Income Tax Appellate Tribunal - Indore
Perfect Pharmacists (P) Ltd. vs Joint Cit on 16 April, 2004
Equivalent citations: [2004]140TAXMAN49(INDORE)
ORDER
T.R. Sood, A.M. In this appeal, assessee has raised various grounds but at the time of hearing learned Authorised Representative submitted that there was only one dispute i.e., whether brought forward, depreciation, loss could be set off against capital gain or not. Assessee had claimed set off of business loss which was because of carry forward of depreciation against short-term capital gain which was not allowed and hence the appeal before us.
2. Learned Authorised Representative submitted that carry forward depreciation was part of current depreciation so the same should have been allowed against the short-term capital gain. He further submitted that amendment in provision regarding set off of losses under various heads not available against capital gain was prospective in nature. In this regard, he referred to page 245 of Taxman Direct Taxes Law and Practice and quoted from the speech of Finance Minister where on the floor of House Honble Finance Minister has stated as under :
"During the course of discussion on General Budget a number of Honble Ministers have expressed their apprehension that the proposed amendment limiting carry forward of un-absorbed depreciation to 8 years will adversely affect the growth of industry. Similar apprehensions have been raised in a large number of post-budget memoranda. I would like to allay these fears. The proposed amendment is only prospective inasmuch as the cumulative unabsorbed depreciation brought forward as on 1-4-1997 can still be set off against taxable business profits or income under any other head for assessment year 1997-98 and seven subsequent assessment years. Therefore, the proposed change will have effect only after 8 years and there is no cause for immediate concern about its likely impact on industry. Eight years is period long enough for industry to adjust itself to the new dispensation and provide for depreciation accordingly."
He also relied on Jt. CIT v. India Steamship Co. Ltd. (2003) 129 Taxman 158 (Cal.-Trib).
3. On the other hand, learned Departmental Representative supported the orders of lower authorities.
4. We have considered the rival submissions carefully. We find that Calcutta Bench of the Tribunal in India Steamship Co. Ltd.s case (supra) has held that in view of the clarification in Finance Ministers speech and CBDT Circular No. 672 dated 18-2-1998, the entire unabsorbed cumulative depreciation upto assessment year 1996-97 get merged in the pool of current depreciation for assessment year 1997-98 and such depreciation was available for the set off. Following the ratio of this decision, we decide the issue in favour of assessee. (sic)
5. In the result, appeal is allowed.