Ita/155/2010 Of The Commissioner Of Income Tax,Kannur v. M/S.cannanore Co-Operative Hospital

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE P.S.GOPINATHAN WEDNESDAY, THE 21ST JULY 2010 / 30TH ASHADHA 1932 ITA.No. 155 of 2010() --------------------- ITA.448/COCH/2009 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT/RESPONDENT ---------------------------------------- THE COMMISSIONER OF INCOME TAX,KANNUR. BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT/APPELLANT ------------------------ M/S.KANNUR CO-OPERATIVE HOSPITAL SOCIETY LTD, TALAP, KANNUR-2. THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ALONG WITH ITA NOS.163 & 196 OF 2010 ON 21/07/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR &P.S.GOPINATHAN, JJ. ....................................................................I.T. Appeal Nos.155,163 & 196 of 2010 ....................................................................Dated this the 21 day of July, 2010. JUDGMENT Ramachandran Nair, J. The only question raised is whether the Tribunal was justified incancelling the order of the Commisisoner issued under Section 263 ofthe Income Tax Act holding that respondent is not entitled to theallowance of carried over unabsorbed depreciation under Section 32(2)of the Act. The respondent-assessee is a Co-operative society which isrunning a Co-operative hospital at Kannur. Though it startedfunctioning in the year 1980, no returns were filed until 2006.However, after a survey made in 2006, the department startedassessment from 2000-2001 onwards because all the assessments forthe first 20 years were barred by limitation. The assessee claimeddepreciation for the entire back period under Section 32(2) which,though allowed by the officer, was cancelled by the CIT in exercise ofsuo moto revisional power under Section 263. The Tribunal held thatSection 32(2) applies to respondent-assessee's case which had a very heavy carried forward depreciation. Even though Standing Counselsubmitted that carried forward depreciation cannot be allowed withoutcomputation by the department, we do not think the scheme underSection 32 requires any computation which applies when assessee hasprofit over depreciation claim. Since on facts Tribunal found thatSection 32(2) applies to the respondent, carried forward depreciationwas rightly found to be allowable. We see no merit in the appeals andare consequently dismissed. C.N.RAMACHANDRAN NAIRJudge P.S.GOPINATHANJudge pms