Mahabaleshwar Gas & Chemicals Pvt. Ltd, New Delhi v. ITO, New Delhi

ITA 544/DEL/2009 | 1996-1997
Pronouncement Date: 31-10-2013 | Result: Allowed

Appeal Details

RSA Number 54420114 RSA 2009
Assessee PAN AAACM6880B
Bench Delhi
Appeal Number ITA 544/DEL/2009
Duration Of Justice 4 year(s) 8 month(s) 16 day(s)
Appellant Mahabaleshwar Gas & Chemicals Pvt. Ltd, New Delhi
Respondent ITO, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 31-10-2013
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted E
Tribunal Order Date 31-10-2013
Date Of Final Hearing 22-10-2013
Next Hearing Date 22-10-2013
Assessment Year 1996-1997
Appeal Filed On 13-02-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E: NEW DELHI) BEFORE SHRI R.P. TOLANI JUDICIAL MEMBER AND SHRI B.C. MEENA ACCOUNTANT MEMBER ITA NO.544/DEL/ 2009 (ASSESSMENT YEAR: 1996-97) M/S. MAHABALESHWAR GAS & CHEMICALS PVT.LTD. VS. IT O WARD 6 (1) 18 COMMUNITY CENTRE NEW FRIENDS COLONY NEW DEL HI. NEW DELHI. (PAN : AAACM6880B) (APPELLANT) (RESPONDENT) ASSESSEE BY : S/SHRI R.S. AHUJA & G.S. ALAG FCA RESPONDENT BY : MRS. REN UKA JAIN GUPTA SENIOR DR O R D E R PER B.C. MEENA ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE ASSESSEE EMANATES FROM TH E ORDER OF THE CIT (APPEALS)-V NEW DELHI DATED 16.12.2008. 2. THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGE D IN THE BUSINESS OF MANUFACTURING OF GASES. THE RETURN FOR THE YEAR WAS FILED DECLARING A LOSS OF RS.3 95 306/- AND UNABSORBED DEPRECIATION O F RS.14 73 434/-. THE ASSESSMENT WAS FINALIZED U/S 143(3) OF THE ACT ON 2 6.03.1999. A DISALLOWANCE OF RS.8 95 261/- WAS MADE FROM THE LEA SE RENT PAID AND RS.5 72 890/- WAS DISALLOWED FROM THE EXPENSES FOR CLAIM OF TESTING PAINTING AND FITTING. THE ASSESSEE WENT IN APPEAL A ND THE CIT (A) ITA NO.544/DEL/2009 2 DISMISSED THE APPEAL ON 21.03.2000. THE ASSESSEE PR EFERRED APPEAL BEFORE ITAT AND ITAT VIDE ITS ORDER DATED 06.09.2005 SET A SIDE THE ORDER OF THE ASSESSING OFFICER AS WELL AS THE CIT (A) AND RESTOR ED THE MATTER BACK TO ASSESSING OFFICER TO EXAMINE SOME OF THE EVIDENCES PRODUCED BY THE ASSESSEE. THE RELEVANT PARA OF THE ITAT FOR RESTOR ING THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR MAKING A DECISION AFRE SH IS REPRODUCED AS UNDER :- 4. THE ASSESSEE IS IN FURTHER APPEAL TO CONTEND MA INLY THAT IT HAD FURNISHED THE RELEVANT DETAILS BEFORE T HE ASSESSING OFFICER IN CONNECTION WITH THE EXPENSES DISALLOWED WHICH WERE NOT CONSIDERED BY THE CIT (A) BEFORE HE HAD PA SSED EX- PARTE ORDER. IN SUPPORT OF THE CONTENTION OUR ATTE NTION