DCIT 3(1), MUMBAI v. BAJAJ HINDUSTAN LTD, MUMBAI

ITA 675/MUM/2013 | 2000-2001
Pronouncement Date: 17-04-2014 | Result: Dismissed

Appeal Details

RSA Number 67519914 RSA 2013
Assessee PAN AAACB4351J
Bench Mumbai
Appeal Number ITA 675/MUM/2013
Duration Of Justice 1 year(s) 2 month(s) 23 day(s)
Appellant DCIT 3(1), MUMBAI
Respondent BAJAJ HINDUSTAN LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 17-04-2014
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 17-04-2014
Assessment Year 2000-2001
Appeal Filed On 24-01-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH MUMBAI BEFORE S/SHRI I.P. BANSAL (JM) AND SANJAY ARORA (AM) . . ./I.T.A. NO.673/MUM/2013 ( / AY-1997-98) ITA NO.678/MUM/2013( / AY-1998-99) ITA NOS.674 TO 677/MUM/2013 ( / AYS-1999-2000 TO 2002-03) DY .COMMISSIONER OF INCOME TAX CIRCLE 3(1) ROOM NO.607 6 TH FLOOR AYAKAR BHAVAN M.K.ROAD MUMBAI-400020 / VS. M/S BAJAJ HINDUSTAN LTD. BAJAJ BHAVAN 2 ND FLOOR JAMNALAL BAJAJ MARG 226 NARIMAN POINT MUMBAI-400021. ( % / APPELLANT) .. ( &'% / RESPONDENT) ./ ./PAN/GIR NO. : AAACB4351J % / APPELLANT BY : SHRI PREETAM SINGH &'% * /RESPONDENT BY : SHRI KIRIT KAMDAR * . / DATE OF HEARING : 17.4.2014 * . /DATE OF PRONOUNCEMENT : 17.4.2014 / O R D E R PER I.P.BANSAL JM: ALL THESE APPEALS ARE FILED BY REVENUE AND THEY AR E DIRECTED AGAINST A CONSOLIDATED ORDER DATED 4.10.2012 PASSED BY LD. CI T(A) IN RESPECT OF ASSESSMENT YEARS 1997-98 TO 2002-03. GROUNDS OF APPEAL IN ALL THESE APPEALS ARE IDENTICA L AND THEREFORE FOR THE SAKE OF CONVENIENCE WE REPRODUCE BELOW THE GROUNDS OF AP PEAL TAKEN BY REVENUE IN THE ASSESSMENT YEAR 1997-98. 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS JUSTIFIED IN ALLOWING THE CAR RY FORWARD OF UNABSORBED DEPRECIATION TO THE ASSESSEE PERTAINING TO AYS 1997 -98 TO 2002-03 WITHOUT APPRECIATING THE LEGAL POSITION OUTLINED BY HONBLE ITAT SPECIAL BENCH (MUMBAI) IN THE CASE OF DCIT V/S TIMES GUARANTY L TD. (ITA NOS. 4917 AND ITA NOS.673 TO 678/MUM/2013 2 4918/MUM/2008 AYRS. 2003-04 AND 2004-05) IN RESPE CT OF CURRENT AND BROUGHT FORWARD UNADJUSTED /UNABSORBED DEPRECIATION ALLOWANCE IN THREE PERIODS THE FIRST PERIOD BEING 1996-97 SECOND PER IOD BEING AYRS 1997-98 TO 2001-02 AND THIRD PERIOD FROM AY 2002-03 ONWARDS 2. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE AO BE RESTORED 2. THE IMPUGNED ORDERS PASSED BY ASSESSING OFFICER ARE DATED 7.2.2012 AND VIDE THESE ORDERS HE HAS GIVEN EFFECT TO THE ORDERS PAS SED BY LD. CIT(A). IN THESE ORDERS THE AO HAS HELD THAT UNABSORBED DEPRECATION IN THE HANDS OF THE ASSESSEE FROM THE ASSESSMENT YEARS 1990-91 TO ASSESSMENT YEAR 2001- 02 CAN ONLY BE CARRIED FORWARD FOR SETTING OFF UP TO THE 8 ASSESSMENT YEARS. AGGREGAT E OF SUCH DEPRECIATION IS A SUM OF RS.74 67 77 206/- AND IS DESCRIBED IN THE FOLLOWIN G CHART : ASSESSMENT YEAR DEPRECIATION IN RS. 1990 - 91 5 07 02 859 1991 - 92 10 44 28 389 1992 - 93 13 59 71 162 1993 - 94 11 67 74 923 1 996 - 97 16 16 03 381 1997 - 98 15 87 64 896 2001 - 02 1 85 21 596 74 67 77 206 THE AFOREMENTIONED UNABSORBED DEPRECIATION ACCORDI NG TO THE IMPUGNED ORDERS COULD BE SET OFF ONLY UPTO THE ASSESSMENT YEAR 2002-03. T HE PART OF AFOREMENTIONED AGGREGATING IMPUGNED UNABSORBED DEPRECIATION COULD ONLY BE SET OFF IN THE COMPUTATION FOR ASSESSMENT YEAR 2002-03 WHICH IS AGGREGATING T O A SUM OF RS.7 30 53 300/- I.E. FULL UNABSORBED DEPRECATION RELATING TO ASSESSMENT YEAR 1990-91 AMOUNTING TO RS.5 07 12 859/- AND PART OF THE UNABSORBED DEPRECI ATION RELATING TO ASSESSMENT YEAR 1991-92 TO THE EXTENT OF RS.2 23 40 441/- OUT OF AV AILABLE UNABSORBED DEPRECIATION OF RS.10 44 28 389/- FOR ASSESSMENT YEAR 1990-91. IN VIEW OF THIS FACTUAL POSITION IT WAS THE GRIEVANCE OF THE ASSESSEE THAT LD. AO WAS WRONG IN RESTRICTING THE AFOREMENTIONED UNABSORBED DEPRECIATION FOR SETTING OFF THEREOF ON LY TO A PERIOD FOR 8 ASSESSMENT YEARS. ACCORDINGLY THE MATTER WAS AGITATED IN APPEALS FILED BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS DECIDED THIS ISSUE I N FAVOUR OF ASSESSEE ON THE BASIS OF DECISION OF HONBLE GUJARAT HI GH COURT IN THE CASE OF ITA NOS.673 TO 678/MUM/2013 3 GENERAL MOTORS INDIA P. LTD V/S DCIT (2013)354 ITR 244 (GUJ). IN THE SAID DECISION IT IS HELD THAT SECTION 32(2) AS AMENDED BY FINANCE ACT 