ACIT, Muzaffarnagar v. M/s. Pushkar Steels Pvt. Ltd., Muzaffarnagar

ITA 5473/DEL/2011 | 2009-2010
Pronouncement Date: 29-02-2012 | Result: Allowed

Appeal Details

RSA Number 547320114 RSA 2011
Assessee PAN AABCP3961D
Bench Delhi
Appeal Number ITA 5473/DEL/2011
Duration Of Justice 2 month(s) 22 day(s)
Appellant ACIT, Muzaffarnagar
Respondent M/s. Pushkar Steels Pvt. Ltd., Muzaffarnagar
Appeal Type Income Tax Appeal
Pronouncement Date 29-02-2012
Appeal Filed By Department
Order Result Allowed
Bench Allotted F
Tribunal Order Date 29-02-2012
Date Of Final Hearing 08-02-2012
Next Hearing Date 08-02-2012
Assessment Year 2009-2010
Appeal Filed On 07-12-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F: NEW DELHI BEFORE SHRI U.B.S. BEDI JUDICIAL MEMBER AND SHRI S.V. MAHROTRA ACCOUNTANT MEMBER ITA NO. 5473/DEL/2011 ASSESSMENT YEAR: 2009-2010 ACIT CIRCLE-1 MUZAFFARNAGAR. VS. M/S PUSHKAR STEELS P. LTD. 273/1-NORTH CIVIL LINES MUZAFFARNAGAR. AABCP3961D (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. RENUKA JAIN GUPTA SR. DR RESPONDENT BY : AKARSH GARG ADV. O R D E R PER S.V. MAHROTRA A.M. THIS IS THE APPEAL FILED BY THE REVENUE. IT IS DI RECTED AGAINST THE ORDER OF LD. CIT(A) DATED 18.08.2011 FOR THE A.Y. 2 009-2010. THE ONLY GROUND RAISED BY THE DEPARTMENT READS AS UNDER: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE CIT(A) HAS ERRED IN LAW BY ALLOWING SET OFF OF UNABSORBED DEPRECIATI ON FOR A.Y. 2001-02 OF RS. 19 94 620/- AGAINST THE INCOME FROM OTHER S OURCES IN A.Y. 2009-10 WHICH IS IN CONTRAVENTION OF SECTION 32(2) 72(2) & 73(3) OF THE I.T. ACT 1961 BY IGNORING THE RECENT DECISION OF H ONBLE SPECIAL BENCH OF ITAT MUMBAI E BENCH IN THE CASE OF DCIT VS. TI MES OF GUARANTY LIMITED (2010) 131 TTJ (MUMBAI) (SB) 257 AND WITHOU T APPRECIATING THE FULL FACTS OF THE CASE. 2. BRIEF FACTS APROPOS THIS ISSUE ARE THAT THE ASSE SSEE A PRIVATE LIMITED COMPANY IN THE RELEVANT ASSESSMENT YEAR WAS ENGAGE D IN THE BUSINESS OF MANUFACTURE AND SALE OF M.S. INGOTS. IT HAD FILED ITS RETURN ON 29.09.2009 DECLARING NIL INCOME. IN THIS CASE SURVEY U/S 133 A OF THE ACT WAS CONDUCTED DURING THE F.Y. 2008-09 AND THE ASSESSEE COMPANY HAD ITA NO. 5473/D/2011 2 SURRENDERED AN AMOUNT OF RS. 15 LAKH IN ADDITION TO THE BUSINESS INCOME. THE ASSESSEE HAD SHOWN THE AMOUNT SURRENDERED AT TH E TIME OF SURVEY IN COLUMN 22 OF SCHEDULE BP OF THE RETURN OF INCOME. