IN HIGH COURT OF JUDICATURE AT MADRAS DATED: 05.02.2020 CORAM: HON'BLE DR. JUSTICE VINEET KOTHARI and HON'BLE MR. JUSTICE R.SURESH KUMAR, J T.C.(A).No.843 of 2010 M/s.Sanmar Speciality Chemicals Limited (formerly known as M/s.Sanmar Electronics Corporation Ltd) 47, Developed Plots for Electrical Electronics Chennai-600 096 Now at 9 Cathedral Road Chennai - 600 086. ... Appellant ..Vs.. Deputy Commissioner of Income Tax Company Circle-III (4) Chennai. ... Respondent Prayer: Tax Cases (Appeal) are filed under Section 260-A of Income Tax Act, 1961, against order of Income Tax Appellate Tribunal, Madras 'B' Bench, dated 07.10.2006 passed in I.T.A.No.1938/Mds/2003 for Assessment Year 1999-2000. http://www.judis.nic.in Judgment dt. 05.02.2020 in T.C.A.No.843 of 2010 [M/s.Sanmar Speciality Chemicals Limited Vs. Deputy Commissioner of Income Tax.] 2/6 2/4 For Appellant : Mr.R.Venkatanarayanan for Mr.Subbaraya Aiyer Senior Standing counsel For Respondent : Mr.J.Narayana Swamy Senior Standing Counsel JUDGMENT (Delivered by DR.VINEET KOTHARI, J.) present Appeal is directed against order dated 07.10.2006 passed in I.T.A.No.1938/Mds/2003 by Income Tax Appellate Tribunal, Madras 'B' Bench for Assessment Year 1990-2000, in which learned Income Tax Appellate Tribunal following decision of Special Bench in I.T.A.No.1225/Mds/2004 vide order dated 25.07.2006 decided Appeal in favour of Revenue and against Assessee. relevant portion of order of Tribunal is quoted below for ready reference: "6. We have heard rival contentions and perused relevant records. We find that Special Bench of this Tribunal in I.T.A.No.1225/Mds/2004, vide order dated 25th July 2006 has considered following question:- "In view of provisions of section 32 (2)(iii). Whether it is possible to set off brought forward depreciation loss against capital gains? After elaborately discussing issue, Special Bench vide order dated 25.07.06 has held as under:- http://www.judis.nic.in Judgment dt. 05.02.2020 in T.C.A.No.843 of 2010 [M/s.Sanmar Speciality Chemicals Limited Vs. Deputy Commissioner of Income Tax.] 3/6 3/4 "During course of discussion when Special Bench of Tribunal was being insisted upon, decisions of Tribunal in Uttam Air Products (P) Ltd. V. Dy. Commissioner of Income Tax in I.T.A.No.767/Del/2001 for assessment year 1997-98 reported in (2006) 99 TTJ (Del) 718, order dated 28.10.2004 and in Perfect Pharmacists (P) Ltd. Vs. Jt.Commissioner of Income Tax in I.T.A.No.247 (Ind.)/99 dated 16.04.2004 (2004) 140 Taxman 49 were relied upon and stated to be applicable to facts of case. At outset, we may observe that both said orders of Tribunal are concerned with assessment year 1997-98. decision in Uttam Air Products (P) Ltd. considered speech of Finance Minister and circular of CBDT No.762 dt. 18.02.1998 that explained manner in which amended provisions of section 32 (2) of Act would have to be acted upon, Bench came to conclude that unabsorbed depreciation for assessment year 1996-97 would have to be treated as depreciation allowance for assessment year 1997-98 and period eight years would be calculated from assessment 1997-98. In other case of Perfect Pharmacists (P) Ltd. identical facts existed as was in case of Uttam Air Products (P) Ltd. and for identical reasons, as in that case, Bench had approved claim of assessee. In present case before us assessment year 1999-2000, as mentioned earlier, and depreciation allowance is for assessment year 1997-98 which assessee is claiming for set off against income for present assessment year. As explained in earlier paragraph in table giving comparative position before amendment and after amendment it is absolutely clear that it is only section 32(2)(iii) of Act, that is operational in case of assessee. On that basis all that assessee could claim is for carry forward of unabsorbed