M/S.sanmar Speciality Chemicals Limited(Formerly Known As M/S.sanmar Electronics Corporation Ltd) v. The Deputy Commissioner Of Income Taxcompany Circle-Iii (4)Chennai

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 05.02.2020 CORAM: THE HON'BLE DR. JUSTICE VINEET KOTHARIandTHE HON'BLE MR. JUSTICE R.SURESH KUMAR, J M/s.Sanmar Speciality Chemicals Limited(formerly known as M/s.Sanmar Electronics Corporation Ltd)47, Developed Plots for Electrical ElectronicsChennai-600 096Now at9 Cathedral RoadChennai - 600 086. ...Appellant ..Vs.. The Deputy Commissioner of Income TaxCompany Circle-III (4)Chennai. ...Respondent Prayer: Tax Cases (Appeal) are filed under Section 260-A of theIncome Tax Act, 1961, against the order of the Income TaxAppellate Tribunal, Madras 'B' Bench, dated 27.10.2006 passed inI.T.A.No.1938/Mds/2003 for Assessment Year 1999-2000 against theorder dated 28.07.2003 made in ITA No 289/2002-2003 on the fileof the Commissioner of Income Tax (Appeals) , Chennai 34 forthe assessment year 1999-200 against the order dated 28.02.2003made in PAN/GIR No.Sa-107/ on the file of the DeputyCommissioner of Income Tax Company Circle - VI(1) Chennai forthe assessment year 1999-2000. For Appellant : Mr.R.Venkatanarayanan for Mr.Subbaraya Aiyer Senior Standing counsel For Respondent : Mr.J.Narayana Swamy Senior Standing Counsel https://hcservices.ecourts.gov.in/hcservices/ J U D G M E N T (Delivered by DR.VINEET KOTHARI, J.) The present Appeal is directed against the order dated27.10.2006 passed in I.T.A.No.1938/Mds/2003 by the Income TaxAppellate Tribunal, Madras 'B' Bench for Assessment Year 1990-2000, in which the learned Income Tax Appellate TribunalfollowingthedecisionoftheSpecialBenchinI.T.A.No.1225/Mds/2004 vide order dated 25.07.2006 decided theAppeal in favour of the Revenue and against the Assessee. Therelevant portion of the order of the Tribunal is quoted belowfor ready reference: "6. We have heard the rival contentionsand perused the relevant records. We findthat a Special Bench of this Tribunal inI.T.A.No.1225/Mds/2004, vide order dated25th July 2006 has considered the followingquestion:-"In view of the provisions of section 32(2)(iii). Whether it is possible to set offthe brought forward depreciation lossagainst capital gains?After elaborately discussing the issue,the Special Bench vide order dated 25.07.06has held as under:- "During the course of discussion whenthe Special Bench of the Tribunal was beinginsisted upon, the decisions of the Tribunalin Uttam Air Products (P) Ltd. V. Dy.CommissionerofIncomeTaxinI.T.A.No.767/Del/2001 for the assessmentyear 1997-98 reported in (2006) 99 TTJ (Del)718, order dated 28.10.2004 and in PerfectPharmacists (P) Ltd. Vs. Jt.Commissioner ofIncome Tax in I.T.A.No.247 (Ind.)/99 dated16.04.2004 (2004) 140 Taxman 49 were reliedupon and stated to be applicable to thefacts of the case. At the outset, we mayobserve that both the said orders of theTribunal are concerned with the assessmentyear 1997-98. The decision in Uttam AirProducts (P) Ltd. considered the speech ofthe Finance Minister and the circular of theCBDT No.762 dt. 18.02.1998 that explainedthe manner in which the amended provisionsof section 32 (2) of the Act would have to be acted upon, the Bench came to concludethat the unabsorbed depreciation forassessment year 1996-97 would have to betreated as depreciation allowance for theassessment year 1997-98 and the period eightyears would be calculated from assessment1997-98. In the other case of PerfectPharmacists (P) Ltd. identical facts existedas was in the case of Uttam Air Products (P)Ltd. and for identical reasons, as in thatcase, the Bench had approved the claim ofthe assessee.In the present case before us the assessmentyear 1999-2000, as mentioned earlier, andthe depreciation allowance is for theassessment year 1997-98 which the assesseeis claiming for