| SooperKanoon Citation | sooperkanoon.com/75119 |
| Court | Income Tax Appellate Tribunal ITAT Chandigarh |
| Decided On | Jul-31-2006 |
| Judge | M Bakshi, Vice, G Pannu |
| Reported in | (2007)112TTJ(Chd.)572 |
| Appellant | Deputy Commissioner of Income Tax |
| Respondent | Asia Resorts |
2. The only issue in this appeal involves the efficacy or otherwise of an order passed by the AO under Section 154 of the IT Act, 1961 (in short 'the Act'), dt. 30th March, 2001 for the asst. yr. 1996-97. The AO has by way of present proceedings attempted to modify the order of the assessment made under Section 143(3) of the Act dt. 20th March, 1997 read with his order dt. 1st May, 2000 passed under Section 154 of the Act for the asst. yr. 1996-97. In the assessment finalized earlier, the AO had allowed the assessee set off of the earlier unabsorbed depreciation and losses amounting to Rs. 35,79,113, but as there was no sufficient income in the asst. yr. 1996-97, a portion of it was also allowed to be carried forward. It would be relevant to note here that brought forward unabsorbed depreciation of Rs. 35,79,113 corresponded to various assessment years starting from the asst. yr. 1985-86 and inclusive of and upto the assessment year immediately preceding i.e.
1995-96. The AO in the impugned order has tinkered with the brought forward unabsorbed depreciation on the plea that for the asst. yrs.
1985-86, 1987-88 and 1992-93, depreciation purported to have been remained unabsorbed has been wrongly adopted and accepted by the AO in the assessment originally determined dt. 20th March, 1997 read with order under Section 154 dt. 1st May, 2000 for the asst. yr. 1996-97. As a result, the AO recomputed the income for the asst. yr. 1996-97 as under:Income determined vide order under Section 154 of the IT Act, 1961 3,67,705dt. 1-5-2000Add unabsorbed depreciation allowed to be set off as per 35,79,113order under Section 143(3) of the IT Act, 1961 dt. 20-3-1997 _________Income determined 17,93,177 _________ 3. Against the aforesaid, the plea of the assessee, as advanced before the lower authorities as well as before us can be understood in the following lines. According to the assessee, the unabsorbed losses and depreciation for each of the assessment years starting from 1984-85 and upto and including the asst. yr. 1993-94 was a subject-matter of an order passed by the AO himself on 17th April, 1995, a copy of which has been placed in the paper book filed before us. The counsel explained that the said order was passed by the AO after considering the assessment and the appeal effects for various assessment years and by way of this order carry forward of the losses, depreciation and investment allowance was determined for each of the assessment years involved in the said order. The counsel further explained that the present order passed by the AO although purported to have been made for the asst. yr. 1996-97 was in fact aimed at rectifying the determination of losses for the assessment year covered by the order of the AO dt.
17th April, 1995. That insofar as the order dt. 17th April, 1995 is concerned, the same has become final inasmuch as it was beyond the power of the AO to rectify the same under Section 154 of the Act since the time-limit of four years as prescribed under Section 154(7) had elapsed. The AO, by doing the present order, has indirectly done what could not be done directly. That, therefore, the impugned order of the AO was vitiated in law and was thus required to the set aside.
4. We find that the aforesaid submissions of the assessee found favour with the CIT(A). The CIT(A) in para 1.2 of its order has made out a chart showing the computation of loss, unabsorbed depreciation, etc.
for various years as determined by the AO in its order dt. 17th April, 1995 and compared it with that determined by the AO in the impugned order passed under Section 154 dt. 30th March, 2001. On the basis of the aforesaid, the CIT(A) has arrived at a factual finding that the losses purported to be withdrawn by the AO by way of impugned order pertain to the asst. yrs. 1985-86, 1987-88, 1992-93. That such rectification for that assessment year had become time-barred and thus the impugned order was cancelled. Against the aforesaid, the Department is presently in appeal before us.
5. The learned Departmental Representative has attempted to defend the order of the AO on the ground that the CIT(A) has merely proceeded on the basis that the proceedings have become time-barred whereas if the issue was considered on the merits, the rectification made by the AO would be found in order. The learned Departmental Representative also submitted that no doubt the rectification carried out by the AO pertained to the loss determined earlier for the asst. yrs. 1985-86, 1987-88 and 1992-93, yet he was competent to pass an order in relation to the asst. yr. 1996-97, since the said losses were partly adjusted in the said year also.
6. After considering the rival pleas, perusing the orders of the lower authorities and fact situation emerging out of the material on record, in our view, there is no substance in the appeal of the Revenue.
Undisputedly, the rectification made by the AO by way of the impugned order passed under Section 154 of the Act has been made with reference to the asst. yr. 1996-97, yet in sum and substance, what is proposed to be rectified is unabsorbed depreciation determined and brought forward from the earlier assessment years. Such determination and the carry forward for the earlier years stood determined and became final by way of the AO's order dt. 17th April, 1995. To a specific query from the Bench with regard to the finality of the order of the AO dt. 17th April, 1995, the learned Departmental Representative could not bring anything on record to the contrary. Under such circumstances, clearly the time period permitted to the AO to rectify an order under Section 154 had elapsed in relation to his order dt. 17th April, 1995. If the AO could not rectify his order dt. 17th April, 1995 so as to alter the position of unabsorbed depreciation determined therein, the AO misdirected himself in making the impugned rectification in the asst.
yr. 1996-97. The indirect route adopted by the AO of passing an order under Section 154 for a subsequent assessment year i.e. 1996-97 is, therefore, unjustified having regard to the provisions of the Act. For the aforesaid reasons, we affirm the conclusion of the CIT(A) in cancelling the order of rectification passed by the AO under Section 154 dt. 30th March, 2001.