Ita/8/2019 Of The Pr. Commissioner Of Income-Tax v. M/S Kids Kemp

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE JZ6TH DAY OF AUGUST 2071 PRESENT| THE HON’BLE MR. JUSTICE ALOK ARADHE AND| THE HON’BLE MR.JUSTICE HEMANT CHANDANGOUDAR. 1LT.A. NO.8 OF 2019 BEITWEEN 1. THE PR. COMMISSIONER OF INCOME-TAX. 5TH FLOOR, BMTC BUILDING 68O FEET ROAD, KORMANGALABENGALURU-560095.BENGALURU-560095. 2. THE DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE-1(2)(1), 2ND FLOOR BMTC BUILDING, 80 FEET ROAD. KORMANGALA, BENGALURU-560095. | .., APPELLANTS (BY SRI. SANMATHI E.I. ADV., FORSRI. ARAVIND K.V. ADV.,) |SRI. ARAVIND K.V. ADV.,) | AND M/S. KIDS KEMP.NO.18, RAMANNSHREE ARCADEM.G. ROAD, BENGALURU-560001PAN: AABFK 6993K. .. RESPONDENT (BY SRI. A. SHANKAR, SR. COUNSEL A/W_SRI. BHAIRAV KUTTAIAH, ADV.,) | THIS I.T.A. IS. FILED UNDER SECTION 260-A OFI.T.ACT, 1961 ARISING OUT OF ORDER DATED 25.05.2018PASSED|IN|M.P.NO.8/BANG/2018(INTTANO.1034/BANG/2016), FOR THE ASSESSMENT YEAR 2008-09, PRAYING TO: I. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW|STATED ABOVE. II]. ALLOW THE APPEAL AND SET ASIDE THE ORDERSPASSED BY THE INCOME TAX APPELLATE TRIBUNAL,BANGALOREINM.P.NO.8/BANG/2018(INITANO.1034/BANG/2016) DATED 25.05.2018 FOR ASSESSMENTYEAR 2OO8-09 ANNEXURE-C CONFIRMING THE ORDER OFTHE APPELLATE COMMISSIONER AND CONFIRM THE ORDERPASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX,CIRCLE-1(2)(1), BENGALURU. THIS I.T.A. COMING ON FOR FINAL HEARING, THIS DAY,|ALOK ARADHE J.,DELIVERED THE FOLLOWING: | JUDGMENT This appeal under Section 260-A of the Income TaxAct, 1961 (hereinafter referred to as ‘the Act’, for short) has| been filed by the revenue against the order dated|25.05.2018 passed by the Income Tax Appellate Tribunal.The subject matter of the appeal pertains to the AssessmentYear 2008-09. The appeal was admitted by a Bench of this Court on the following substantial question of law: "WhetherOf)thefactsandInthecircumstances of the case and in law, the Tribunalis right in law in setting aside the disallowance of set off of unabsorbed depreciation by followingthe judgment of Gujarat High Court in the case ofGENERAL MOTORSPRIVATE LIMITED., eventhougn the amenaments madaer to Section 32(2)of the Act whicn removed the gap of 8 years inallowing set off of unabsorbed depreciation isprospective and effective only from 1-4-2002?" 2. Facts leading to filing of this appeal briefly statedare that the assessee is a partnership firm and is engaged in|the business of sale of readymade garments. The assesseehad claimed set off of unabsorbed depreciation in relation to Assessment Years 1997-98, 1998-99 and 1999-2000 in thereturn of income. The aforesaid claim was accepted in tne|regular assessment under Section 143(3) for the AssessmentYears 2008-09 and JOO9-2Z010. Tne assessee was directed|to carry forward the depreciation in the proceeding underSection 143(1) of the Act for the Assessment Year 2010-11also. 3. Thereafter, a notice under Section 154 of tne Act:was served on the assessee Dy wnicn it was proposed to disallow the unabsorbed depreciation. The assessee|submitted its response to the aforesaid notices and the| 2. Facts leading to filing of this appeal briefly statedare that the assessee is a partnership firm and is engaged in|the business of sale of readymade garments. The assesseehad claimed set off of unabsorbed depreciation in relation to Assessment Years 1997-98, 1998-99 and 1999-2000 in thereturn of income. The aforesaid claim was accepted in tne|regular assessment under Section 143(3) for the AssessmentYears 2008-09 and JOO9-2Z010. Tne assessee was directed|to carry forward the depreciation in the proceeding underSection 143(1) of the Act for the Assessment Year 2010-11also. 3. Thereafter, a notice under Section 154 of tne Act:was served on the assessee Dy wnicn it was proposed to disallow the unabsorbed depreciation. The assessee|submitted its response to the aforesaid notices and the| Assessing Officer, by an order dated 25.02.2014 passed|under Section 154 of the Act, rectified the assessment anddisallowed the unabsorbed assessment of depreciation of theAssessment Years 1997-98 to 2001-02. The assessee filed|an appeal before the Commissioner of Income Tax (Appeals)wno by an order dated 29.02.2016 allowed the appeal on|merits but did not adjudicate the issue with regard to|jurisdiction raised by the assessee as the same had been|rendered academic. Being aggrieved, the revenue filed an|appeal whereas the assessee filed a cross-objection before|the Income Tax Appellate Tribunal. The Tribunal, by ajcommon order dated 06.07.2017, dismissed the appeal|preferred by the revenue as well as the cross-objection|preferred by the assessee and upheld the order passed by the Commissioner of Income Tax (Appeals) allowing theunabsorbed depreciation. It is pertinent to note that againstthe aforesaid order, the revenue has not filed any appeal. 