set off against the incomefor the present assessment year. Asexplained in the earlier paragraph in thetable giving comparative position before theamendment and after the amendment it isabsolutely clear that it is only section 32(2)(iii) of the Act, that is operational inthe case of the assessee. On that basis allthat the assessee could claim is for carryforward of the unabsorbed depreciation forsix more successive assessment years to beadjusted against the income from profits andgains from the same business from which thedepreciation claim arose and the assesseewould be entitled to carry this act for thenext six assessment years. Further, theclear condition that is laid down in thissection is that in the assessment year inwhich the assessee is claiming the set offthe unabsorbed depreciation, the assesseemust be carrying on that business and theincome from that business must exist. Toput it to other words, if the business fromwhich the depreciation claim arose is notcarried out in any of the assessment years,the assessee would not be entitled to setoff. For the aforesaid reasons, we decidethe question in the negative, i.e. in favourof the Revenue." 8. Since the Special Bench has answered thequestion in favour of the Revenue for thesame assessment year, respectfully followingthe precedent, we set aside the order of CIT (A) and restore that of the AssessingOfficer. 9. In the result, the Revenue 's appeal isallowed." 2. The learned counsel for the Revenue brought to our noticethe decision of the Co-ordinate Bench of this Court in the caseof Southern Travels Vs. Assistant Commissioner of Income Taxreported in (2015) 232 TAXMAN 0689 (Madras), in which the Co-ordinate Bench of this Court has set aside the order of thelearned Tribunal and remanded the case back to the Tribunal forconsideration of the entire issues afresh. Paragraph 9 andparagraph 20 are quoted below for ready reference: "9. The Special Bench of the Tribunalreferred to the provisions of Sections 32(2), 32 (2)(i), (ii) and (iii), Section 71as also Section 72 of the Income tax Act andwas of the view that in the facts of thepresent case, the claim of the assessee thatunabsorbed depreciation should be allowed tobe adjusted against the capital gains isincorrect, as the said provisions are notattracted to the facts of the present case.""20. In this view of the matter, we areinclined to remand the matter back to theTribunal to consider and pass orders on theentire issues raised by the assessee.Accordingly, the order of the Tribunalstands set aside and the matter is remandedback to the Tribunal for consideration ofthe entire issues afresh." 3. In view of the aforesaid Judgment of the Co-ordinateBench of this Court, we are not inclined to entertain thepresent appeal and answer the Questions of Law raised and thematter deserves to be restored back to the learned Tribunal. 3. In view of the aforesaid Judgment of the Co-ordinateBench of this Court, we are not inclined to entertain thepresent appeal and answer the Questions of Law raised and thematter deserves to be restored back to the learned Tribunal. 4. Accordingly, the Impugned Order dated 27.10.2006 is setaside and the matter is remanded back to the learned Tribunalfor consideration of entire issues afresh. Both the parties areat liberty to raise their contentionsbefore the learned Tribunal and the learned Tribunal may decidethe matter in accordance with law. 5. With the above directions, this Appeal is disposed of.No costs. Sd/- Assistant Registrar(V) //True Copy// arr Sub Assistant Registrar To 1.The Income Tax Appellate Tribunal Chennai 'B' Bench, Chennai 2.Deputy Commissioner of Income TaxCompany Circle VI(1)/III(4), Chennai. 3.The Commissioner of Income Tax (Appeals) V,121, Mahatma Gandhi Road, Chennai-34. +1cc to Mr.J.Narayanaswamy, Advocate, S.R.No.9581 T.C.(A).No.843 of 2010 GMR(CO)KKV/07/08/2020