TaxTMI 
TaxTMI 
TaxTMI 
2014 (11) TMI 682
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.... Rs. 34,75,000 to the income of your appellant and also disallowing Rs. 3.47,500 claimed by your appellant u/s 32 (1)(i )as depreciation@ 10%. 3. On the facts and circumstances of your appellant's case and in law, the learned Commissioner of Income Tax (Appeals) erred in upholding the learned assessing officer's order with regard to not allowing set off of Unabsorbed depreciation of Rs. 9,07,981 pertaining to 2001-2002 against Income from Other Sources viz. Interest on fixed deposit with bank. 4. On the facts and circumstances of your appellant's case and in law, the learned Commissioner of Income Tax (Appeals) erred in upholding the view of the learned assessing officer in disallowing bad debts written off by your appellant aggregating to Rs. 7,32,113. 6. On the facts and circumstances of your appellant's case and in law, the learned Commissioner of Income Tax (Appeals) erred in upholding the view of the learned assessing officer in disallowing depreciation u/s 32 (1)(i) of Rs. 1,31,538 claimed by your appellant on additions of Rs. 4,38,460made to Software." Ground Nos.1 & 2 2. Ground Nos.1 & 2 are relating to the addition of Rs. 34,75,000/- as unexplained exp....
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....en an opportunity to produce the necessary details and evidences in this respect before the AO. On the other hand, the Ld. D.R. has contended that the assessee has failed to explain as to what exactly was purpose of the expenditure incurred. 5. After going though the record on the file and hearing the Ld. Representatives of the parties, we deem it fit to restore the issue regarding the claim of depreciation to the file of the AO to decide it afresh after giving proper opportunity to the assessee to represent its case. This issue is accordingly allowed for statistical purposes. Ground No.3 6. Ground No.3, as reproduced above, is with regard to not allowing of set off of unabsorbed depreciation of Rs. 9,07,981/- pertaining to assessment year 2001-02 against income from other sources i.e. interest on fixed deposits with bank. The lower authorities denied the said set off observing that the current year depreciation which could not be set off against the profits and gains of business could be carried forward and adjusted only against profits and gains of business and not other heads of income. The Ld. counsel for the assessee has brought our attention to the relevant section 32(2) ....
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....owance 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.] 9. A perusal of the aforementioned section shows that Sec. 32(2) has been subjected to the provisions of Sec. 72(2) and 73(3) of the Act. Before discussing the provisions of Sec. 72(2) let us first analyze the provisions of Sec. 32(2) of the Act prior to this amendment w.e.f. 1.4.2002 "Substituted by the Finance Act, 2001, w. e. f 1-4-2002. Prior to its substitution, sub section (2), as amended by the Taxation Laws (Amendment and Miscellaneous Provisions) Act, 1986, w.e.f 1-4-1988, Direct Tax Laws (Amendment) Act, 1987, w.e..f 1-4-1989 and Finance Act, 1992, w.e.f 1-4- 1993, substituted by the Finance (No. 2) Act, 1996, w.e.f 1-4-1 997 and further amended by the Finance Act, 2000, w. e. f 1-4-2001, read as under: '(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 previou....
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....that been the intention of the legislature it would not have deleted phrase "of any business or profession in the post amended provisions of Sec. 32(2). The law regarding set off of unabsorbed depreciation upto 1.4.1996 was very liberal and set off was allowable against any income. This was also upheld by the Hon'ble Supreme Court in the case of CIT Vs CIT Vs Virmani Indus. Pvt. Ltd & Ors 216 ITR 607 (SC) (supra). However, the law regarding such set off was changed by the Finance Act No. 2 of 1996 and from A.Y. 1997-98 to 2002-03 the unabsorbed depreciation was put at par with business losses u/s. 72. However the status quo have been restored from A.Y. 2003-04 and therefore the ratio laid down by the Hon'ble Supreme Court in the case of CIT Vs Virmani Indus. Pvt. Ltd & Ors 216 ITR 607 (SC) (supra) once again hold good and so now unabsorbed depreciation can be set off against any income. Thus, the claim of current year's depreciation of Rs. 2,32,059/- is directed to be set off against the income under the head "Capital gains". Accordingly, ground No. 1 of the appeal is allowed. 11.Having considered the provisions of Sec. 32(2), it is also clear that if the current year&....
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....ion sheet and copy of return of income for the earlier years in support of the said claim. The Ld. A.R. of the assessee has explained from the said documents that said debts are past period debts wherein the respective parties either have refused to make the payment or there were no chances of recovery of the same. 10. After going through the documents relied upon by the Ld. A.R. and after hearing the Ld. Representatives of the parties, we are of the view that this issue requires adjudication afresh by the AO. We accordingly restore this issue to the file of the AO for decision afresh. Needless to say that the AO will give proper opportunity to the assessee to present its case and produce the necessary evidence and thereafter to decide the same by way of speaking order. Ground No.6 11. Ground No.6 is relating to disallowance of depreciation of Rs. 1,31,538/- on software expenses. The assessee during the year incurred expenses on purchase of software amounting to Rs. 4,38,460/-. The assessee claimed depreciation at the rate of 30%. The AO, however, observed that the assessee had put for use the said software for less than 180 days. He also observed that as per section 32(1)(ii) t....