward and set off against the profits and gains of subsequent years, without any limit whatsoever. This view has been adopted by the Hon'ble Delhi High Court in the cases of Motor & General Finance Ltd. vs. ITO (393 ITR 60 (Delhi) and Pr. CIT vs. British Motor Car Co. (1934) Ltd. 400 ITR 569 (Delhi). We further note that Ld. CIT(A)- 14, New Delhi in the impugned order dated 30.6.2016, by following the decision of the Hon'ble Gujarat High Court in the case of M/s General Motors India Pvt. Ltd. vs. DCIT (Supra) and order dated 23.3.2014 passed in Appeal No. 396/14-15 by the CIT(A)-2, New Delhi for AY 2006-07, has rightly decided the similar and identical issue of disallowance of b/f depreciation in favour of the assessee in assessee's own case and directed the AO to allow the set off of b/f depreciation u/s. 32 of the Income Tax Act, 1961 against assessed income, which does not need any interference on our part, hence, we uphold the action of the Ld. CIT(A) on the issue in dispute and reject the ground raised by the Revenue and accordingly, the Revenue's Appeal stands dismissed. 7 ASSESSEE'S CROSS OBJECTION (AY 2007-08)
10. As far as Assessee's Cross Objection is concerned, since we have dismissed the Appeal of the Revenue as aforesaid on the merit of the case, the Cross Objection filed by the Assessee has become infructuous and dismissed as such and accordingly, the Cross Objection of the Assessee also stands dismissed.
11. In the result, both the Revenue's Appeals as well as Assessee's Cross Objections stand dismissed.
Order pronounced on 10/04/2018.
Sd/- Sd/-
[L.P. SAHU] [H.S. SIDHU)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 10/04/2018
*SR BHATNAGAR*
Copy forwarded to: -
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR, ITAT
TRUE COPY By Order,
ASSISTANT REGISTRAR