2001 IS APPLICABLE FROM ASSESSMENT YEAR 2002-03 AND SUBSEQUENT ASSESSMENT YEARS. CENT RAL BOARD OF DIRECT TAXES CIRCULAR CLARIFIED THE INTENT OF THE AMENDMENT THA T IT IS FOR ENABLING THE INDUSTRY TO CONSERVE SUFFICIENT FUNDS TO REPLACE PLANT AND MAC HINERY AND ACCORDINGLY THE AMENDMENT DISPENSES WITH THE RESTRICTION OF EIGHT Y EARS FOR CARRY-FORWARD AND SET OFF OF UNABSORBED DEPRECATION THEREFORE ANY UNABSORBED DEPRECIATION AVAILABLE TO ASSESSEE ON THE DATE 1.4.2002(ASSESSMENT YEAR 2002-03) WIL L BE DEALT WITH IN ACCORDANCE WITH THE PROVISION OF SECTION 32(2) AS AMENDED BY THE F INANCE ACT 2001 AND NOT BY PROVISIONS OF SECTION 32(2) AS IT STOOD BEFORE THE SAID AMENDMENT. THE DEPARTMENT IS AGGRIEVED HENCE FILED AFOREMENTIONED GROUNDS OF APP EAL FOR EACH OF THE YEAR. 3. AS IT CAN BE SEEN FROM THE GROUNDS OF APPEAL IT IS THE GRIEVANCE OF REVENUE THAT THE LD. CIT(A) HAS COMMITTED AN ERROR IN HOLDING THAT UNABSORBED DEPRECIATION RELATING TO AYS 1997-98 TO 2002-03 AVAILABLE FO R SETTING OFF FOR A PERIOD BEYOND THAN 8 YEARS. FOR CONTESTING OF SUCH ACTION OF LD. CI T(A) IT HAS BEEN MENTIONED IN THE GROUNDS OF APPEAL THAT WHILE HOLDING SO THE LD. CIT (A) HAS IGNORED THE LEGAL POSITION LAID DOWN BY SPECIAL BENCH OF ITAT IN THE CASE OF DCIT V/S TIMES GUARANTY LTD (2010) 40 SOT 14 (MUM)(SB). 4. IN ADDITION TO WHAT HAS BEEN CONTESTED IN THE G ROUNDS OF APPEAL THE LD. CIT DR WHO HAS REPRESENTED THE MATTER BEFORE US HAS ALSO SUBMITTED WRITTEN SUBMISSIONS. THE SUM AND SUBSTANCE OF WHICH IS AS FOLLOWS : (I) LD. DR HAS EXPLAINED THE PREVAILING STATUTORY POSIT ION RELATING TO THE PROVISIONS OF SECTION 32(2). ACCORDING TO THE SUBM ISSIONS OF LD. DR THE POSITION AS PREVAILED UP THE ASSESSMENT YEAR 1996-97 IS AS UNDER : ITA NOS.673 TO 678/MUM/2013 4 IT COULD BE CARRIED FORWARD FOR ANY NUMBER OF SUBSE QUENT ASSESSMENT YEARS WITHOUT LIMIT; IT COULD BE SET OFF AGAINST INCOME UNDER ANY HEAD O F SUCH SUBSEQUENT ASSESSMENT YEARS; IT WAS NOT NECESSARY THAT THE SAME BUSINESS TO WHIC H IT RELATES SHOULD BE CONTINUED TO BE CARRIED ON BY THE ASSESSEE. IN FACT EVEN IF NO BUSINESS WAS CARRIED ON BY THE ASSESSEE IN THE SUBSEQUENT YEARS THE BENEFIT OF SET OFF WAS NONETHELESS AVAILABLE THE POSITION AS IT IS APPLICABLE FROM ASSESSMENT Y EAR 1997-98 TO 2001-02 IS AS UNDER : UNABSORBED DEPRECIATION WAS ALLOWED TO BE CARRIED F ORWARD FOR A MAXIMUM OF 8 SUBSEQUENT YEARS IMMEDIATELY FOLLOWIN G THE YEAR TO WHICH IT RELATES; THE UNABSORBED DEPRECIATION COULD BE SET OFF ONLY A GAINST ANY BUSINESS OR PROFESSIONAL INCOME OF A SUBSEQUENT ASSESSMENT Y EAR; THE SET OFF OF UNABSORBED DEPRECIATION WAS ALLOWAB LE SUBJECT TO THE CONDITION THAT THE BUSINESS/PROFESSION TO WHICH IT RELATES WAS CONTINUED TO BE CARRIED ON BY THE ASSESSEE IN THE SUBSEQUENT ASSES SMENT YEAR IN WHICH SET OFF WAS BEING CLAIMED. THE SAID CONDITION THAT THE SAM E BUSINESS SHOULD BE CONTINUED TO CARRIED ON IN THE YEAR OF SET OFF WA S HOWEVER OMITTED BY THE FINANCE ACT 2000 WITH EFFECT FROM ASSESSMENT YEAR 2001-02 THE POSITION OF LAW AS FROM ASSESSMENT YEAR 2002-03 ONWARD IS AS UNDER : UNABSORBED DEPRECIATION CAN BE CARRIED FORWARD FO R ANY NUMBER OF SUBSEQUENT ASSESSMENT YEARS WITHOUT LIMIT; IT CAN BE SET OFF AGAINST INCOME UNDER ANY HEAD OF SUCH SUBSEQUENT YEARS; SET OFF WILL BE ALLOWED EVEN IF THE SAME BUSINESS TO WHICH IT RELATES IS NOT CONTINUED TO BE CARRIED ON BY THE ASSESSEE IN THE SUBSEQUENT ASSESSMENT YEAR IN WHICH SET OFF WAS BEING CLAIMED. IN FACT EVEN I F NO BUSINESS IS CARRIED ON BY THE ASSESSEE IN THE SUBSEQUENT YEARS THE BENEFIT OF SET OFF WILL NONETHELESS BE AVAILABLE: REFERRING TO THE ABOVE POSITION OF LAW IT WAS SUB MITTED BY LD. DR THAT THE LEGAL POSITION AS IT EXISTED UP TO THE ASSESSMENT YEAR 2 001-02 IS COMPLETELY SUBSTITUTED BY NEW PROVISIONS EFFECTIVE FROM ASSESSMENT YEAR 200 2-03 AND SUCH AMENDMENT DOES NOT MAKE ANY REFERENCE ABOUT AS TO HOW THE UNABSOR BED DEPRECATION RELATING TO ASSESSMENT YEAR 1997-98 TO 2001-02 WILL BE DEALT W ITH AND SUCH POSITION SHOWS AND PROVES THAT THE SUSTENTATIVE PROVISIONS AS EXISTED BEFORE THE AMENDMENT HOLD GOOD SO FAR THE TREATMENT TO BE GIVEN TO THE UNABSORBED DEP RECIATION RELATING TO ASSESSMENT YEARS 1997-98 TO 2001-02 ARE CONCERNED AS PER TH E LAW AS APPLICABLE IN ITA NOS.673 