Tribunal permits set-off of depreciation from prior years against current income

The tribunal allowed the appeal, directing the Assessing Officer to permit the set off of depreciation from assessment years 1995-96 to 2000-01 against the income of the assessment year 2009-10 based on a purposive interpretation of the amendment in section 32(2) and a CBDT Circular clarifying the intent of the amendment.

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Issues Involved:
Appeal against order disallowing set off of unabsorbed depreciation for specific assessment years against current income.

Analysis:

Issue 1: Impugned Order Passed in Haste
The appellant argued that the order passed by the Commissioner of Income Tax (Appeals) was hasty and did not consider the evidence and submissions made during the appeal hearing. However, the tribunal did not find merit in this argument.

Issue 2: Rectification Order and Jurisdiction of Assessing Officer
The appellant contended that the rectification order passed by the Assessing Officer was beyond the scope of power vested under section 154 of the Income Tax Act. The tribunal examined the contentious issues involved and held that the rectification order was valid as the Assessing Officer rectified an apparent mistake in allowing set off of unabsorbed depreciation against the income of the relevant assessment year.

Issue 3: Treatment of Unabsorbed Depreciation
The main grievance of the appellant was the disallowance of set off of brought forward unabsorbed depreciation for specific assessment years against the income of the current assessment year. The tribunal analyzed the provisions of section 32(2) of the Act before and after the amendment in Finance Act, 2001. It was held that the unabsorbed depreciation could be carried forward and set off against profits and gains of subsequent years without any time limit post the amendment.

Judgment Outcome:
The tribunal allowed the appeal of the assessee, directing the Assessing Officer to permit the set off of depreciation from assessment years 1995-96 to 2000-01 against the income of the assessment year 2009-10. The decision was based on a purposive interpretation of the amendment in section 32(2) and the CBDT Circular clarifying the intent of the amendment.

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