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD SET OFF THE INCOME OF THE YEAR AT RS. 33 61 821/- (INCLUDING AMOUNT OF RS. 15 LAKH SURREN DERED AT THE TIME OF SURVEY) AGAINST THE BROUGHT FORWARD LOSSES OF THE E ARLIER YEARS. THE AO REQUIRED THE ASSESSEE TO EXPLAIN AS TO WHY THE AMOU NT OF RS. 15 LAKH BE NOT TREATED AS INCOME FROM OTHER SOURCES. THE ASSE SSEE ACCEPTED THE AOS PLEA AND ACCORDINGLY THE SUM OF RS. 15 LAKH WAS ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES. THE AO FURTH ER NOTICED THAT A SUM OF RS. 4 94 620/- BEING INTEREST INCOME HAD ALSO BE EN SET OFF AGAINST THE BROUGHT FORWARD DEPRECIATION LOSSES OF EARLIER YEAR S. THE AO REFERRED TO SECTION 73 OF THE I.T. ACT AND POINTED OUT THAT ONL Y THE INCOME EARNED BY THE ASSESSEE UNDER THE HEAD INCOME FROM BUSINESS O R PROFESSION COULD BE SET OFF AGAINST THE BROUGHT FORWARD DEPRECIATION BUSINESS LOSSES. HE THEREFORE HELD THAT THE AMOUNTS OF RS. 15 LACS AND RS. 4 94 620/- WERE NOT ENTITLED FOR SET OFF AGAINST THE BROUGHT FORWARD BU SINESS DEPRECIATION LOSSES OF EARLIER YEAR. HE ACCORDINGLY COMPLETED THE AS SESSMENT AT RS. 19 94 620/-. LD. CIT(A) ALLOWED THE ASSESSEES APP EAL RELYING ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CI T VS. VIRMANI INDUSTRIES (P) LTD. 216 ITR 607 618 (SC) OBSERVIN G THAT COMBINED READING OF SECTIONS 32(2) 72(2) 73(3) & 71(2A) CLEARLY ES TABLISHES THAT UNABSORBED BROUGHT FORWARD DEPRECIATION CAN BE SET OFF AGAINST THE CURRENT YEARS INCOME EVEN IF IT IS UNDER THE HEAD INCOME FROM OT HER SOURCES. THE MAIN GRIEVANCE OF THE DEPARTMENT IS THAT LD. CIT(A) HAS NOT CONSIDERED THE DECISION OF SPECIAL BENCH IN THE CASE OF DCIT VS. T IMES OF GUARANTY (MUM.) (SB). IN THIS CASE THE TRIBUNAL HAD CONSID ERED THE DECISION IN THE CASE OF VIRMANI INDUSTRIES (SUPRA) AND THE EFFECT O F AMENDMENT TO SECTION 32(2) AND HAS CONCLUDED AS UNDER IN PARA 38 OF ITS ORDER: - ITA NO. 5473/D/2011 3 38. THE LEGAL POSITION OF CURRENT AND BROUGHT FORW ARD UNADJUSTED/UNABSORBED DEPRECIATION ALLOWANCE IN THE THREE PERIODS IS SUMMARIZED AS UNDER:- A. IN THE FIRST PERIOD (I.E. UPTO A.Y. 1996-97) I. CURRENT DEPRECIATION THAT IS THE AMOUNT OF ALL OWANCE FOR THE YEAR U/S 32(1) CAN BE SET OFF AGAINST INCOME UNDER ANY HEAD WITHIN THE SAME YEAR. II. AMOUNT OF SUCH CURRENT DEPRECIATION WHICH CAN NOT BE SO SET OFF WITHIN THE SAME YEAR AS PER I. ABOVE SHALL BE DEEME D AS DEPRECIATION U/S 32(1) THAT IS DEPRECIATION FOR THE CURRENT YEA R IN THE FOLLOWING YEAR(S) TO BE SET OFF AGAINST INCOME UNDER ANY HEAD LIKE CURRENT DEPRECIATION. B. IN THE SECOND PERIOD (I.E. A.Y. 1997-98 TO 2001- 02) I. BROUGHT FORWARD UNADJUSTED DEPRECIATION ALLOWAN CE FOR AND UPTO A.Y.1996-97 (HEREINAFTER CALLED THE `FIRST UNADJUST ED DEPRECIATION ALLOWANCE) WHICH COULD NOT BE SET OFF UPTO A.Y. 1 996-97 SHALL BE CARRIED