ACIT Vs Elecon Engineering Company Ltd. (ITAT Ahmedabad)
Belated Return No Bar- Section 32(2) Prevails – Carry Forward of Depreciation Allowed Even Without Timely Return – ITAT Ahmedabad Allows Rs.2.38 Cr Carry Forward as Unabsorbed Depreciation
Ahmedabad Tribunal dismissed Revenue’s appeal, upholding CIT(A)’s finding that loss of Rs.2.38 crore was unabsorbed depreciation allowable to be carried forward, even though return was filed belatedly.
Assessee, engaged in manufacturing of industrial gears & couplings, filed return belatedly u/s 139(4) declaring unabsorbed depreciation of Rs.2.38 crore. CPC initially allowed carry forward in intimation u/s 143(1). AO later passed rectification u/s 154 denying set-off, treating it as business loss that could not be carried forward without filing return within due date u/s 139(1).
CIT(A) examined records & noted that depreciation of Rs.28.88 crore was claimed, while business profit before depreciation was Rs.24.59 crore, resulting in unabsorbed depreciation of Rs.4.29 crore. After set-off of income from other heads, Rs.2.38 crore remained unabsorbed depreciation eligible for carry forward u/s 32(2). He held that section 32(2), unlike section 80, does not mandate filing return within time limit to carry forward depreciation. Relying on precedents including ACIT vs Anil Printers Ltd. (ITAT Mumbai) & CIT vs Govind Nagar Sugar Ltd. (Delhi HC), CIT(A) quashed AO’s rectification.