4. The revenue, being aggrieved by the order of theTribunal dated 06.07.2017, filed a miscellaneous petition|wnich was dismissed py the Tribunal by an order dated| 25.05.2018. In the aforesaid factual background, this appealhas been filed.. 5. Learned counsel for the revenue submitted tnat tne|Tribunal grossly erred in dismissing the appeal preferred by the revenue by placing reliance on the decision of Gujarat|Hign Court in‘M/s. GENERAL MOTORS INDIA PVT. LTD.Vs, DEPUTY COMMISSIONER OF INCOME-TAX 354 ITR 244 (GUJ).It is furtner submitted tnat tne amendment.made to Section 32(2) of the Act which removed the cap of 8years in allowing the set off of unabsorbed depreciation, is prospective in nature and applies w.e.f. 01.04.2002 only. It|is further submitted that the Tribunal ought to haveappreciated that the amendment made to Section 32(2) of|tne Act is prospective in nature. In this connection, our|attention nas been invited to memorandum explaining theprovisions of Finance Act, 2001. Learned counsel for therevenue, while inviting the attention of this Court to the|decision of the Supreme Court in|‘COMMISSIONER OFCUSTOMS (IMPORT) MUMBAI Vs. M/s. DILIP KUMARAND CO. & ORS. (2018) 68 GST 239,nas submitted tnat tne provisions pertaining to deduction / exemption has to De|Strictly considered and in case there is any ambiguity in tne|provision, the benefit of the same has to be explained to therevenue. 6. On the other hand, learned Senior counsel! for tneassessee submitted that for invocation of Section 154 of the|Act, twin conditions have to be satisfied. Firstly, that there|nas to be a mistake. Secondly, sucn mistake has to bDe|apparent on the record. It is further submitted that theTribunal has recorded a categorical finding in the factsituation of the case, that the revenue has failed to make out|any error apparent on the face of record. It is further|Submitted that the issue involved in the appeal was|debatable and the Tribunal, after assigning reasons vide|order dated 06.07.2017, nad upneld the order of the|Commissioner of Income Tax (Appeals) allowing unabsorbeddepreciation. It is pointed out that the aforesaid order was|not challenged by the revenue. It is further submitted that|infact the substantial question of law involved in this appeal|does not arise for consideration. 7. We have considered the submissions made on both.sides and have perused the record. Admittedly, the revenuenas not challenged the order dated 06.07.2017 passed Dy tne Income Tax Appellate TridDunal Dy whicn the appealpreferred by the revenue was dismissed and the order|passed by the Commissioner of Income Tax (Appeals)|aliowing|theclaimOf|theaSSeSSCC for.unabsorbeddepreciation was upheld. In order to invoke Section 154 of|the Act, twin conditions are required to be satisfied namely|that tnere nas to be a mistake and such a mistake nas to be|apparent on record. It is settled in law that the detection of |such a mistake does not require a search or thnorougnapplication of mind and there cannot be a mistake in respect|of an issue which admits of two plausible opinion. In the|instant case, the Tribunal has dealt with the contention ot the revenue in paragraph 6 and has held that for the reasonsassigned therein, in the decision of Calcutta High Court in thecase of."PEERLESS GENERAL FINANCE & INVESTMENT CO. LTD. Vs. CIT 380 ITR 165does not apply to the case.of tne assessee and has recorded a finding tnat the| miscellaneous petition filed by the revenue is liable to be|dismissed as the revenue has failed to show any error|apparent on the face of the record in the order dated|06.07.2017 passed py the Tribunal. The order dated|06.07.2017 is based on the decision of the High Court of|Gujarat In|M/s. GENERAL MOTORS INDIA,SUPId.Tne.aforesaid order does not suffer from any mistake apparent|on the face of the record warranting invocation of power|under Section 144 of the Act. The Tribunal has therefore,|rightly dismissed the application filed by the revenue. The|substantial question of law framed by this Court in fact does|not arise for consideration in this appeal.| In the result, the appeal fails and is hereby dismissed. Sd/-JUDGE Sd/-—JUDGE RY|