Ita/1358/2009 Of The Commissioner Of Income Tax,Cochin v. M/S.premier Tyres Ltd., Kalamasserry

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI & THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS FRIDAY, THE 23RD DAY OF JULY 2021 / 1ST SRAVANA, 1943 ITA NO. 1358 OF 2009 AGAINST THE ORDER IN ITA 1150/Coch/2005 dated 21.7.2006 OF I.T.A.TRIBUNAL, COCHIN BENCH, ERNAKULAM APPELLANT/Appellant: THE COMMISSIONER OF INCOME TAX,COCHIN. BY ADV SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT/Respondent: M/S.PREMIER TYRES LTD., KALAMASSERRY ERNAKULAM. BY ADVS. SRI.K.P.ABDUL AZEES SRI.V.ABRAHAM MARKOS SRI.BINU MATHEW SRI.JOSEPH MARKOSE SR. SRI.B.J.JOHN PRAKASH SRI.MATHEWS K.UTHUPPACHAN SRI.TERRY V.JAMES SRI.TOM THOMAS KAKKUZHIYIL THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 23.07.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI & THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS FRIDAY, THE 23RD DAY OF JULY 2021 / 1ST SRAVANA, 1943 ITA NO. 1359 OF 2009 AGAINST THE ORDER IN ITA 1151/2005 DATED 21.7.2006 OF I.T.A.TRIBUNAL, COCHIN BENCH, ERNAKULAM APPELLANT/Appellant: THE COMMISSIONER OF INCOME TAX COCHIN. BY ADVS. SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT/Respondent: M/s PREMIER TYRES LTD. KALAMASSERY, ERNAKULAM. BY ADVS. SRI.K.P.ABDUL AZEES SRI.V.ABRAHAM MARKOS SRI.BINU MATHEW SRI.JOSEPH MARKOSE SR. SRI.B.J.JOHN PRAKASH SRI.MATHEWS K.UTHUPPACHAN SRI.TERRY V.JAMES SRI.TOM THOMAS KAKKUZHIYIL THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 23.07.2021, ALONG WITH ITA.1358/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: JUDGMENT [ITA Nos.1358/2009, 1359/2009] S.V.Bhatti, J. Heard learned Standing Counsel Mr.Jose Joseph for the appellant and learned Senior Counsel Mr.Joseph Markose for the respondent. 2. The Commissioner of Income Tax, Cochin/Revenue is the appellant. Premier Tyres Ltd., Kalamassery/Assessee is the respondent. These two appeals are directed against the common order dated 21.7.2006 in ITA No.1150/Coch/2005 and ITA No.1151/Coch/2005 of the Income Tax Appellate Tribunal, Cochin Bench. 3. The circumstances relevant for disposing of the appeals are stated thus: The Assessing Officer, through Annexure-A effect order dated 31.1.2005, had given effect to the order of Income Tax Appellate Tribunal's order dated 14.12.2004. For appreciating the details of respective matters, the following Tabular statement is given. 4. Assessing Officer disallowed the claim of assessee for set off of unabsorbed depreciation for the assessment years 1998-1999 and 2001-02. The assessee filed appeals against the order in Annexure A dated 31.1.2005 before the CIT (Appeals) and CIT (Appeals) through order in Annexure-B dated 16.8.2005 allowed the appeal of assessee and directed AO to allow carry forward of the unabsorbed depreciation as claimed by the assessee against the income of assessment years 1998-99 and 2001-02. The revenue filed, as noted above, ITA Nos.1150 and 1151 of 2005 before the ITAT Cochin Bench. The appeals came to be dismissed through order in Annexure-C. Hence the subject appeals. The following substantial questions of law are framed for the consideration of this Court. 1. Whether on the facts and in the circumstances of the case, the carried forward unabsorbed depreciation relating to the assessment years 1979-80 to 1995-96 can be set off against the income of the assessment years 1998-99 and 2001-02? 