Income Tax Appellate Tribunal - Chandigarh
M/S Raja Ram Corn Products (Pb.) P. Ltd., ... vs Dcit, Chandigarh on 2 February, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
'SMC' BENCH, CHANDIGARH
BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER
ITA No. 1092/CHD/2016
Assessment Year: 2013-14
M/s Raja Ram Corn Products Vs The DCIT,
(Pb) Pvt. Ltd., Circle 1(1),
House No. 17, Sector - 4, Chandigarh.
Chandigarh.
PAN: AABCR1679L
(Appellant) (Respondent)
Appellant by : Shri A.K.Jindal
Respondent by : Shri S.K.Mittal, DR
Date of Hearing : 01.02.2017
Date of Pronouncement : 02.02.2017
O R D E R
This appeal by assessee has been directed against the order of ld. CIT(Appeals)-1 Chandigarh dated 02.09.2016 for assessment year 2013-14 on the following ground :
"That the Ld.. CIT(A) has erred in law and facts of the case in upholding the action of AO in not allowing the set off of unabsorbed depreciation of earlier years amounting to Rs. 65,40,217/- against the current year's income which is highly unjustified and uncalled for".
2. Briefly the facts on this issue as noted by the authorities below are that assessee was engaged in the 2 business of manufacturing of corn products but after 20.06.2002, the assessee has closed his business. The only income being returned is 'income from other sources'. The Assessing Officer noted that the assessee company has not been doing any business in the last many years. The unabsorbed depreciation brought forward from previous year or pertaining to this year was not allowed to be set off against the income of Rs. 31,23,691/-. Further, no business loss of previous year is allowed to be carried forward in view of the order of the ld. CIT(Appeals) dated 19.12.2013 for assessment year 2008-09. The assessee argued before ld. CIT(Appeals) that depreciation is allowable under section 32(2) of the Act irrespective of the fact that business is closed and that the provisions of Section 32(2) of the Act would apply. The ld. CIT(Appeals), however, did not agree with the argument of the assessee because computation of income from profit and gains of business and profession are covered from Sections 28 to 43D. Section 28 is charging section and section 29 gives the method of computation. All the Sections 30 to 43D including Section 32 are in a way are applicable to Section 28 of the Income Tax Act. The ld. CIT(Appeals), therefore, noted that since business of the assessee is closed therefore, there cannot be any profit/loss under that head and unabsorbed loss and unabsorbed depreciation cannot be allowed to be set off and carry forward. The unabsorbed depreciation is to be treated at par with the unabsorbed business loss which 3 were disallowed by ld. CIT(Appeals) by order dated 19.12.2013. The ld. CIT(Appeals), therefore, held that Assessing Officer was right in rejecting the carry forward and set off of unabsorbed depreciation of the earlier year. This ground was, accordingly, dismissed.
3. The ld. counsel for the assessee reiterated the submissions made before ld. CIT(Appeals) and submitted that Section 32(2) of the Act relates to carry forward of unabsorbed depreciation and this Section has undergoned various changes. Therefore, the unabsorbed depreciation could be set off from income derived during the year under the head 'income from other sources' despite closure of the business by the assessee. In support of his contention, he has relied upon following decisions :
i) Judgement of Gujrat High Court in the case of Baroda Spinning & Weaving Mills Co. Ltd. Vs CIT 238 ITR 221 (Guj), in which it was held as under :
"Set off of unabsorbed depreciation carried forward from earlier years could be allowed against the income from other sources even if the-assesses-had no income falling under s. 28."
ii) Decision of Hon'ble Punjab & Haryana High Court in the case of CIT Vs G.T.M. Synthetics Ltd. 347 ITR 458, in which it was held as under :
"Unabsorbed depreciation could be set-off from income derived during the year under head 'Income 4 from, other sources' despite closure of business by assessee".
iii) Decision of Hon'ble Delhi High Court in the case of Escorts Electronics Ltd. Vs CIT 258 ITR 23, in which it was held as under :
"Unabsorbed depreciation carried forward from earlier years could be allowed against the income assessed under s. 56 of the Act under the head 'income from other sources'".
4. On the other hand, ld. DR relied upon orders of the authorities below.
5. After considering rival submissions, I am of the view matter requires re-consideration at the level of the Assessing Officer. The points raised by the ld. counsel for the assessee have not been dealt by the authorities below. The decisions now cited are cited for the first time and even amendment in Section 32 have not been brought to the notice of the authorities below. The authorities below have also confirmed the addition and did not allow claim of the assessee of set off of unabsorbed depreciation of earlier years against the current income because of the order of the ld. CIT(Appeals) for assessment year 2008-09 dated 19.12.2013 in which no appeal have been filed by the assessee before the Tribunal. However, it appears that the judgements now relied upon by ld. counsel for the 5 assessee have bearing on the matter in issue and have to be dealt in accordance with amended provisions of law as is contended by ld. counsel for the assessee. Therefore, matter requires re-consideration at the level of the Assessing Officer. I, accordingly, set aside the orders of authorities below and restore this issue to the file of Assessing Officer with direction to re-decide the issue in accordance with law in the light of the judgements referred to above in this order by giving reasonable sufficient opportunity of being heard to the assessee.
6. In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in the Open Court.
Sd/-
(BHAVNESH SAINI) JUDICIAL MEMBER Dated : 2 n d February,2017.
'Poonam' Copy to:
1. The Appellant
2. The Respondent
3. The CIT(A)
4. The CIT,DR Assistant Registrar, I TAT Chandigarh