WAS DRAWN TO THE PAPER BOOK FILED BEFORE US WHICH CONT AINED THE COPY OF THE LEASE AGREEMENT RECONCILIATION OF THE LEASE RENT PAID COPY OF THE BILLS AND DEBIT NOTES ETC. THESE PAPERS HAVE BEEN CERTIFIED BY THE ASSESSEE TO HAVE BEEN FILED BEFORE THE ASSESSING OFFICER. WE HAVE NO REASON TO DOUBT THE CORRECTNESS OF THE CERTIFICATE. FURTHER CONSID ERING THE FACT THAT THE CIT (A) HAS PASSED THE ORDER EX-PARTE WE ARE OF THE VIEW THAT THE MATTER SHOULD RECEIVE A FRESH CON SIDERATION BEFORE THE ASSESSING OFFICER. WE THEREFORE SET AS IDE THE ORDERS OF THE DEPARTMENTAL AUTHORITIES AND RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER WHO SHALL EXAM INE THE EVIDENCE ADDUCED BY THE ASSESSEE AND TAKE A DECISIO N AFRESH IN ACCORDANCE WITH LAW AFTER GIVEN ADEQUATE OPPORT UNITY OF BEING HEARD TO THE ASSESSEE. WE DIRECT ACCORDINGLY AND ALLOW THE APPEAL FOR STATISTICAL PURPOSES. THE ASSESSING OFFICER AGAIN MADE THE DISALLOWANCE O F RS.6 99 472/- (RS.4 82 311/- + RS.2 17 161/-) FROM THE LEASE REN T PAID AND RS.5 22 890/- FROM THE EXPENSES CLAIMED UNDER THE H EAD PAINTING TESTING AND FITTING CHARGES. THE CIT (A) HAS CONFIRMED THIS ADDITIONS AND NOW ITA NO.544/DEL/2009 3 THE ASSESSEE IS IN APPEAL BEFORE US BY TAKING THE F OLLOWING GROUNDS OF APPEAL :- 1. THAT IN THE CIRCUMSTANCES AND FACTS OF THE CASE LEARNED ASSESSING OFFICER/CIT (A) HAS ERRED IN DISA LLOWING AN EXPENSE OF RS.2 17 161 AS LEASE RENT OF CYLINDER FOR THE PERIOD 03.08.1995 TO 04.09.1995. 2. THAT IN THE CIRCUMSTANCES AND FACTS OF THE CASE LEARNED ASSESSING OFFICER/CIT (A) HAS ERRED IN DISA LLOWING AN EXPENSE OF RS.4 82 311 AS LEASE RENT OF HYDROGEN GAS COMPRESSORS. 3. THAT IN THE CIRCUMSTANCES AND FACTS OF THE CASE LEARNED ASSESSING OFFICER/CIT(A) HAS ERRED IN DISAL LOWING AN EXPENSE OF RS.5 22 890 INCURRED BY THE ASSESSEE ON ACCOUNT OF TESTING PAINTING AND FITTING OF THE CYL INDERS. 4. THAT IN THE CIRCUMSTANCES AND FACTS OF THE CASE LEARNED ASSESSING OFFICER/CIT (A) HAS ERRED IN DISA LLOWANCE OF UNABSORBED DEPRECIATION TO BE CARRIED FORWARD AS THE RETURN OF INCOME WAS FILED AFTER THE DUE DATE BY TH E ASSESSEE. 5. THAT THE APPELLANT SEEKS PERMISSION TO ADD DELE TE OR MODIFY ALL/ANY GROUND(S) OF APPEAL AT THE TIME OF H EARING. 