TaxTMI 
TaxTMI 
2008 (1) TMI 441
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....rn, income from business and income from house property was shown at Rs. 1,41,43,875 and Rs. 22,03,740 respectively and after adjusting carried forward business loss and unabsorbed depreciation relating to assessment year 1999-2000 against the business income to the extent of Rs. 1,41,43,875, total income was declared at Rs. 22,03,740 which represented income from house property. During the course of assessment proceedings, it was noticed by the Assessing Officer that there was still sufficient amount of unabsorbed depreciation relating to assessment year 1999-2000 available to the assessee which was liable to be set off against the income from house property as per the provisions of section 32(2) amended with effect from 1-4-2002. As the said amended provisions of section 32(2), according to the Assessing Officer, were applicable in the present case involving assessment year 2003-04, he set off the unabsorbed depreciation for assessment year 1999-2000 against the income of the assessee from house property for the year under consideration amounting to Rs. 22,03,740 and computed its income at nil The matter was carried before the learned CIT(A) and it was submitted on behalf of the ....
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....owing to the profits or gains chargeable being less than the allowance, then, subject to the provisions of sub-section (2) of section 72 and sub-section (3) of section 73, the allowance or the part of the allowance to which effect has not been given, as the case may be, shall be added to the amount of the allowance for depreciation for the following previous year and deemed to be part of that allowance, or if there is no such allowance for that previous year, be deemed to be the allowance for that previous year, and so on for the succeeding previous years.]" Provisions of section 32(2) as applicable from 1-4-1997 to 31-3-2002:- "(2) Where in the assessment of the assessee full effect cannot be given to any allowance under clause (ii) of sub-section (1) in any previous year, owing to there being no profits or gains chargeable for that previous year, or owing to the profits or gains being less than the allowance, then, the allowance or the part of allowance to which effect has not been given (hereinafter referred to as unabsorbed depreciation allowance), as the case may be,- (i) shall be set off against the profits and gains, if any, of any business or profession carried on ....
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....e allowance or the part of the allowance to which effect has not been given, as the case may be, shall be added to the amount of the allowance for depreciation for the following previous year and deemed to be part of that allowance, or if there is no such allowance for that previous year, be deemed to be the allowance for that previous year, and so on for the succeeding previous years." 6. As is evident from the aforesaid provisions, the unabsorbed depreciation of the previous year was being treated as current year's depreciation up to assessment year 1996-97 and the same therefore was allowed to be set off against income from any other head. As per the amendment made in the said provisions of section 32(2) with effect from 1-4-1997, the benefit available to the assessee as a result of treatment given to the unabsorbed depreciation of the earlier years as current year's depreciation by deeming fiction was taken away by the Finance (No. 2) Act, 1996. Even the period available for setting off such unabsorbed depreciation against the profits of the subsequent years was limited to eight years as against no such time prescribed in the pre-amended provisions. The provisions of section....
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....0 were governed by the provisions of section 32(2) as amended by the Finance (No. 2) Act, 1996 with effect from 1-4-1997, there was no dispute as to which of the provisions of section 32(2) were applicable i.e., whether the said provisions as amended with effect from 1-4-1997 or as amended with effect from 1-4-2002 as is involved in the present case. The issue involved in the said case before the Special Bench thus was entirely different which is also evident from the following question referred for the consideration of the Special Bench in the said case:- "In view of the provisions of section 32(2)(iii), whether it is possible to set off the brought forward depreciation loss against capital gains?" 9. Similarly, in the case of Keshwa Enterprises (P.) Ltd., the issue was different than the issue involved in the present case inasmuch as the unabsorbed depreciation in that case was related to assessment year 1996-97 and the same was sought to be set off by the assessee against income from house property and short-term capital gain for assessment year 2002-03. The said claim was disallowed by the Assessing Officer and when the learned CIT(A) allowed the same, the matter was carr....