ITAT Delhi directs allowance of unabsorbed depreciation claim for 1986-87

The Appellate Tribunal ITAT Delhi-A allowed the appeal, directing the assessing officer to accept the claim for the allowance of unabsorbed depreciation for the assessment year 1986-87. The Tribunal emphasized that the depreciation amount needed to be considered under section 32(1) and that the claim should have been accepted by the assessing officer. The decision was based on the interpretation of the relevant provisions of the Act, ensuring the assessee's right to claim unabsorbed depreciation was upheld.

---

---

Issues:
1. Rejection of claim for unabsorbed depreciation of the earlier year.

Analysis:
The appeal before the Appellate Tribunal ITAT Delhi-A arose from the order passed by the Commissioner of Income-tax (Appeals)-V, New Delhi, rejecting the claim for unabsorbed depreciation of the earlier year. The issue revolved around the assessing officer's rejection of the claim for unabsorbed depreciation for the assessment year 1986-87 due to the late filing of the return. The Commissioner (Appeals) upheld the decision, stating that the depreciation needed to be computed and determined before carry forward, which was not done in the said assessment year.

In the detailed analysis, the Tribunal Member noted that the assessing officer treated the return of income for the assessment year 1986-87 as non est under section 139(10) due to being filed after the due date, thereby rejecting the claim for unabsorbed depreciation. However, the Member opined that the provisions of section 139(10) could only be invoked if the return showed income below the taxable limit. The statement of income for 1986-87 indicated a business loss before depreciation, justifying the late filing. The Member emphasized that the depreciation amount needed to be considered under section 32(1) as per section 32(2) requirements, and the claim should have been accepted by the assessing officer.

Furthermore, the Tribunal Member considered case laws cited by the assessee's representative, highlighting the distinction between business loss and unabsorbed depreciation carry forward under different sections of the Act. The Member clarified that the claim fell under section 32(1) for depreciation allowance, and the unabsorbed depreciation should be part of the depreciation under section 32(1) for the subsequent assessment year. The Member disagreed with the arguments presented by the Senior Departmental Representative, emphasizing the specific provisions of the Act governing depreciation and business loss carry forwards.

Ultimately, the Tribunal allowed the appeal, directing the assessing officer to accept the claim for the allowance of unabsorbed depreciation for the assessment year 1986-87 and calculate the depreciation allowance required under section 32(1) accordingly. The decision was based on the interpretation of the relevant provisions of the Act and the specific circumstances of the case, ensuring the assessee's right to claim unabsorbed depreciation was upheld.

---