3. IN THE GROUND NO.1 THE ISSUE TAKEN IS SUSTAININ G THE DISALLOWANCE OF RS.2 17 161/- OUT OF LEASE RENT PAID FOR CYLINDERS FOR THE PERIOD 03.08.1995 TO 04.09.1995. THIS ADDITION HAS BEEN SU STAINED BY THE CIT (A) BY HOLDING THAT THE LEASE AGREEMENT SUBMITTED W AS COMMENCING FROM 04.09.1995 AND THESE LEASE RENTS WERE PERTAINING TO THE PERIOD WHEN THERE WAS NO LEASE AGREEMENT. THEREFORE THESE ARE NOT AL LOWABLE EXPENSES. IT WAS ALSO NOTED THAT ASSESSEE IS NOT IN A POSITION T O ADDUCE ANY OTHER ITA NO.544/DEL/2009 4 EVIDENCE IN SUPPORT OF THIS CLAIM EXCEPT STATING TH AT SOME SALE OF GAS WAS SHOWN FOR THIS PERIOD AND CIT (A) HAS HELD THAT ASS ESSEE HAS CHANGED THE STAND AND CONFIRMED THE ADDITION. 4. WHILE PLEADING ON BEHALF OF THE ASSESSEE LD. AR SUBMITTED THAT ASSESSEE IS ENGAGED IN PRODUCING OF THE GASES ALTHO UGH THE LEASE DEED IN RESPECT OF 1500 CYLINDERS WAS DATED 04.09.1995. HOW EVER THE ASSESSEE HAS CARRIED OUT THE PRODUCTION OF THE GASES PRIOR T O THAT AND WHICH HAS BEEN SOLD OUT PRIOR TO THAT ALSO. IN ABSENCE OF CYL INDERS THE ASSESSEE COULD NOT HAVE CARRIED OUT ITS BUSINESS. THEREFORE THIS EXPENDITURE INCURRED FOR THE GENUINE NEED OF THE ASSESSEE CONCE RN AND THE EXPENDITURE INCURRED FOR PAYMENT OF THE LEASE RENT FOR CYLINDER S FOR THE PERIOD 03.08.1995 TO 04.09.1995 OF RS.2 17 161/- IS ALLOWA BLE EXPENDITURE. THE ASSESSEE HAS SUBMITTED THE CONFIRMATION FROM THE PA RTIES TO WHOM THIS AMOUNT WAS PAID BY CHEQUES ONLY THEREFORE THE GEN UINENESS OF THE EXPENDITURE IS ESTABLISHED. HE PLEADED TO DELETE TH E DISALLOWANCE. 5. ON THE OTHER HAND LD. DR RELIED ON THE ORDERS O F THE AUTHORITIES BELOW. 6. WE HAVE HEARD BOTH THE SIDE SON THIS ISSUE. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF GASES. THE ASSESSEE HAS TAKEN TH E CYLINDERS ON LEASE W.E.F. 04.09.1995 FOR WHICH AN AGREEMENT HAS BEEN S UBMITTED WHICH IS PLACED AT PAGES 39 TO 54 OF THE PAPER BOOK. THE LEA SE RENT DEBITED W.E.F. 04.09.1995 HAS BEEN ALLOWED BY THE ASSESSING OFFICE R TAKING IT A GENUINE ITA NO.544/DEL/2009 5 EXPENDITURE WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. AS PER THIS AGREEMENT THE ASSESSEE HAS T AKEN 1500 EMPTY HIGH PRESSURE SEAMLESS GAS CYLINDERS OF 46.7 LTRS. OF WA TER CAPACITY @ RS.3 500/- PER CYLINDER. THE ASSESSING OFFICER HAS ALLOWED THIS EXPENDITURE. THE ONLY DISPUTE WAS FOR THE LEASE REN T PAID FOR THE PERIOD 03.08.1995 TO 04.09.1995 WHICH WAS PRIOR TO THIS AG REEMENT. THE ASSESSEE HAS PAID THIS AMOUNT BY CHEQUE FROM THE SA ME CONCERN FROM WHOM THESE CYLINDERS WERE TAKEN ON LEASE VIDE AGREE MENT DATED 04.09.1995. THE CONFIRMATION HAS BEEN SUBMITTED FRO M THE PARTY. THE ASSESSEE STATED THAT PRODUCTION HAS BEEN MADE DURIN G THIS PERIOD THEREFORE WE FIND THAT THIS EXPENDITURE INCURRED I N ONE MONTH JUST PRIOR TO THE WRITTEN AGREEMENT. NECESSARY CONFIRMATION FROM THE PARTY TO WHOM LEASE RENT PAID WAS FILED. PAYMENT WAS MADE BY CHEQ UES ONLY. IN VIEW OF THESE FACTS THIS EXPENSES CANNOT BE TREATED BOGUS OR FOR ANYTHING OTHER THAN BUSINESS REQUIREMENT OF THE ASSESSEE. THEREFOR E WE ALLOW THIS GROUND OF ASSESSEES APPEAL. 