depreciation for six more successive assessment years to be adjusted against http://www.judis.nic.in Judgment dt. 05.02.2020 in T.C.A.No.843 of 2010 [M/s.Sanmar Speciality Chemicals Limited Vs. Deputy Commissioner of Income Tax.] 4/6 4/4 income from profits and gains from same business from which depreciation claim arose and assessee would be entitled to carry this act for next six assessment years. Further, clear condition that is laid down in this section is that in assessment year in which assessee is claiming set off unabsorbed depreciation, assessee must be carrying on that business and income from that business must exist. To put it to other words, if business from which depreciation claim arose is not carried out in any of assessment years, assessee would not be entitled to set off. For aforesaid reasons, we decide question in negative, i.e. in favour of Revenue." 8. Since Special Bench has answered question in favour of Revenue for same assessment year, respectfully following precedent, we set aside order of CIT(A) and restore that of Assessing Officer. 9. In result, Revenue 's appeal is allowed." 2. learned counsel for Revenue brought to our notice decision of Co-ordinate Bench of this Court in case of Southern Travels Vs. Assistant Commissioner of Income Tax reported in (2015) 232 TAXMAN 0689 (Madras), in which Co-ordinate Bench of this Court has set aside order of learned Tribunal and remanded case back to Tribunal for consideration of entire issues afresh. Paragraph 9 and paragraph 20 are quoted below for ready reference: http://www.judis.nic.in Judgment dt. 05.02.2020 in T.C.A.No.843 of 2010 [M/s.Sanmar Speciality Chemicals Limited Vs. Deputy Commissioner of Income Tax.] 5/6 5/4 "9. Special Bench of Tribunal referred to provisions of Sections 32(2), 32 (2)(i), (ii) and (iii), Section 71 as also Section 72 of Income tax Act and was of view that in facts of present case, claim of assessee that unabsorbed depreciation should be allowed to be adjusted against capital gains is incorrect, as said provisions are not attracted to facts of present case." "20. In this view of matter, we are inclined to remand matter back to Tribunal to consider and pass orders on entire issues raised by assessee. Accordingly, order of Tribunal stands set aside and matter is remanded back to Tribunal for consideration of entire issues afresh." 3. In view of aforesaid Judgment of Co-ordinate Bench of this Court, we are not inclined to entertain present appeal and answer Questions of Law raised and matter deserves to be restored back to learned Tribunal. 4. Accordingly, Impugned Order dated 27.10.2007 is set aside and DR. JUSTICE VINEET KOTHARI,J http://www.judis.nic.in Judgment dt. 05.02.2020 in T.C.A.No.843 of 2010 [M/s.Sanmar Speciality Chemicals Limited Vs. Deputy Commissioner of Income Tax.] 6/6 6/4 and MR. JUSTICE SURESH KUMAR,J arr matter is remanded back to learned Tribunal for consideration of entire issues afresh. Both parties are at liberty to raise their contentions before learned Tribunal and learned Tribunal may decide matter in accordance with law. 5. With above directions, this Appeal is disposed of. No costs. (V.K.,J.) (R.S.K.,J.) 05.02.2020 Index : Yes/No Internet : Yes/No arr To Income Tax Appellate Tribunal Chennai 'B' Bench, Chennai T.C.(A).No.843 of 2010 http://www.judis.nic.in Judgment dt. 05.02.2020 in T.C.A.No.843 of 2010 [M/s.Sanmar Speciality Chemicals Limited Vs. Deputy Commissioner of Income Tax.] 7/6 7/4 T.C.A.No.843 of 2010 06.02.2020 http://www.judis.nic.in Judgment dt. 05.02.2020 in T.C.A.No.843 of 2010 [M/s.Sanmar Speciality Chemicals Limited Vs. Deputy Commissioner of Income Tax.] 8/6 8/4 Sanmar Speciality Chemicals Limited (formerly known as Sanmar Electronics Corporation Ltd) v. Deputy Commissioner of Income-tax, Company Circle-III(4), Chennai