TO 678/MUM/2013 5 PROVISIONS/PERIOD. THUS ACCORDING TO THE LD.DR TH E UNABSORBED DEPRECIATION ALLOWANCE AS DETERMINED FOR SET OFF IN SUCCEEDIN G ASSESSMENT YEARS AS PER PROVISIONS OF SECTION 32(2) OF THE ACT AS APPLICABLE TO ASSES SMENT YEAR 1997-98 AND ASSESSMENT YEAR 2001-02 ARE TO BE CONSIDERED AS PART OF THE UNABSORBED DEPRECATION FOR SETTING OFF IN ASSESSMENT YEAR 1997-98 AND FURTHER 7 MORE ASSESSMENT YEARS ONLY AND NOT BEYOND THAT. IT IS THE CONTENTION OF THE LD. DR T HAT AS PER SETTLED LAW WHEN THE PROVISIONS OF ACT ARE NOT AMBIGUOUS NO FURTHER I NTERPRETATION CAN BE EXTENDED AS RULE OF STRICT INTERPRETATION WILL BE APPLICABLE. HE C ONTENDED THAT AO IN THE PRESENT CASE HAS HELD THAT CARRIED FORWARD AND SET OFF OF SUCH UNABSORBED DEPRECIATION WILL BE ONLY UP TO THE PERIOD OF 8 YEARS AND SUCH OBSERVAT IONS OF AO ARE IN ACCORDANCE WITH LAW AS WAS APPLICABLE UP TO THE ASSESSMENT YEAR 2001-02. HE SUBMITTED THAT EVEN CIRCULAR ISSUED BY CBDT DATED 9.11.2001 HAS SPECI FICALLY MENTIONED THAT THE AMENDMENT WILL BE APPLICABLE IN RELATION TO ASSES SMENT YEAR 2002-03 AND SUBSEQUENT YEARS AND THUS IT WAS PLEADED BY LD. DR THAT UNABSO RBED DEPRECIATION RELATING TO ASSESSMENT YEAR 1997-98 TO 2001-02 WOULD QUALIFY F OR CARRIED FORWARD AND SET OFF BUT WOULD BE SUBJECT TO THE CONDITIONS STIPULATED U/S 32(2) AS IT EXISTED UP TO ASSESSMENT YEAR 2001-02. TO CONTEND THAT PROVISIONS OF SECTIO N 32(2) AS APPLICABLE FROM ASSESSMENT YEAR 1997-98 TO ASSESSMENT YEAR 2001-02 WILL GOVERN THE CARRIED FORWARD AND SET OFF OF UNABSORBED DEPRECATION RELATED T O ASSESSMENT YEARS 1997-98 TO 2001- 02 THE LD. CIT DR HAS RELIED ON THE FOLLOWING DE CISIONS : I) DCIT V/S TIMES GUARANTY LTD 40 SOT 14 (ITAT-SB- MUM) II) CIT V/S RPIL SIGNALLING SYSTEMS LTD 328 ITR 2 83 (MAD) III) CIT V/S PIONEER ASIA PACKAGING PVT LTD 310 ITR 198 (MAD) IV) CIT V/S S & S POWER SWITCHGEAR LTD 318 ITR 187 ( MAD) V) JCIT V/S INDIA STEAMSHIP CO.LTD 78 TTJ 154 (CAL) 5. LD. CIT DR DISTINGUISHING THE DECISION OF HON BLE GUJARAT HIGH COURT IN THE CASE OF GENERAL MOTORS INDIA P. LTD (SUPRA) ON THE GROUND THAT THE QUESTION DECIDED BY HONBLE GUJARAT HIGH COURT DOES NOT RELATE TO SE CTION 32(2) WITH EFFECT FROM 1.4.2002 THAT WHETHER IT WAS RETROSPECTIVE OR PROSPECTIVE BU T IT RELATES TO VALIDITY OR OTHERWISE ITA NOS.673 TO 678/MUM/2013 6 OF THE PROCEEDINGS U/S 147 OF THE ACT AND MORE PAR TICULARLY WHILE DECIDING THE ISSUE U/S 32(2) THE HONBLE GUJARAT HIGH COURT DID NOT REFER THE DECISION OF SPECIAL BENCH OF ITAT IN THE CASE OF TIMES GUARANTY LTD (SUPRA) AND OTHER DECISIONS OF HONBLE MADRAS HIGH COURT IN THE CASES OF (I) RPIL SIGNALLING SYS TEMS LTD (II) PIONEER ASIA PACKAGING PVT LTD AND (III) S & S POWER SWITCHGEAR LTD (SUP RA) WHICH WERE DIRECTLY ON THE ISSUE. FINALLY THE LD. DR SUBMITTED THAT THE HONBLE SUPR EME COURT IN THE CASE OF CIT V/S MOTHER INDIA REFRIGERATION INDUSTRIES PVT LTD REPO RTED IN 155 ITR 711 (SC) HAS HELD THAT LEGAL FICTIONS ARE CREATED ONLY FOR SOME DEF INITE PURPOSE AND THESE MUST BE LIMITED TO THAT PURPOSE AND SHOULD NOT BE EXTENDED BEYOND THEIR LEGITIMATE FIELD . THUS IT WAS PLEADED BY LD. DR THAT AMENDED PROVI SIONS VIDE FINANCE ACT 2001 ARE PROSPECTIVE AND NOT RETROSPECTIVE. THEREFORE HE PL EADED THAT THE ORDER PASSED BY LD. CIT(A) SHOULD BE SET ASIDE AND THAT OF AO BE REST ORED. 6. ON THE OTHER HAND IT WAS SUBMITTED BY LD. AR T HAT NONE OF THE DECISIONS RENDERED BY HONBLE MADRAS HIGH COURT AND RELIED UP ON BY LD. DR RELATES TO AMENDMENT BROUGHT INTO STATUTE BY FINANCE ACT 2001. HE SUBM ITTED THAT ALL THE THREE DECISIONS RELIED UPON BY LD DR OF HONBLE MADRAS HIGH COURT WERE RELATING TO INTERPRETATIONS OF PROVISIONS OF SECTION 32(2) AS EXISTED FOR A PERIOD FROM ASSESSMENT YEAR 1997-98 TO 2001-02. HE SUBMITTED THAT THE DECISION OF SPECIA L BENCH OF ITAT IN THE CASE OF TIMES GUARANTY LTD (SUPRA) HAS DISCUSSED THE AMENDMENT BR OUGHT INTO THE STATUTE BY FINANCE ACT 2001 BUT THE SAID VIEW OF SPECIAL BENCH HAS BEEN REVERSED BY HONBLE GUJARAT HIGH COURT IN THE CASE OF GENERAL MOTORS INDIA P. LTD (SUPRA). HE SUBMITTED THAT APART FROM AFORE MENTIONED DECISION OF HONBLE GUJ ARAT HIGH COURT WHICH IS RENDERED FOR INTERPRETATION OF PROVISIONS OF SECTION 32(2 ) AS AMENDED BY FINANCE ACT 2001 THERE IS NO