Carry forward and set-off of Unabsorbed depreciation & Effect of Circular No. 14 of 2001 with amendment by the Finance Act, 2001

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Carry forward and set-off of Unabsorbed depreciation & Effect of Circular No. 14 of 2001 with amendment by the Finance Act, 2001

short overview :  Any unabsorbed depreciation available to an assessee on 1-4- 2002 will be dealt with in accordance with the provisions of section 32(2) as amended by Finance Act, 2001. As the restriction of 8 years for carry forward and set off of unabsorbed depreciation had been dispensed with by Circular No. 14 of 2001, the unabsorbed depreciation available to an assessee on 1-4- 2002 were available for carry forward and set-off against the profits and gains of subsequent years, without any limit, whatsoever.

Issue arose for consideration was whether the Tribunal had erred in allowing carry forward of unabsorbed depreciation following Circular No. 14 of 2001 without appreciating that the amendment to section 32(2) by the Finance Act, 2001 was prospective.

it is held that Any unabsorbed depreciation available to an assessee on 1-4- 2002 will be dealt with in accordance with the provisions of section 32(2) as amended by Finance Act, 2001. As the restriction of 8 years for carry forward and set-off of unabsorbed depreciation had been dispensed with by Circular No. 14 of 2001, the unabsorbed depreciation from assessment year 1997-98 up to the assessment year 2001-02 got carried forward to the assessment year 2002-03 and became part thereof, it came to be governed by 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.

Decision: In assessee’s favour by way of remand.

Followed: General Motors India Private Limited v. Dy. CIT [(2013) 354 ITR 244 (Guj): 2013 TaxPub(DT) 0624 (Guj-HC)]

IN THE GUJARAT HIGH COURT

J.B. PARDIWALA & A.C. RAO, JJ.

Pr. CIT v. Ankur Protein Industries Ltd.

R/Tax Appeal No. 572 of 2019

26 August, 2019

Appellant(s) by: Mauna M. Bhatt (174)

Opponent(s) by: Manish J. Shah (1320)

ORAL ORDER

J.B. Pardiwala, J.

1. This tax appeal under section 260A of the Income Tax Act, 1961 [for short ‘The Act, 1961’] is at the instance of the revenue and is directed against the order passed by the Income Tax Appellate Tribunal, Ahmedabad ‘C’ Bench, Ahmedabad, dated 13-12-2018 in the IT(SS)A No. 112/AHD/2016 for the assessment year 2008-09.

2. The revenue has proposed the following two questions of law for the consideration of this Court:–

(A) Whether the Appellate Tribunal has erred in law and on facts in allowing carry forward of unabsorbed depreciation following Circular No. 14 of 2001 without appreciating that the amendment to the Finance Act was prospective?

(B) Whether the Appellate Tribunal has erred in law and on facts in holding that the assessee is entitled to claim of deferred revenue expenditure of Rs. 18,82,326 by not appreciating that the assessee would get double benefit by way of one-tenth of expenditure once the fresh claims in assessment year 2006-07 and 2007-08 are allowed?

3. So far as the first question is concerned, the same is squarely covered by the decision of this Court in the case of General Motors India Private Limited v. Deputy Commissioner of Income Tax reported in (2013) 354 ITR 244 (Guj) : 2013 TaxPub(DT) 0624 (Guj-HC). So far as the second question as proposed by the revenue is concerned, Mr. Bhatt, the learned senior counsel appearing for the appellant invited our attention to the order passed by the Commissioner (Appeals), Ahmedabad, wherein, in para7 of the order, the following has been observed.

“7. Consequently, the appellant’s ground for allowing 1/10th of amortized expenses for assessment year 2008-09 to 1213 would stand dismissed.”

4. In view of what has been observed by the Commissioner (Appeals), Mr. Bhatt pointed out that the second question as proposed would not survive.

5. In such circumstances, this appeal fails and is hereby dismissed.

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