2013 (10) TMI 1363

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....rtaining to AYs 1997-98 to 1999 -2000 against the business  income of AY 2008-09;   2. The ld. CIT(A) erred in not considering the appellant's submissions of  applicability of the law as prevailing on the first day of the Assessment year  also supported by the orders of various superior courts." 2. Assessee filed return of income declaring taxable income of Rs.NIL and book  profit u/s 115JB of Rs. 4,41,29,438/-. In the re turn of income the assessee claimed  set off of brought forward unabsorbed depreciation  of earlier years amounting to  Rs.14,97,78,668/- which includes brought forward un absorbed depreciation of earlier assessment years 1997-98 to 1999-2000 of Rs. 4,76,8 1,470/-. AO stated th....

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....fo re the said amendment. Their  Lordships have stated that had the intention of th e Legislature being to allow the  unabsorbed depreciation allowance worked out in A.Y . 1997-98 only for eight  subsequent assessment years even after the amendmen t to section 32(2) by Finance  (No.1) Act, 2001 it would have incorporated a provi sion to that effect. However, it does  not contain any such provision. Their Lordships h ave held that the provision of section  32(2) as amended by Finance (No.1) Act, 2001 would  allow the unabsorbed  depreciation allowance available in the A.Ys. 1997- 98, 1999-2000, 2000-01 and 2001-02  to be carried forward to the succeeding years, and  if any unabsorbed deprecia....

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....p;of depreciation for the assessment year 2002-03 an d held that be deemed to be part  of that allowance, or if there is no such allowance  for that previous year i.e. assessment  year 2002-03 be deemed to be allowance for that pr evious year, and so on for the  succeeding previous year, which means unabsorbed d epreciation up to assessment year  2001-02 could be carried forward for set off for i ndefinite period. We consider it  prudent to reproduce para 8 of the said order as u nder :   "8. On reading the provisions of section 32(2) as i t stood prior to the amendment made by the Finance (No. 2) Act, 1996, i.e., operative up to and including assessment year 1996-97, it is seen that where, in the asses....

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....hat year; and in case there is still a balance left over, it is to be treated as unabsorbed depreciation and it shall be carried forward to the next succeeding year, and where there is current depreciation for such succeeding year, the unabsorbed depreciation brought forward from earlier year is added to the current depreciation for such, succeeding year and is deemed, by legal fiction, a part thereof. If, however, there is no current depreciation for such succeeding year, the unabsorbed depreciation becomes the depreciation allowance for succeeding year. In this view of the matter, section 32(2) contained an inde pendent provision for setting off unabsorbed depreciation carried forward from a preceding year. The unabsorbed depreciation can....

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....2) Act, 1996 (with effect from 1-4 -1997) has been substituted by the Finance Act, 2001, with effect from 1-4-2002 and status quo ante has been restored with effect from assessment year 2002 -03. The new sub-section (2) of section 32 as substituted by the Finance Act , 2001 with effect from 1-4- 2002 has restored the sub-section (2) of section 32 as it stood in the assessment year 1996-97. In other words, the restrictions impo sed by the Finance (No. 2) Act, 1996 with effect from 1-4-1997 in the matter o f set-off of unabsorbed depreciation has been dispensed with by substitutin g the section 32(2) by the Finance Act, 2001 with effect from 1-4-2002 and status quo ante i.e., status quo of section 32(2) as existed prior to the amendment made ....