7. IN THE GROUND NO.2 THE ISSUE INVOLVED IS CONFIR MING THE DISALLOWANCE OF RS.4 82 311/- WHICH WAS PAID AS LEA SE RENT ON THE LEASING ASSETS OF HYDROGEN GAS COMPRESSORS. 8. LD. AR SUBMITTED THAT ASSESSEE IS DOING THE PROD UCTION OF GASES AND IN THE ABSENCE OF HYDROGEN GAS COMPRESSORS NO PRODUCTION CAN BE CARRIED OUT. THIS IS THE NECESSARY COMPONENT FOR TH E PRODUCTION. THIS ITA NO.544/DEL/2009 6 AMOUNT WAS ALSO PAID TO M/S. MODI ALKALIES AND CHEM ICALS LTD. THE REVENUES CLAIM THAT NO WRITTEN AGREEMENT WAS MADE IN THIS REGARD WILL NOT EFFECT THE GENUINE REQUIREMENT OF THE ASSESSEE. THE RECEIPT WITH REGARD TO THE PAYMENT WAS SUBMITTED WHICH IS PLACED AT PAGE 65 OF THE PAPER BOOK WHEREIN RS.4 82 311/- DEBITED TO THE ASS ESSEE ACCOUNT BEING LEASE RENT FOR THE COMPRESSORS. THERE WAS NO AGREE MENT WITH REGARD TO THIS LEASING OF HYDROGEN2 COMPRESSORS. HOWEVER TH E ASSESSEE HAD SUBMITTED A COPY OF DEBIT/CREDIT ADVICE FROM M/S. M ODI ALKALIES AND CHEMICALS LTD. TO WHOM IT WAS PAID. THE REVENUE HAS FAILED TO DISPROVE THE GENUINENESS OF THESE ADVICES. HE PLEADED THAT T HIS EXPENDITURE WAS INCURRED FOR GENUINE NEED OF THE ASSESSEE AND WITHO UT THIS EXPENDITURE THE ASSESSEE COULD NOT HAVE DONE PRODUCTION OF GASE S AS THIS WAS THE NECESSARY COMPONENT IN THE PROCESS OF THE PRODUCTIO N OF THE GASES. LD. AR PLEADED TO SET ASIDE THE ORDERS OF THE AUTHORITI ES BELOW. 9. ON THE OTHER HAND LD. DR RELIED ON THE ORDERS O F THE AUTHORITIES BELOW. 10. WE HAVE HEARD BOTH THE SIDES ON THIS ISSUE. THE ASSESSEE HAS SUBMITTED A DEBIT/CREDIT ADVICE FROM M/S. MODI ALKA LIES AND CHEMICALS LTD. WHEREIN IT HAS BEEN NARRATED THAT THIS AMOUNT WAS PAID TO M/S. CEAT FINANCIAL SERVICES LTD. AS LEASE RENT FOR HYDROGEN2 COMPRESSORS. THE REVENUE HAS FAILED TO GIVE ANY ADVERSE FINDING ON T HIS DEBIT NOTE WHICH PROVES THAT THE PAYMENT HAS BEEN MADE. FURTHER REVE NUE HAS ALSO FAILED TO ITA NO.544/DEL/2009 7 ESTABLISH THAT HYDROGEN2 COMPRESSOR WAS NOT USED FO R THE PURPOSE OF BUSINESS OF THE ASSESSEE. THEREFORE IN OUR CONSIDE RED VIEW FOR NOT MAKING A WRITTEN AGREEMENT FOR LEASING ANY OF SUCH MACHINERY SHALL NOT ITSELF BE SUFFICIENT TO DISALLOW THE CLAIM WHEN THE ASSESSEE HAS SUBMITTED THE EVIDENCE REGARDING THE PAYMENT AND CONFIRMATION OF THE LEASE RENT FROM THE LESSOR. WE ALLOW THIS GROUND OF ASSESSEES APPEAL. 