OTHER DECISION RENDERED BY ANY OTHER HI GH COURT. HE SUBMITTED THAT IN VIEW OF THE DECISION OF HONBLE GUJARAT HIGH COURT I TAT MUMBAI BENCH SUBSEQUENT TO DECISION OF SPECIAL BENCH OF ITAT IN THE CASE OF TIMES GUARANTY LTD (SUPRA) HAS FOLLOWED THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF GENERAL MOTORS INDIA ITA NOS.673 TO 678/MUM/2013 7 P. LTD (SUPRA) IN PLACE OF SPECIAL BENCH DECISION. FOR THIS PURPOSE REFERENCE WAS MADE TO THE DECISION OF ITAT MUMBAI BENCH IN THE CASE OF HINDUSTAN UNILEVER LTD V/S ADDL. CIT (2012) 28 TAXMANN.COM 142(MUM-TRIB) ORDER DATED 10.12.2012 WHEREIN IT HAS BEEN HELD THAT UNABSORBED DEPRECIATION OF MAR KETING COMPANY FOR ASSESSMENT YEARS 1996-97 AND 1997-98 AMOUNTING TO RS.5 63 66 551/- AND RS.8 97 30 340/- RESPECTIVELY WOULD BE ALLOWABLE IN RESPECT OF ASSES SMENT YEAR 2006-07. THE LD. AR ALSO POINTED OUT THAT THE DECISION OF THE SPECIAL BENCH IN THE CASE OF TIMES GUARANTY LTD (SUPRA) WAS SPECIFICALLY RELIED UPON BY REVENUE I N THE SAID CASE AND HAS BEEN DISCUSSED BY THE TRIBUNAL IN PARAS 74 AND 75 OF T HE ORDER. THE LD. AR FURTHER POINTED OUT THAT SUBSEQUENTLY VIDE ORDER DATED 22.5.2013 MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF MILTONS PVT LTD V/S CIT-6 IN ITA NO.3 019/MUM/2012 (AY 2007-08) HAS HELD THAT CONSEQUENT TO THE AMENDMENT BY FINANCE ACT 2001 THE ASSESSEE IS ENTITLED TO CLAIM SET OFF OF UNABSORBED DEPRECATION RELATING T O ASSESSMENT YEARS 1995-96 1998- 99 2000-01 AND 2001-2002 AGAINST THE INCOME FOR AS SESSMENT YEAR 2007-08. THE ISSUE HAS BEEN DISCUSSED BY TRIBUNAL AS UNDER (PA RA 3 TO 7): 3. VIDE GROUND NO. 2 THE ASSESSEE CONTENDS THAT CONSEQUEN T TO THE AMENDMENT BY THE FINANCE ACT 2001 THE ASSESSEE IS ENTITL ED TO CLAIM SET OFF OF UNABSORBED DEPRECIATION RELATING TO A.YS. 1995- 96 1998-99 2000- 01 & 2001-02. IN THE EVENT OF NOT ACCEPTING THE AFORE MENTIONED CLAIM THE ASSESSEE-COMPANY CONTENDS THAT BROUGHT FORWARD BUSINESS LOSSE S OF EARLIER YEARS OUGHT TO HAVE BEEN SET OFF OF AGAINST TH E SALE OF BUSINESS ASSET. 4. SIMILARLY IN GROUND NO.4 IT CONTENDS THAT LEARNED COMMISSIONER OF INCOME TAX ERRED IN NOT ALLOWING SET OFF OF UNABSORBED DEPRECIATION AGAINST CAPITAL GAIN OF A.Y. 2007-08 BY OVERLOOKING TH E FACT THAT THE ASSESSEE BECAME A SICK INDUSTRIAL COMPANY FROM A.Y. 2000-01 A ND HENCE ENTITLED TO SET OFF OF UNABSORBED DEPRECIATION AGAINST CAPITAL GAIN OF A.Y. 2007-08. 5. AT THE TIME OF HEARING LEARNED COUNSEL SUBMITTED TH AT IF GROUND NO. 2 IS TAKEN UP FOR CONSIDERATION THE MAIN ISSUE ON MERIT CA N BE CONSIDERED AND IN THE EVENT OF TAKING A VIEW IN FAVOUR OF THE ASSESSEE ON THE SAID ISSUE GROUND NO. 3&4 WOULD BECOME ACADEMIC AND EVEN GRO UND NO. 1 WOULD BECOME ACADEMIC AND IF THE BENCH IS NOT INCLINED T O ACCEPT GROUND NO. 1 AS ACADEMIC IN NATURE IT CAN EVEN DISMISS AS NOT PRESS ED IN THE EVENT OF ACCEPTING THE PLEA OF THE ASSESSEE WITH REGARD TO GROUND NO. 2. ADVERTING OUR ATTENTION TO THE DECISION OF HON'BLE GU JARAT HIGH COURT IN THE ITA NOS.673 TO 678/MUM/2013 8 CASE OF GENERAL MOTORS INDIA PVT. LTD. VS. DCIT (SPECIA L CIVIL APPLICATION NO. 1773 OF 2012 DATED 23.8.2012); IT WAS CONTENDED T HAT FROM A.Y. 1997- 98 TO 2001-02 THERE WAS RESTRICTION WITH REGARD TO CARR Y FORWARD OF UNABSORBED DEPRECIATION BUT THE LEGISLATURE IN ITS WISD OM WITHDREW SUCH RESTRICTION BY THE FINANCE ACT 2001 WHEREIN THE PROVISI ONS AS STOOD BEFORE 1997-98 WAS RESTORED IN WHICH EVENT THE ASSESSEE WO ULD BE ENTITLED TO CLAIM SET OFF OF UNABSORBED DEPRECIATION A LLOWANCE PERTAINING TO A.Y. 1995-96 ONWARDS AGAINST INCOME IF ANY OF THE CUR RENT YEAR. HE FURTHER SUBMITTED THAT THE ITAT SPECIAL BENCH MUMBAI IN THE CASE OF DCIT VS. TIMES GUARANTY LTD. (2010) 131 TTJ 257 (MUM)(SB) WAS OF THE OPINION THAT DEPRECIATION PERTAINING TO A.Y. 1997-98 TO 2001-02 CANNOT BE CARRIED FORWARD BEYOND 8 YEARS AS THE LAW STOOD AT THAT POINT OF TIME BUT SUBSEQUENT TO THE AFOREMENTIONED JUDGEMENT HON'BLE GU JARAT HIGH COURT HAD TAKEN A VIEW THAT INTENTION OF THE LEGISLATURE WA S TO ALLOW UNABSORBED DEPRECIATION ALLOWANCE FOR AN INDEFINITE PERIOD OF T IME SINCE IT WAS FOR ENABLING THE INDUSTRY TO CONSERVE SUFFICIENT FUNDS TO RE PLACE PLANT AND MACHINERY AND BEARING IN MIND THE INTENTION OF INCE NTIVE RESTRICTION OF 8 YEARS WAS DISPENSED WITH BY AN AMENDMENT. SUBSEQUENT TO THE DECISION OF HON'BLE GUJARAT HIGH COURT ITAT K BENCH MUMBA I IN THE CASE OF HINDUSTAN UNILEVER LTD. (22 ITR 737) FOLLOWED THE DE CISION OF HON'BLE GUJARAT HIGH COURT IN PREFERENCE TO THE DECISION OF TH E SPECIAL BENCH; SINCE THERE IS NO CONTRARY DECISION OF ANY OTHER HIGH COU RT. