Special Bench decision on 32(2)

[pawansingla]

INCOME-TAX TRIBUNAL DECISIONS
VOLUME 117
[ORDERS]
[2009] 117 ITD 1 (DELHI)
IN THE ITAT DELHI BENCH 'F'
Jai Ushin Ltd.
v.
Deputy Commissioner of Income-tax*, Central Circle-14, New Delhi
R.V. EASWAR, VICE PRESIDENT AND P.M. JAGTAP, ACCOUNTANT MEMBER
IT APPEAL NO. 3412 (DELHI) OF 2006
[ASSESSMENT YEAR 2003-04]
JANUARY 25, 2008

Section 32 of the Income-tax Act, 1961 - Depreciation - Unabsorbed depreciation  - Assessment year 2003-04 - Assessing Officer, while framing assessment of assessee-company, had set off unabsorbed depreciation relating to assessment year 1999-2000 against its income from house property for assessment year 2003-04 applying provisions of section 32(2) as applicable with effect from 1-4-2002 - Assessee contended that since unabsorbed depreciation was relating to assessment year 1999-2000, same could be set off only against business income as per provisions of section 32(2) as applicable to assessment year 1999-2000 and, therefore, Assessing Officer was not justified in setting off same against its income from house property as per provisions of section 32(2) as applicable with effect from 1-4-2002 - Whether since assessment year involved in instant case was 2003-04, provisions of section 32(2), as existed in statute as on 1-4-2003, would be applicable and, therefore, Assessing Officer was justified in his action - Held, yes

In above judgment department/Assessing Officer has taken a stand that amended provisions of sec. 32(2) will be applicable. Whereas department has taken a contrary view in front of special bench.

[ashutosh majumdar]

Sir,

what you are asking? The matter is pending before the SB in case of M/s Times Guaranty Ltd as per itatonline.org. Are you asking if the judgement has come? It has not come AFAIK.

[pawansingla]

I know that the matter is pending before special bench. That's why i am saying that in Jai ushin department/Assessing Officer taken a stand that amended provisions of sec.32(2) will be applicable. But before special bench Department has taken a stand that unamended law should be applied?

[pawansingla]

Geetanjali Trading vs. ITO (ITAT Mumbai)
Tuesday, January 19th, 2010
(202.6 KiB, 380 DLs)
 

Right to set-off loss is a "vested right" which is available despite amendment in year of set-off



In AY 2002-03, the assessee suffered a long-term capital loss. U/s 74(1) as it then stood, such loss could be carried forward and set off against all capital gains including short-term capital gains. S. 74 was amended in AY 2003-04 to provide that long-term capital loss could only be set-off against long-term capital gains and not against short-term-capital gain. When the assessee claimed a set-off in AY 2004-05 the question arose whether the amended law should apply or the un-amended law. HELD deciding in favour of the assessee:



(i) In Govinddas 103 ITR 123 (SC) it was held that unless the terms of a statute expressly so provide or necessarily require it, retrospective operation should not be given to a statute so as to take away or impair an existing right or create a new obligation or impose a new liability otherwise than as regards matter of procedure. If the enactment is ambiguous in language, which is fairly capable of either interpretation, it ought to be considered as prospective only.



(ii) Applying this principle, the amended s. 74 is applicable to computation of loss under the head "Capital Gains" for AY 2003-04 and onwards. As regards loss of earlier years, the law as it then stood gave a vested right of set off the loss against all capital gains. There is nothing in the amendment which withdraws the said vested right. Consequently, the loss can be set off against short-term capital gains despite the amendment.



Note: In Reliance Jute and Industries 120 ITR 921 (SC) it was held that though the 1922 Act provided for an indefinite period of carry forward of business loss, the limitation of 8 years imposed by the 1961 Act would apply and the assessee could not claim a 'vested right'. Per contra, in Shah Sadiq 166 ITR 102 (SC) it was held that the right given by the 1922 Act to carry forward the losses of speculation business was an "accrued and vested right" which had to be granted even after the repeal of the Act.


If raito of above judgment is applied in sec. 32(2) , then deceision of special bench should go in favour of the Department.Because this judgment has held that law as on date of loss will be applicable.In that situation unameded provisions of sec. 32(2) will apply according to which unabsorbed depreciation can be carried forward  for 8 succedding A.Y.and set off against busineess income only.

Let,s see whether department brings it to the notice of special Bench.