FORWARD FOR SET OFF AGAINST INCOME UNDER AN Y HEAD FOR A MAXIMUM PERIOD OF EIGHT A.YS. STARTING FROM A.Y. 19 97-98. II. CURRENT DEPRECIATION FOR THE YEAR U/S 32(1) ( FOR EACH YEAR SEPARATELY STARTING FROM A.Y. 1997-98 UPTO 2001-02) CAN BE SET OFF FIRSTLY AGAINST BUSINESS INCOME AND THEN AGAINST IN COME UNDER ANY OTHER HEAD. III. AMOUNT OF CURRENT DEPRECIATION FOR A.YS. 1997 -98 TO 2001-02 WHICH CANNOT BE SO SET OFF AS PER II. ABOVE HEREIN AFTER CALLED THE `SECOND UNABSORBED DEPRECIATION ALLOWANCE SHALL BE CARRIED FORWARD FOR A MAXIMUM PERIOD OF EIGHT ASSESSMENT YE ARS FROM THE A.Y. IMMEDIATELY SUCCEEDING THE A.Y. FOR WHICH IT W AS FIRST COMPUTED TO BE SET OFF ONLY AGAINST THE INCOME UND ER THE HEAD `PROFITS AND GAINS OF BUSINESS OR PROFESSION. C. IN THE THIRD PERIOD ( I.E. A.Y. 2002-03 ONWARDS) I. `FIRST UNADJUSTED DEPRECIATION ALLOWANCE CAN B E SET OFF UPTO A.Y. 2004-05 THAT IS THE REMAINING PERIOD OUT OF MAXIM UM PERIOD OF EIGHT A.Y.S (AS PER BI. ABOVE) AGAINST INCOME UNDER ANY HEAD. II. `SECOND UNABSORBED DEPRECIATION ALLOWANCE CAN BE SET OFF ONLY AGAINST THE INCOME UNDER THE HEAD `PROFITS AND GAIN S OF BUSINESS OR PROFESSION WITHIN A PERIOD OF EIGHT A.YS. SUCCEEDI NG THE A.Y. FOR WHICH IT WAS FIRST COMPUTED. III. CURRENT DEPRECIATION FOR THE YEAR U/S 32(1) FOR EACH YEAR SEPARATELY STARTING FROM A.Y. 2002-03 CAN BE SET O FF AGAINST INCOME UNDER ANY HEAD. AMOUNT OF DEPRECIATION ALLOWANCE NO T SO SET OFF (HEREINAFTER CALLED THE `THIRD UNADJUSTED DEPRECIAT ION ALLOWANCE) SHALL BE CARRIED FORWARD TO THE FOLLOWING YEAR. IV. THE `THIRD UNADJUSTED DEPRECIATION ALLOWANCE SHALL BE DEEMED AS DEPRECIATION U/S 32(1) THAT IS DEPRECIATION FOR THE CURRENT YEAR IN ITA NO. 5473/D/2011 4 THE FOLLOWING YEAR(S) TO BE SET OFF AGAINST INCOME UNDER ANY HEAD LIKE CURRENT DEPRECIATION IN PERPETUITY. 3. THE LD. COUNSEL HAS REFERRED TO THE DECISION IN THE CASE OF M/S PARIJAT PAPER MILLS LIMITED. SINCE THE ISSUE HAS NOW BEEN DECIDED BY THE SPECIAL BENCH THIS ORDER CANNOT BE RELIED UPON. WE FIND F ROM THE ORDERS OF THE AUTHORITIES BELOW THAT THEY HAVE NOT REFERRED TO WH ICH YEAR THE CARRY FORWARD UNABSORBED DEPRECIATION BELONGS. THEREFORE WE RESTORE THE MATTER TO THE FILE OF AO TO EXAMINE THE ISSUE IN TH E LIGHT OF THE DECISION OF SPECIAL BENCH (SUPRA). 4. IN THE RESULT THE APPEAL IS ALLOWED FOR STATIST ICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 29.02.2012 SD/- SD/- ( U.B.S. BEDI ) JUDICIAL MEMBER ( S.V. MAHROTRA ) ACCOUNTANT MEMBER DATED: 29.2.12 *KAVITA COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT NEW DELHI. TRUE COPY BY ORDER DEPUTY REGISTRAR