1991 (9) TMI 148

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....that the unabsorbed depreciation could not be set off against the long term capital gains made for the year under consideration and thus rejected the claim of set off made by the assessee. The assessee has raised grounds to urge that the CIT(A) erred in his decision and that he ought to have held that the unabsorbed depreciation carried forward should be set off against long-term capital gains. ....

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....capital gains determined for the same year. The CIT(A) was of the opinion that in view of the provisions of the Income-tax Act, 1961 only the carried forward business loss will have priority over the unabsorbed depreciation of earlier years and this has been rightly done by reducing the business profits to nil. Quoting the observations of the Supreme Court in the case of Jaipuria China Clay Mines ....

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.... is force in the contentions of the learned counsel for the assessee that the claim made by the assessee is valid in accordance with the judgment of the Supreme Court in the case of Jaipuria China Clay Mines (P.) Ltd. In that case the total income of the assessee was Rs. 14,041 for the assessment year 1952-53. After deducting the current depreciation the net profit was determined at Rs. 8,681 agai....

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....gment is, therefore, a clear elucidation of the provisions of law contained in the Income-tax Act, 1961. In view of the legal fiction of deeming the unabsorbed depreciation as part of current year's depreciation for the purpose of determining the business profits, and inasmuch as the priority for unabsorbed depreciation has been given the unabsorbed depreciation is liable to be set off against the....