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICE R IN PROCEEDINGS U/S. 143(3) OF THE ACT HAD ORIGINALLY ACCEPTE D THE CLAIM OF SET OFF OF CARRIED FORWARD UNABSORBED DEPRECIATION WHICH IS IN CONSONANCE WITH THE VIEW TAKEN BY HON'BLE GUJARAT HIGH COURT AN D HENCE VIEW TAKEN BY THE ASSESSING OFFICER CANNOT BE SAID TO BE ERRONEOUS. AT ANY RATE IN THE LIGHT OF LATER DECISION OF THE ITAT MUMBAI BENCH GROUND NO. 2 DESERVES TO BE DECIDED IN FAVOUR OF THE ASSESSEE ON MERIT. 6. ON THE OTHER HAND LEARNED DEPARTMENTAL REPRESENTA TIVE MERELY RELIED UPON THE ORDER PASSED BY LEARNED COMMISSIONER OF INCOME TAX BY STATING THAT THE VIEW OF LEARNED COMMISSIONER OF INCOME TAX WAS BASED UPON THE DECISION OF THE SPECIAL BENCH OF THE ITAT IN THE CASE OF TIMES GUARANTY LTD. (SUPRA). 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. IN THE LIGHT OF THE DECISION OF HON'BLE G UJARAT HIGH COURT WHICH IN TURN WAS FOLLOWED BY THE ITAT MUMBAI BENCH WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE IS ENTITLED TO SET OFF OF UNABSORBED DEPRECIATION PERTAINING TO A.Y. 1995-96 ONWARDS. IN T HE RESULT GROUND NO. 2 URGED BY THE ASSESSEE IS DECIDED IN FAVOUR OF THE ASSESSE E. 7. THE LD. AR ALSO RELIED UPON THE FOLLOWING OBSER VATIONS OF HONBLE GUJARAT HIGH COURT IN THE CASE OF GENERAL MOTORS INDIA P. LTD (SUPRA) PARA 32 TO 40 (PAGES 263 TO 267 OF THE REPORT): 32. THE LAST QUESTION WHICH ARISES FOR CONSIDERATION IS T HAT WHETHER THE UNABSORBED DEPRECIATION PERTAINING TO A.Y. 1997-9 8 COULD BE ALLOWED ITA NOS.673 TO 678/MUM/2013 9 TO BE CARRIED FORWARD AND SET OFF AFTER A PERIOD OF EIGHT YEARS OR IT WOULD BE GOVERNED BY SECTION 32 AS AMENDED BY FINANCE ACT 2001 ? THE REASON GIVEN BY THE ASSESSING OFFICER UNDER SECTION 147 IS THAT SEC TION 32(2) OF THE ACT WAS AMENDED BY FINANCE ACT NO. 2 OF 1996 W.E.F. A.Y. 1997-98 AND THE UNABSORBED DEPRECIATION FOR THE A.Y. 1997-98 COULD BE CARRIED FORWARD UP TO THE MAXIMUM PERIOD OF 8 YEARS FROM THE YEAR IN WHICH IT WAS FIRST COMPUTED. ACCORDING TO THE ASSESSING OFFICER 8 YEA RS EXPIRED IN THE A.Y. 2005-06 AND ONLY TILL THEN THE ASSESSEE WAS ELIGI BLE TO CLAIM UNABSORBED DEPRECIATION OF A.Y. 1997-98 FOR BEING CARR IED FORWARD AND SET OFF AGAINST THE INCOME FOR THE A.Y. 2005-06. BUT TH E ASSESSEE WAS NOT ENTITLED FOR UNABSORBED DEPRECIATION OF RS. 43 60 22 1 58/- FOR A.Y. 1997- 98 WHICH WAS NOT ELIGIBLE FOR BEING CARRIED FORWARD A ND SET OFF AGAINST THE INCOME FOR THE A.Y. 2006-07. 33. PRIOR TO THE FINANCE ACT NO. 2 OF 1996 THE UNABS ORBED DEPRECIATION FOR ANY YEAR WAS ALLOWED TO BE CARRY FORWARD INDEFIN ITELY AND BY A DEEMING FICTION BECAME ALLOWANCE OF THE IMMEDIATELY SUCCEEDING YE AR. THE FINANCE ACT NO. 2 OF 1996 RESTRICTED THE CARRY FORWARD OF UNABSORBED DEPRECIATION AND SET-OFF TO A LIMIT OF 8 YEARS FROM THE A.Y. 1997-98. CIRCULAR NO. 762 DATED 18.2.1998 ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES (CBDT) IN THE FORM OF EXPLANATORY NOTES CATEGORI CALLY PROVIDED THAT THE UNABSORBED DEPRECIATION ALLOWANCE FOR ANY PR EVIOUS YEAR TO WHICH FULL EFFECT CANNOT BE GIVEN IN THAT PREVIOUS YEAR SHAL L BE CARRIED FORWARD AND ADDED TO THE DEPRECIATION ALLOWANCE OF THE NEXT Y EAR AND BE DEEMED TO BE PART THEREOF. 34. SO THE UNABSORBED DEPRECIATION ALLOWANCE OF A.Y. 1996-97 WOULD BE ADDED TO THE ALLOWANCE OF A.Y. 1997-98 AND THE LI MITATION OF 8 YEARS FOR THE CARRY-FORWARD AND SET-OFF OF SUCH UNABSORBED DEPRE CIATION WOULD START FROM A.Y. 1997-98. 