11. IN THE GROUND NO.3 THE ISSUE INVOLVED IS SUSTA INING THE DISALLOWANCE OF RS.5 22 890/- INCURRED BY THE ASSES SEE ON ACCOUNT OF TESTING PAINTING AND FITTING OF THE CYLINDERS. 12. WHILE PLEADING ON BEHALF OF THE ASSESSEE THE LD . AR SUBMITTED THAT THE REVENUE HAS DISALLOWED THIS CLAIM ONLY BY STATI NG THAT THE CYLINDERS WERE NEW THEREFORE THERE WAS NO REQUIREMENT FOR SU CH TESTING PAINTING AND FITTING. HOWEVER HE SUBMITTED THAT ASSESSEE HA S SUBMITTED THE BILLS AND DEBIT NOTES OF THIS WORK AND THE CONFIRMATION O F OTHER PARTIES WERE ALSO SUBMITTED. SINCE THE ASSESSEE MANUFACTURES THE DANGEROUS GASES THEREFORE THE TESTING PAINTING AND FITTING OF VAL VES TO CYLINDERS NEEDS CONSTANT MAINTENANCE. THEREFORE THIS EXPENDITURE W AS THE BASIC REQUIREMENT OF ASSESSEES BUSINESS AND IT HAS BEEN INCURRED SOLELY AND WHOLLY FOR THE PURPOSE OF THE ASSESSEES BUSINESS A ND THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN SUSTAINING THE ADDITION . HE PLEADED TO ALLOW THE RELIEF TO ASSESSEE. ITA NO.544/DEL/2009 8 13. ON THE OTHER HAND LD. DR RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 14. WE HAVE HEARD BOTH THE SIDES ON THIS ISSUE. IT IS A FACT THAT ASSESSEE PRODUCES GASES AND THESE GASES MAY TURN DANGEROUS F OR ANY LEAKAGE IN THE CYLINDERS. THEREFORE WE FEEL THAT THE EXPENDITURE INCURRED FOR TESTING PAINTING AND VALVE FITTING WAS FOR THE GENUINE REQU IREMENT OF ASSESSEES BUSINESS. THEREFORE WE DIRECT TO ALLOW THIS EXPEND ITURE. 15. IN THE GROUND NO.4 THE ISSUE INVOLVED IS NOT A LLOWING THE CARRY FORWARD OF UNABSORBED DEPRECIATION. 16. WE HAVE HEARD BOTH THE SIDES ON THIS ISSUE. THE DEPRECIATION WAS FOR THE CURRENT YEAR. THE REVENUES CLAIM IS THAT T HE RETURN WAS BELATED AND IT CANNOT BE ALLOWED IS UNJUSTIFIED. LD. ARS RELIANCE ON THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. GOVIND NAGAR SUGAR LIMITED REPORTED IN 334 ITR 13 (DEL.) ALSO SUPPORTS THE CLAIM OF THE ASSESSEE WHEREIN THE HON'BLE HIGH COURT HELD AS UND ER :- FROM THE PROVISION OF SECTION 139(1) IT IS EVIDEN T THAT THE RETURN WAS TO BE FILED WITHIN THE DUE TIME RELEVANT TO THE PREVIOUS YEAR DURING WHICH THE LOSS WAS SUSTAINED. SUB- SECTION (3) OF SECTION 139 PROVIDES FOR CARRY FORWA RD OF LOSS OR ANY PART THEREOF SUSTAINED BY ANY PERSON IN THE PREVIOUS YEAR UNDER ANY OF PROVISIONS OF SECTION 72(1) 73(2 ) 74(1) 74(3) OR 74A(3) . SECTION 80 CONTEMPLATES DETERMINATION OF LOSS IN PU RSUANCE OF RETURN FILED UNDER SECTION 139(3) WHICH IS TO BE CARRIED FORWARD UNDER SECTIONS 72 73 74 74A. 1N OTHER WO RDS ONLY SUCH LOSSES WHICH HAVE BEEN DETERMINED IN PURSUANCE