2. Whether on the facts and in the circumstances of the case and on an interpretation of Section 32(2) of the Income Tax Act as it stood at the relevant time, the Tribunal is right in law in allowing the carry forward and set off of the unabsorbed depreciation and is not the same against law and the intendment of the legislature? 5. The issue relates to the entitlement of assessee to claim set off of 1. Whether on the facts and in the circumstances of the case, the carried forward unabsorbed depreciation relating to the assessment years 1979-80 to 1995-96 can be set off against the income of the assessment years 1998-99 and 2001-02? 2. Whether on the facts and in the circumstances of the case and on an interpretation of Section 32(2) of the Income Tax Act as it stood at the relevant time, the Tribunal is right in law in allowing the carry forward and set off of the unabsorbed depreciation and is not the same against law and the intendment of the legislature? 5. The issue relates to the entitlement of assessee to claim set off of unabsorbed depreciation in the assessment years in which the assessee has earned ITA Nos.1358 and 1359 of 2009 5 income and filed the return. The issue is considered by the Apex Court in Peerless General Finance and Investment Co.Ltd. v Commissioner of Income Tax [2016] 380 ITR 165(SC) and this Court in CIT, Cochin v Cochin Shipyard Ltd. [2019] 101 taxmann.com 174 (Kerala) and it has been held that the assessee can claim set off of unabsorbed depreciation against the income earned in the assesment year 1998-99 under the head of business income. 6. By following the judgments referred to above, the questions framed in ITA No.1358 of 2009 are answered against the revenue and in favour of the assessee. The questions framed in ITA No.1359 of 2009 are answered in favour of assessee and against the revenue. Consequently ITA No.1358 of 2009 is dismissed. ITA No.1359 of 2009 is allowed as indicated above. No order as to costs. sd/- S.V.BHATTI Judge sd/- BECHU KURIAN THOMAS Judge css/ ………..contd/- ITA No.1359 of 2009 The last sentence in paragraph 5 of the judgment dated 23/07/2021 is corrected as “The issue is considered by the Apex Court in Peerless General Finance and Investment Co.Ltd. v Commissioner of Income Tax [2016] 380 ITR 165(SC) and this Court in CIT, Cochin v Cochin Shipyard Ltd. [2019] 101 taxmann.com 174 (Kerala) and it has been held that the assessee can claim set off of unabsorbed depreciation against the income earned in the assessment year 1998-99 under any head of income”, and the second sentence of the last paragraph is corrected as “The questions framed in ITA No.1359 of 2009 are answered in the favour of the revenue and against the assessee”, vide order dated 31/03/2022 in I.A.No.1/2021 in ITA 1359/2009. APPENDIX OF ITA 1358/2009 PETITIONER ANNEXURE ANNEXURE-A COPY OF ORDER DATED 31.1.2005 GIVING EFFECT TO ITAT'S ORDER DETERMINING REVISED TOTAL INCOME AT RS. 5.59,84,220/- (AY 1998-99) ANNEXURE-B COPY OF ORDER DATED 16.8.2005 OF THE COMMISSIONER OF INCOME TAX (APPEALS) ANNEXURE-C COPY OF THE ORDER DATED 21.07.2006 OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH, COCHIN IN ITA NO.1150/COCH/2005 APPENDIX OF ITA 1359/2009 PETITIONER'S ANNEXURE ANNEXURE A COPY OF ORDER DATED 31.1.2005 GIVING EFFECT TO ITAT'S ORDER DETERMINING REVISED TOTAL INCOME AT RS.87,69,270/- FOR THE ASSESSMENT YEAR 2001-02. ANNEXURE B COPY OF ORDER DATED 16.8.2005 OF THE COMMISSIONER OF INCOME TAX (APPEALS). ANNEXURE C COPY OF THE ORDER DATED 21.7.2006 OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH, COCHIN IN ITA NO.1151/COCH/2005.