35. WE MAY NOW EXAMINE THE PROVISIONS OF SECTION 32(2) OF THE ACT BEFORE ITS AMENDMENT BY FINANCE ACT 2001. THE SECTION PR IOR TO ITS AMENDMENT BY FINANCE ACT 2001 READ AS UNDER:- 'WHERE IN THE ASSESSMENT OF THE ASSESSEE FULL EFFECT CANN OT BE GIVEN TO ANY ALLOWANCE UNDER CLAUSE (II) OF SUB-SECTION ( 1) IN ANY PREVIOUS YEAR OWNING TO THERE BEING NO PROFITS OR GAI NS CHARGEABLE FOR THAT PREVIOUS YEAR OR OWING TO THE PROFITS OR GAI NS BEING LESS THAN THE ALLOWANCE THEN THE ALLOWANCE OR THE PART O F ALLOWANCE TO WHICH EFFECT HAS NOT BEEN GIVEN (HEREINAFTER REFERRED TO AS UNABSORBED DEPRECIATION ALLOWANCE) AS THE CASE MAY BE - ( I ) SHALL BE SET OFF AGAINST THE PROFITS AND GAINS IF AN Y OF ANY BUSINESS OR PROFESSION CARRIED ON BY HIM AND ASSESSABLE FOR THAT ASSESSMENT YEAR; ( II ) IF THE UNABSORBED DEPRECIATION ALLOWANCE CANNOT BE WH OLLY SET OFF UNDER CLAUSE (I) THE AMOUNT NOT SO SET OFF SHALL B E SET OFF FROM THE INCOME UNDER ANY OTHER HEAD IF ANY ASSESSABLE FOR THAT ASSESSMENT YEAR; ITA NOS.673 TO 678/MUM/2013 10 ( III ) IF THE UNABSORBED DEPRECIATION ALLOWANCE CANNOT BE W HOLLY SET OFF UNDER CLAUSE (I) AND CLAUSE (II) THE AMOUNT OF A LLOWANCE NOT SO SET OFF SHALL BE CARRIED FORWARD TO THE FOLLOWING ASSESSME NT YEAR AND- ( A ) IT SHALL BE SET OFF AGAINST THE PROFITS AND GAINS IF ANY OF ANY BUSINESS OR PROFESSION CARRIED ON BY HIM AND ASSESSABLE FOR T HAT ASSESSMENT YEAR; ( B ) IF THE UNABSORBED DEPRECIATION ALLOWANCE CANNOT BE W HOLLY SO SET OFF THE AMOUNT OF UNABSORBED DEPRECIATION ALLOWA NCE NOT SO SET OFF SHALL BE CARRIED FORWARD TO THE FOLLOWING ASSESSME NT YEAR NOT BEING MORE THAN EIGHT ASSESSMENT YEARS IMMEDIATELY SUCCEEDING THE ASSESSMENT YEAR FOR WHICH THE AFORESAID ALLOWANCE WAS FIRST COMPUTED: PROVIDED THAT THE TIME LIMIT OF EIGHT ASSESSMENT YEARS SPECIFIED IN SUB-CLAUSE (B) SHALL NOT APPLY IN CASE OF A COMPANY FOR T HE ASSESSMENT YEAR BEGINNING WITH THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE SAID COMPANY HAS BECOME A SICK INDUSTRIAL COMPANY UNDER SUB-SECTION (1) OF SECTION 17 OF THE SICK INDUSTRIAL COMPANY (SPECIAL PROVISIONS) ACT 1985 (1 OF 1986) AND ENDING WITH THE ASSESSMENT YEAR RELEVANT TO THE PREVI OUS YEAR IN WHICH THE ENTIRE NET WORTH OF SUCH COMPANY BECOMES EQUAL TO OR EXCEEDS THE ACCUMULATED LOSSES. EXPLANATION.- FOR THE PURPOSES OF THIS CLAUSE 'NET WORTH' SHALL HAVE THE MEANING ASSIGNED TO IT IN CLAUSE (GA) OF SUB-SECTION ( 1) OF SECTION 3 OF THE SICK INDUSTRIAL COMPANIES (SPECIAL PROVI SIONS) ACT 1985.' 36. THE AFORESAID PROVISION WAS INTRODUCED BY FINANCE ( NO. 2) ACT 1996 AND FURTHER AMENDED BY THE FINANCE ACT 2000. T HE PROVISION INTRODUCED BY FINANCE (NO. 2) ACT WAS CLARIFIED BY THE FINANCE MINISTER TO BE APPLICABLE WITH PROSPECTIVE EFFECT. 37. SECTION 32(2) OF THE ACT WAS AMENDED BY FINANCE ACT 2001 AND THE PROVISION SO AMENDED READS AS UNDER :- 'WHERE IN THE ASSESSMENT OF THE ASSESSEE FULL EFFECT CAN NOT BE GIVEN TO ANY ALLOWANCE UNDER SUB-SECTION (1) IN ANY PR EVIOUS YEAR OWING TO THERE BEING NO PROFITS OR GAINS CHARGEABLE FOR THAT PREVIOUS YEAR OR OWING TO THE PROFITS OR GAINS CHARGEABLE FOR THAT PREVIOUS YEAR OWING TO THE PROFITS OR GAINS CHARGEABLE BEING L ESS THAN THE ALLOWANCE THEN SUBJECT TO THE PROVISIONS OF SUB-SECTION ( 2) OF SECTION 72 AND SUB-SECTION (3) OF SECTION 73 THE ALLOWANCE OR THE PART OF THE ALLOWANCE TO WHICH EFFECT HAS NOT BEEN GIVE N AS THE CASE MAY BE SHALL BE ADDED TO THE AMOUNT OF THE ALLO WANCE FOR DEPRECIATION FOR THE FOLLOWING PREVIOUS YEAR AND DEEME D TO BE PART OF THAT ALLOWANCE OR IF THERE IS NO SUCH ALLOWANCE FOR THAT PREVIOUS YEAR BE DEEMED TO BE ALLOWANCE OF THAT PREVIOUS YEAR AND SO ON FOR THE SUCCEEDING PREVIOUS YEARS.' ITA NOS.673 TO 678/MUM/2013 11 38. THE PURPOSE OF THIS AMENDMENT HAS BEEN CLARIFIED BY CENTRAL BOARD OF DIRECT TAXES IN THE CIRCULAR NO.14 OF 2001. T HE RELEVANT PORTION OF THE SAID CIRCULAR READS AS UNDER :- 'MODIFICATION OF PROVISIONS RELATING TO DEPRECIATION 30.1 UNDER THE EXISTING PROVISIONS OF SECTION 32 OF THE INCOME-TAX ACT CARRY FORWARD AND SET OFF OF UNABSORBED DEPRECIATION I S ALLOWED FOR 8 ASSESSMENT YEARS. 30.2 WITH A VIEW TO ENABLE THE INDUSTRY TO CONSERVE SUF FICIENT FUNDS TO REPLACE PLANT AND MACHINERY SPECIALLY IN AN ERA WHERE OBSOLESCENCE TAKES PLACE SO OFTEN THE ACT HAS DISPENSED WITH THE RESTRI CTION OF 8 YEARS FOR CARRY FORWARD AND SET OFF OF UNABSORBED DEPR ECIATION. THE ACT HAS ALSO CLARIFIED THAT IN COMPUTING THE PROFITS AN D GAINS OF BUSINESS OR PROFESSION FOR ANY PREVIOUS YEAR DEDUCTION O F DEPRECIATION UNDER SECTION 32 SHALL BE MANDATORY. 30.3 UNDER THE EXISTING PROVISIONS NO DEDUCTION FOR D EPRECIATION IS ALLOWED ON ANY MOTOR CAR MANUFACTURED OUTSIDE INDIA UN LESS IT IS USED (I) IN THE BUSINESS OF RUNNING IT ON HIRE FOR TOURISTS OR (II) OUTSIDE IN THE ASSESSEE'S BUSINESS OR PROFESSION IN ANOTHER COUNTRY. 