OF ITA NO.544/DEL/2009 9 RETURN FILED IN ACCORDANCE WITH PROVISIONS OF SECTI ON 139(1) & (3) CAN BE CARRIED FORWARD. THE QUESTION THAT FOLLOWS FOR CONSIDERATION IS AS T O WHETHER THE LOSS REFERRED UNDER SECTION 80 ALSO INCLUDES UN ABSORBED DEPRECIATION AND INVESTMENT ALLOWANCES. ON EXAMININ G THE PROVISIONS OF SECTIONS 72 73 & 74 AS REFERRED IN S ECTION 80 PRIMA FACIE THESE SECTIONS DO NOT COVER OR DEAL WI TH PROCEDURE OF SETTING-OFF OF UNABSORBED DEPRECIATION AND INVESTMENT ALLOWANCE. SECTION 32 DEALS WITH DIFFERENT TYPES OF DEPRECIATI ON. FROM A PLAIN READING OF PROVISIONS OF SECTIONS 72 AND 32 I T IS MANIFESTLY CLEAR THAT SECTION 72 DEALS WITH CARRY F ORWARD OF UNABSORBED BUSINESS LOSSES OTHER THAN LOSSES ON ACC OUNT OF DEPRECIATION AND THAT IS SO BECAUSE THE CARRY FORWA RD DEPRECIATION HAS BEEN PROVIDED UNDER SECTION 32 (2) . THE MANNER OF CARRY FORWARD IN THE TWO PROVISIONS IS EN TIRELY DIFFERENT. IN THIS MANNER OF INTERPRETATION OF THE PROVISIONS OF LOSSES AS NOTED ABOVE IT MAY BE SEEN THAT SECTI ONS 80 AND 139(3) APPLY TO BUSINESS LOSSES AND NOT TO UNABSORB ED DEPRECIATION WHICH IS EXCLUSIVELY GOVERNED BY THE PROVISIONS OF SECTION 32(2). THAT BEING SO THE PER IOD OF LIMITATION FOR FILING LOSS RETURN AS PROVIDED UNDER SECTION 139(1) SHALL NOT BE APPLICABLE FOR CARRYING FORWARD OF UNABSORBED DEPRECIATION AND INVESTMENT ALLOWANCES. SECTION 32 DEALS WITH THE DIFFERENT TYPES OF DEPREC IATION WHEREAS SECTION 80 DEALS WITH CARRY FORWARD OF UNAB SORBED LOSSES OTHER THAN LOSSES ON ACCOUNT OF DEPRECIATION . IF THAT WAS NOT SO THERE WAS NO NEED FOR LEGISLATURE TO PR OVIDE SPECIFIC PROVISION FOR CARRYING FORWARD OF DEPRECIA TION UNDER SECTION 32. FROM THE ABOVE IT CAME OUT THAT THE EFFECT OF SECTI ON 32 (2) IS THAT UNABSORBED DEPRECIATION OF A YEAR BECOMES A PART OF DEPRECIATION OF SUBSEQUENT YEAR BY LEGAL FICTION AN D WHEN IT BECOMES PART OF CURRENT YEAR DEPRECIATION IT IS LI ABLE TO BE SET-OFF AGAINST ANY OTHER INCOME IRRESPECTIVE OF TH E FACT THAT THE EARLIER YEARS RETURN WAS FILED IN TIME OR NOT. ACCORDINGLY THE APPEAL WAS TO BE DISMISSED. ITA NO.544/DEL/2009 10 THE DECISION OF ITAT CHANDIGARH BENCH IN THE CASE OF BHAI INFOTECH LTD. VS. ITO REPORTED IN [2012] 23 TAXMANN.COM 49 ( CHD) ALSO SUPPORTS THE CLAIM OF THE ASSESSEE. THE ITAT CHANDIGARH BEN CH HAS HELD AS UNDER:- IN VIEW OF THE PROVISIONS OF SECTION 32(2) THE DEP RECIATION ALLOWANCE OR PART THEREOF WHICH COULD N BE GIVEN E FFECT TO DURING THE PREVIOUS YEAR DUE TO THERE BEING NO PRO FITS OR GAINS CHARGEABLE FOR THAT PREVIOUS YEAR IS TO BE A