The Income Tax Appellate Tribunal (ITAT), Pune bench, has allowed the carry forward of unabsorbed depreciation from assessment years 1997-98 to 2000-01 for set-off without any time limit.
Windsor Machines Limited, the assessee, sought to set off unabsorbed depreciation waiver amounting to Rs. 19,89,09,661/- from A.Ys. 1997-98 to 2000-01. However, the Assessing Officer (AO) restricted the set-off of the unabsorbed depreciation to A.Y. 2000-01.
In response to the appeal filed by the assessee, the Commissioner of Income Tax (Appeals) [CIT(A)] ruled that unabsorbed depreciation from A.Ys. 1997-98 to 2000-01 should be dealt with according to the provisions of section 32(2) of the Act, as amended by the Finance Act, 2001. The CIT(A) held that the carry forward of unabsorbed depreciation should be allowed and set off against the profits and gains of subsequent years without any limit.
Subsequently, the revenue filed a second appeal before the tribunal. During the proceedings, the tribunal observed that unabsorbed depreciation from A.Ys. 1997-98 to 2000-01 could be carried forward and set off against the profits and gains of subsequent years without a limit of 8 years. The bench further noted that the CIT(A) directed the AO to verify records and determine the correct allowable unabsorbed depreciation for A.Ys. 1997-98 to 2000-01, allowing the same to be carried forward for set-off with income for the year under consideration and also for set-off in the subsequent years.
After reviewing the facts and records, the two-member bench of G.D. Padmahshali (Accountant Member) and S.S. Viswanethra Ravi (Judicial Member) dismissed the grounds raised by the revenue. Kishor B. Phadke, Counsel for the assessee, and Ajay Kumar Kesari, appearing for Revenue, presented their arguments during the proceedings.
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