30.4 THE ACT HAS ALLOWED DEPRECIATION ALLOWANCE ON ALL IMPORTED MOTOR CARS ACQUIRED ON OR AFTER 1ST APRIL 2001. 30.5 THESE AMENDMENTS WILL TAKE EFFECT FROM THE 1ST APR IL 2002 AND WILL ACCORDINGLY APPLY IN RELATION TO THE ASSESSMENT YE AR 2002-03 AND SUBSEQUENT YEARS.' 39. THE CBDT CIRCULAR CLARIFIES THE INTENT OF THE AMEN DMENT THAT IT IS FOR ENABLING THE INDUSTRY TO CONSERVE SUFFICIENT FUNDS T O REPLACE PLANT AND MACHINERY AND ACCORDINGLY THE AMENDMENT DISPENSES WITH T HE RESTRICTION OF 8 YEARS FOR CARRY FORWARD AND SET OFF OF UNABSORBED DEPRECIATION. THE AMENDMENT IS APPLICABLE FROM ASSESSMENT YEAR 2002-03 AND SUBSEQUENT YEARS. THIS MEANS THAT ANY UNABSORBED DEPRECIATION AVAI LABLE TO AN ASSESSEE ON 1ST DAY OF APRIL 2002 (A.Y. 2002-03) WILL BE DEALT WITH IN ACCORDANCE WITH THE PROVISIONS OF SECTION 32(2) AS AMENDED BY FINANCE ACT 2001 AND NOT BY THE PROVISIONS OF SECTION 32(2) AS IT STOOD BEFORE THE SAID AMENDMENT. HAD THE INTENTION OF THE LEGISLATURE BEEN TO ALLOW THE UNABSORBED DEPRECIATION ALLOWANCE WORKED OUT IN A.Y. 19 97-98 ONLY FOR EIGHT SUBSEQUENT ASSESSMENT YEARS EVEN AFTER THE AMENDMEN T OF SECTION 32(2) BY FINANCE ACT 2001 IT WOULD HAVE INCORPORATED A PROVISION TO THAT EFFECT. HOWEVER IT DOES NOT CONTAIN ANY SUCH PROVISION. HENCE KEEPING IN VIEW THE PURPOSE OF AMENDMENT OF SECTION 32(2) OF THE ACT A PURPOSIVE AND HARMONIOUS INTERPRETATION HAS TO BE TAKEN. WHILE C ONSTRUING TAXING STATUTES RULE OF STRICT INTERPRETATION HAS TO BE APPLIE D GIVING FAIR AND REASONABLE CONSTRUCTION TO THE LANGUAGE OF THE SECTION W ITHOUT LEANING TO THE SIDE OF ASSESSEE OR THE REVENUE. BUT IF THE LEGISLAT URE FAILS TO EXPRESS CLEARLY AND THE ASSESSEE BECOMES ENTITLED FOR A BENEFIT W ITHIN THE AMBIT OF THE SECTION BY THE CLEAR WORDS USED IN THE SECTION THE B ENEFIT ACCRUING TO THE ASSESSEE CANNOT BE DENIED. HOWEVER CIRCULAR NO.14 O F 2001 HAD CLARIFIED THAT UNDER SECTION 32(2) IN COMPUTING THE P ROFITS AND GAINS OF BUSINESS OR PROFESSION FOR ANY PREVIOUS YEAR DEDUCTION OF DEPRECIATION UNDER SECTION 32 SHALL BE MANDATORY. THEREFORE THE P ROVISIONS OF SECTION ITA NOS.673 TO 678/MUM/2013 12 32(2) AS AMENDED BY FINANCE ACT 2001 WOULD ALLOW THE UNABSORBED DEPRECIATION ALLOWANCE AVAILABLE IN THE A.Y. 1997-98 1999-2000 2000-01 AND 2001-02 TO BE CARRIED FORWARD TO THE SUCCEEDING YEA RS AND IF ANY UNABSORBED DEPRECIATION OR PART THEREOF COULD NOT BE S ET OFF TILL THE A.Y. 2002-03 THEN IT WOULD BE CARRIED FORWARD TILL THE TI ME IT IS SET OFF AGAINST THE PROFITS AND GAINS OF SUBSEQUENT YEARS. 40. THEREFORE IT CAN BE SAID THAT CURRENT DEPRECI ATION IS DEDUCTIBLE IN THE FIRST PLACE FROM THE INCOME OF THE BUSINESS TO WHICH IT RELATES. IF SUCH DEPRECIATION AMOUNT IS LARGER THAN THE AMOUNT OF THE PROFITS OF THAT BUSINESS THEN SUCH EXCESS COMES FOR ABSORPTION FROM THE PRO FITS AND GAINS FROM ANY OTHER BUSINESS OR BUSINESS IF ANY CARRIED ON BY THE ASSESSEE. IF A BALANCE IS LEFT EVEN THEREAFTER THAT BECO MES DEDUCTIBLE FROM OUT OF INCOME FROM ANY SOURCE UNDER ANY OF THE OT HER HEADS OF INCOME DURING THAT YEAR. IN CASE THERE IS A STILL BALAN CE LEFT OVER IT IS TO BE TREATED AS UNABSORBED DEPRECIATION AND IT IS TAKEN TO THE NEXT SUCCEEDING YEAR. WHERE THERE IS CURRENT DEPRECIATION FOR SUCH SUCCEED ING YEAR THE UNABSORBED DEPRECIATION IS ADDED TO THE CURRENT DEPRECI ATION FOR SUCH SUCCEEDING YEAR AND IS DEEMED AS PART THEREOF. IF HOWEV ER THERE IS NO CURRENT DEPRECIATION FOR SUCH SUCCEEDING YEAR THE UNABSOR BED DEPRECIATION BECOMES THE DEPRECIATION ALLOWANCE FOR SUCH SUCCEEDING YEAR. WE ARE OF THE CONSIDERED OPINION THAT ANY UNABS ORBED DEPRECIATION AVAILABLE TO AN ASSESSEE ON 1ST DAY OF APRIL 2002 (A.Y . 2002-03) WILL BE DEALT WITH IN ACCORDANCE WITH THE PROVISIONS OF SECTION 32 (2) AS AMENDED BY FINANCE ACT 2001. AND ONCE THE CIRCULAR NO.14 OF 2 001 CLARIFIED THAT THE RESTRICTION OF 8 YEARS FOR CARRY FORWARD AND SET OF F OF UNABSORBED DEPRECIATION HAD BEEN DISPENSED WITH THE UNABSORBED D EPRECIATION FROM A.Y. 1997-98 UPTO THE A.Y. 2001-02 GOT CARRIED FORWA RD TO THE ASSESSMENT YEAR 2002-03 AND BECAME PART THEREOF IT CAME TO BE G OVERNED BY THE PROVISIONS OF SECTION 32(2) AS AMENDED BY FINANCE ACT 200 1 AND WERE AVAILABLE FOR CARRY FORWARD AND SET OFF AGAINST THE PR OFITS AND GAINS OF SUBSEQUENT YEARS WITHOUT ANY LIMIT WHATSOEVER. 