DDED TO THE AMOUNT OF DEPRECIATION ALLOWANCE IN THE FOLLOWING Y EAR AND IS DEEMED TO BE PART OF THAT ALLOWANCE. IN CASE THE RE BEING NO ALLOWANCE IN THE SUCCEEDING YEAR THEN SUCH ALLO WANCE OF DEPRECIATION WOULD BE DEEMED TO BE ALLOWANCE OF THA T PREVIOUS YEAR OR IN THE SUCCEEDING PREVIOUS YEARS. IN VIEW THEREOF DEPRECIATION ALLOWABLE IN THE HANDS OF THE ASSESSEE IS ALLOWANCE UNDER THE STATUTE AND CANNOT BE EQUATE D WITH THE LOSS OF THE BUSINESS DETERMINED UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION'. THE RETURN OF INCOME CLAIMING CARRYING FORWARD OF BUSINESS LOSS ARE COMP ULSORILY TO BE FILED WITHIN THE TIME ALLOWED UNDER SUB-SECTI ON (1) TO SECTION 139 IN ORDER TO CLAIM THE CARRY FORWARD OF SUCH LOSS. THE LOSSES REFERRED TO IN SECTION 139(3) ARE THE LO SSES WHICH WOULD BE CARRIED FORWARD UNDER SECTIONS(S) 72(L)/73(2)/74(L)/74(3)/74A(3). HOWEVER IN THE INS TANT CASE THE ASSESSEE HAD CLAIMED CARRY FORWARD OF DEPRECIAT ION ALLOWANCE WHICH COULD NOT BE ADJUSTED AGAINST THE PROFITS OF THE CAPTIONED PREVIOUS YEAR. 1N VIEW OF THE PROVISI ONS OF SECTION 32(2) WHERE DEPRECIATION ALLOWANCE IS NOT A DJUSTED AGAINST PROFITS OF THE PREVIOUS YEAR IT FORMS PART OF THE ALLOWANCE FOR DEPRECIATION FOR THE SUCCEEDING PREVI OUS YEAR AND AS PER PROVISIONS OF SECTION 72(2) THE EFFECT OF THE ALLOWANCE WHICH IS CARRIED FORWARD TO THE SUCCEEDIN G YEAR IS TO BE ALLOWED FIRST AS AGAINST THE CURRENT ALLOWANC E OF DEPRECIATION OF THE PREVIOUS YEAR. ACCORDINGLY THE ALLOWANCE OF DEPRECIATION WHICH HAS NOT BEEN SET O FF AGAINST THE PROFITS AND GAINS OF THE PREVIOUS YEAR IN QUEST ION CANNOT BE EQUATED WITH THE BUSINESS LOSS DETERMINED IN THE HANDS OF THE ASSESSEE. THE PROVISIONS OF SECTION 139(3) ARE TO BE APPLIED IN CASES WHERE ANY PERSON HAD SUFFERED LOS SES IN ANY PREVIOUS YEAR UNDER THE HEAD 'PROFITS AND GAINS OF THE ITA NO.544/DEL/2009 11 BUSINESS' OR UNDER THE HEAD 'CAPITAL GAINS'. SUCH B USINESS LOSS IS AT VARIANCE WITH ALLOWANCE OF DEPRECIATION NOT A DJUSTED AGAINST THE PROFITS OF BUSINESS. UNDER THE STATUTE THE ALLOWANCE OF DEPRECIATION TO BE CARRIED FORWARD AND SET OFF AS PART OF THE DEPRECIATION OF THE SUCCEEDING YEAR IS GOVERNED BY SEPARATE PROVISIONS OF ACT WHICH ARE AT VARIANCE WITH THE PROVISIONS OF SET OFF AND CARRY F ORWARD OF BUSINESS LOSS UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS'. FN VIEW THEREOF PROVISIONS OF SECTION 139(3) WHIC H RELATE TO THE LOSSES UNDER THE HEAD 'PROFITS AND GAINS OF BUS INESS' OR 'CAPITAL GAINS' ARE NOT TO BE APPLIED IN CASES WHE RE THE ASSESSEE HAS ONLY