2015 (7) TMI 982

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.... a company in which public are substantially interested. Assessee had un-absorbed depreciation of Rs. 55,52,124/- for AY. 1996-97 and Rs. 1,82,68,535/- for AY. 1997-98. These amounts were originally allowed to be set-off in an order u/s. 154 dt. 17-03-2010. Subsequently, Ld.CIT passed an order u/s. 263 on the order u/s. 154 dt. 17-03-2010 on the reason that depreciation pertaining to year 1996-97 and 1997-98 cannot be carried forward beyond eight years and accordingly set-off of the carried forward depreciation was not correct. He accordingly set aside the orders u/s. 154 and directed the AO to modify the order accordingly. AO passed consequential order denying the depreciation which was appealed before the CIT(A) who by the impugned orders....

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.... the issue and examined the contentions. Technically speaking, CIT(A) could not have allowed the appeal when the consequential order was passed on the directions of the CIT(A) u/s. 263. However, the orders of the ITAT were not placed before the CIT(A), consequently, Ld.CIT(A) decided the issue on merits of the contentions. Be that as it may, as the law stands now, assessee is entitled for set-off of carried forward depreciation. This is analysed in the order of the CIT(A) in para 6, which is extracted as under: "6. The information on record, submissions of the appellant are carefully considered. As per the Finance Act 1996 the unabsorbed depreciation can be carried forward for the next 8 subsequent years. This amendment takes effect from....

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....or 8 assessment years. 30.2 With a view to enable the industry to conserve sufficient funds to replace plant and machinery, especially in an era where obsolescence takes place so often, the Act has dispensed with the restriction of 8 years for carry forward and set off of unabsorbed depreciation. The Act has also clarified that in computing the profits and gains of business or profession for any previous year, deduction of depreciation under section 32 shall be mandatory. 30.3 Under the existing provisions, no deduction for depreciation is allowed on any motor car manufactured outside India unless it is used (i) in the business of running it on hire for tourists, or (ii) outside India in the assessee's business or profession in an....

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....r, it does not contain any such provision. Hence keeping in view the purpose of amendment of section 32(2) of the Act a purposive and harmonious interpretation has to be taken. While construing taxing statutes, rule of strict interpretation has to be applied, giving fair and reasonable construction to the language of the section without leaning to the side of assessee or the revenue. But if the legislature fails to express clearly and the assessee becomes entitled for a benefit within the ambit of the section by the clear words used in the section, the benefit accruing to the assessee cannot be denied. However, Circular No.14 of 2001 had clarified that under Section 32(2), in computing the profits and gains of business or profession for any....