TaxTMI 
TaxTMI 
2017 (2) TMI 324
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....onsideration the appellant had filed Return of Income U/s. 139(1) of the Income Tax Act on 29.09.2008 declaring total income at Rs. NIL after claiming set off of brought forward business loss of Rs. 30,82,831/- and showing book profit u/s 115JB of the Act at Rs. 8,14,04,114/-. The case was selected for scrutiny assessment and notice u/s 143(2) of the Act was issued on 25.08.2009, followed by notice u/s 142(1) of the Act. Against the income of Rs. 2,18,70,576/- the assessee claimed set off of unabsorbed depreciation of Rs. 2,95,27,925/- which was brought forward from A.Y. 1999-2000. Such set off of unabsorbed depreciation brought forward from Asstt. Year 1999-2000 was disallowed/denied to the appellant on the ground that as per Section 32(2) which was applicable to Asstt. Year 1999-2000 unabsorbed depreciation can be carry forward-only to the maximum period of 8 years succeeding the Asstt. Year in which depreciation remains unabsorbed. Since in the case of the appellant said period of 8 year expired in Asstt. Year 2007-08, the appellant, is not entitled to set off as well as carry forward the unabsorbed depreciation of Asstt. Year 1999-2000 against the Income of Asstt. year 2008-09.....
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....according to which the un-absorbcd depreciation of the earlier year will become part and parcel of the current year depreciation and the same is required to be allowed in the current year under question subject to the provision of Section 72(2) & 73(3). As the substituted law permit us to carry forward unabsorbed depreciation indefinitely and such un-absorbed depreciation will become the current deprecation for the next Asstt. Year, we are very well legally entitled to claim set off of such brought forward depreciation against the income of current year. In support of our proposition that the law (as amended) on the first day of the Asstt year is to be applied we relied on the decision of Hon. Supreme Court in the case of Karimtharuvi Tea Estate Ltd. Vs. State of Kara la 60 ITR 262 (SC) and Reliance jute & Industries Ltd. Vs CIT120 ITR 921 (SC), In view of the above said legal position we request your honour to kindly consider provision of Section 32(2) as applicable for the Asstt. Year under consideration i.e. Asstt. Year 2008-09 and accordingly allowed us such set off to which we are very much entitled and drop the proposal of disallowing such set off. " 9. However, reply o....
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..... 01-02 at Rs. 30,82,831/- as against Rs. 29;77,230/- allowed in the assessment order. This ground of appeal is' allowed. Ground No.2 : The Learned Assessing Officer has further erred in law as well as on facts in denying the set off of Brought forward unabsorbed depreciation of Asstt. Year J 999-2000 amounting to . Rs. 2,94,27,925/- against the income of current year and carry forward of balance amount for the next Asstt. Year. 6,0 The appellant had claimed the set off of brought forward unabsorbed depreciation for A.Y. 99-2000 of Rs. 2,94,27,925/- from the total income. The same was denied by the A.O. The A.O. held that the unabsorbed depreciation pertaining to A.Y. 96-97 to A.Y. 01-02 (before the amendment to section 32(2) of the I. T. Act, 1961 w.e.f. A.Y. 02-03) is eligible for set off and carry forward for a maximum period of eight years only. The A.O. held that this is squarely covered by the decision of the Hon'ble ITAT in case of DGIT"vs. Times Guarantee Ltd. 40 SOT 14. The appellant made various submissions on this issue. However, in his last submission, the appellant submitted that this issue is squarely covered by the decision of the Hon'ble Guja....
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.... 32(2), in computing the profits and gains of business or profession for any previous year, deduction of depreciation under Section 32 shall be mandatory. Therefore, the provisions of section 32(2) .as amended by Finance Act, 2001 would allow the unabsorbed depreciation allowance available in the A.Y. 1997-98, 1999-2000, 2000-01 and 2001-02 to be carried forward to the succeeding years, and if any unabsorbed depreciation or part thereof could not be set off till the A.Y. 2 002-03 then it would be carried forward till the time it is set off against the profits and gains of subsequent years. 38. Therefore, it can be said that, current depreciation is deductible in the first place from the income of the business to which if relates. If such depreciation amount is larger than the amount of the profits of that business, then such excess comes for absorption from the profits and gains from any other business or business, if any, carried on by the assessee. If a balance is left even thereafter, that becomes deductible from out of income from any source under any of the other heads of income during that year. In case there is a still balance left over, it is to be treated as unabs....