DETERMINED THE DEPRECIATION ALLOW ANCE NOT ADJUSTED AGAINST THE PROFITS OF BUSINESS FOR THE CA PTIONED PREVIOUS YEAR. IN THE INSTANT CASE THE ASSESSEE HAD CLAIMED SET O FF AND CARRY FORWARD OF UNABSORBED DEPRECIATION TO BE MADE AGAIN ST THE PROFITS AND GAINS OF THE BUSINESS OF THE SUCCEEDING YEAR. THE SAID CLAIM OF THE ASSESSEE WAS REJECTED BY THE ASSE SSING OFFICER AS THE RETURN OF INCOME IN THE ASSESSMENT Y EAR WAS FILED LATE BY THE ASSESSEE AND PROVISIONS OF SECTIO N 139(3) WERE INVOKED AND APPLIED. THERE IS NO MERIT IN THE STAND OF THE AUTHORITIES BELOW IN THIS REGARD. THE BUSINESS LOSS DETERMINED IN THE HANDS OF THE ASSESSEE UNDER THE H EAD 'PROFITS AND GAINS' OF BUSINESS STANDS ON A DIFFERE NT FOOTING THAN UNABSORBED DEPRECIATION DETERMINED IN THE HAND S OF THE ASSESSEE FOR THE PREVIOUS YEAR UNDER CONSIDERATION. THE ASSESSEE HAVING CLAIMED THE SET OFF AND CARRY FORWA RD OF ALLOWANCE OF DEPRECIATION UNADJUSTED AGAINST THE PR OFITS OF THE CURRENT PREVIOUS YEAR CANNOT BE DENIED SUCH SET OFF OR CARRY FORWARD OF THE UNABSORBED DEPRECIATION ALLOWA NCE AS THE PROVISIONS OF SECTION 139(3) ARE NOT APPLICABLE . THE ASSESSEE HAVING FILED RETURN OF INCOME THOUGH BELA TEDLY BUT WITHIN THE EXTENDED PERIOD ALLOWED UNDER THE STATUT E IS ENTITLED TO THE BENEFIT OF CARRY FORWARD AND SET OF F OF UNABSORBED DEPRECIATION ALLOWANCE AS PART OF DEPREC IATION OF THE SUCCEEDING YEAR IN VIEW OF THE PROVISIONS OF SE CTION 32(2) AND SECTION 72(2). THE REVENUE HAD PLACED REL IANCE ON THE PROVISIONS OF SECTIONS 80 AND 139(3) FOR NEGATI NG THE CLAIM OF THE ASSESSEE OF CARRY FORWARD OF UNABSORBE D DEPRECIATION. THERE IS NO MERIT IN THE OBJECTIONS R AISED BY THE REVENUE AS THE PROVISIONS OF SECTIONS 80 AND 13 9(3) ARE APPLICABLE TO BUSINESS LOSSES AND NOT TO UNABSORBED ITA NO.544/DEL/2009 12 DEPRECIATION GOVERNED BY SECTION 32(2). THE LIMITAT ION FOR FILING THE RETURN CLAIMING LOSS IS NOT APPLICABLE F OR CARRY FORWARD OF UNABSORBED DEPRECIATION. ACCORDINGLY THE CLAIM OF THE ASSESSEE OF CARRY FOR WARD OF UNABSORBED DEPRECIATION IS TO BE ALLOWED. CONSIDERING THESE FACTS WE DIRECT TO ALLOW THE CAR RY FORWARD OF UNABSORBED DEPRECIATION. 17. GROUND NO.5 IS GENERAL IN NATURE AND DOES NOT R EQUIRE ANY ADJUDICATION HENCE DISMISSED. 18. IN THE RESULT THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 31 ST DAY OF OCTOBER 2013. SD/- SD/- (R.P. TOLANI) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 31 ST DAY OF OCTOBER 2013 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-V NEW DELHI. 5.CIT(ITAT) NEW DELHI. AR/ITAT NEW DELHI