8. THUS IT WAS PLEADED BY LD. AR THAT LD. CIT(A) D ID NOT COMMIT ANY ERROR AS WHAT HAS BEEN ALLOWED BY LD. CIT(A) IS IN ACCORDANCE WIT H LAW WHICH IS EXPLAINED IN THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF GENERAL MOTORS INDIA P. LTD (SUPRA). 9. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTENT IONS HAVE BEEN CAREFULLY CONSIDERED. IT IS THE CONTENTION OF LD DR THAT AM ENDED PROVISIONS OF SECTION 32(2) AS APPLICABLE FROM ASSESSMENT YEAR 2002-03 SHOULD NOT BE MADE APPLICABLE TO THE UNABSORBED DEPRECIATION CARRIED FORWARD BY THE ASSE SSEE FROM EARLIER YEARS. TO SUPPORT SUCH CONTENTION THE LD. DR HAS RELIED MAINLY ON TH E DECISION OF SPECIAL BENCH OF THE ITA NOS.673 TO 678/MUM/2013 13 TRIBUNAL IN THE CASE OF TIMES GUARANTY LTD (SUPRA) WHICH IS DIRECTLY ON THE ISSUE. HOWEVER SUBSEQUENTLY ON THE SAME ISSUE THE HONBLE GUJARAT HIGH COURT HAS RENDERED THE DECISION IN THE CASE OF GENERAL MOTORS INDIA P. LTD(SUPRA). CONSIDERING THE DECISION OF HONBLE GUJARAT HIGH COURT DESPITE T HERE BEING EXISTING DECISION OF SPECIAL BENCH OF MUMBAI BENCH THE MUMBAI BENCHES HAVE TAKEN A VIEW THAT IN VIEW OF SUBSEQUENT DECISION OF HONBLE GUJARAT HIGH COUR T THE DECISION OF SPECIAL BENCH OF TRIBUNAL IN THE CASE OF TIMES GUARANTY LTD (SUPR A) CANNOT BE FOLLOWED. FOR THIS PURPOSE REFERENCE HAS BEEN MADE BY LD. AR TO THE D ECISION OF MUMBAI BENCH I.E. IN THE CASE HINDUSTAN UNILEVER LTD (SUPRA) AND MILTON S PVT LTD (SUPRA). THE RELEVANT PORTION OF THE DECISION IN THE CASE OF MILTONS PV T LTD. HAS ALREADY BEEN REPRODUCED. NO CONTRARY DECISION HAS BEEN BROUGHT TO OUR NOTICE . 10. SO FAR AS IT RELATES TO RELIANCE BY LD. DR ON T HE DECISIONS OF HONBLE MADRAS HIGH COURT IN THE CASES OF (I) RPIL SIGNALLING SYSTEMS LTD (II) PIONEER ASIA PACKAGING PVT LTD AND (III) S & S POWER SWITCHGEAR LTD (SUPRA) IT MAY BE MENTIONED THAT THESE DECISIONS RELATED TO AMENDMENT BROUGHT INTO THE ST ATUTE FROM ASSESSMENT YEAR 1997-98 AND NONE OF THE DECISIONS RELATES TO AMENDMENT BROU GHT INTO STATUTE BY FINANCE ACT 2001 RELEVANT TO ASSESSMENT YEAR 2002-03 ONWARDS. WHEREAS THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE GENERAL MOT ORS INDIA P. LTD (SUPRA) IS DIRECTLY ON THE AMENDMENT BROUGHT INTO STATUTE BY FINANCE AC T 2001 RELATES TO ASSESSMENT YEAR 2002-03 ONWARDS AND IS DIRECTLY APPLICABLE TO THE FACTS OF THE PRESENT CASE. THEREFORE RELIANCE BY LD. CIT DR ON THE DECISIONS OF HONBLE MADRAS HIGH COURT IS MISPLACED. 11. SO FAR AS IT RELATES TO ARGUMENT OF LD. DR THAT THE ISSUE BEFORE THE HONBLE GUJARAT HIGH COURT WAS NOT RELATING TO INTERPRETAT ION OF AMENDMENT BOUGHT INTO STATUTE IN SECTION 32(2) BY FINANCE ACT 2001. IT MAY BE MENTIONED HERE THAT THIS CONTENTION OF LD. DR IS NOT CORRECT. THE RELEVANT PORTION OF DECISION OF GUJARAT HIGH ITA NOS.673 TO 678/MUM/2013 14 COURT HAS ALREADY BEEN REPRODUCED IN PARA 7 OF TH IS ORDER AND IT CAN BE SEEN FROM THESE OBSERVATIONS SPECIFIC ISSUE WAS CONSIDERED AND DECIDED BY HONBLE GUJARAT HIGH COURT. THE LD. CIT(A) WHILE RENDERING THE DECISI ON HAS RELIED UPON THE AFOREMENTIONED DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF GENERAL MOTORS INDIA P. LTD (SUPRA). NO CONTRARY DECISION HAS BEEN BROUGHT TO OUR NOTICE BY THE LD. DR. MUMBAI BENCH OF THE TRIBUNAL HAVE ALSO FOLLOWED THE SAID DECISION AND HAS DECIDED THE SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE. THERE IS NO MATER IAL ON RECORD TO PERSUADE US TO TAKE THE CONTRARY VIEW. THEREFORE WE DECLINE TO INTERF ERE IN THE RELIEF GIVEN BY LD. CIT(A) AND DEPARTMENTAL APPEALS ARE DISMISSED. 12. IN THE RESULT THE APPEALS OF THE DEPARTMENT AR E DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 17TH APRIL 2014. 1 2 17TH APRIL 2014 * SD SD ( / SANJAY ARORA) ( . . /I.P. BANSAL ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI: ON THIS 17TH DAY OF APR 2014 . . ./ SRL SR. PS / COPY OF THE ORDER FORWARDED TO : 1. % / THE APPELLANT 2. &'% / THE RESPONDENT. 3. 6 ( ) / THE CIT(A)- CONCERNED 4. 6 / CIT CONCERNED 5. 7 &9 . 9 / DR ITAT MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER TRUE COPY (ASSTT. REGISTRAR) . 9 /ITAT MUMBAI