TaxTMI 
TaxTMI 
2015 (12) TMI 1682
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....as filed by the assessee on 31.10.2007 declaring total income of Rs. 54,20,232/- under the head 'profits and gains from business or profession' and claimed the same to be set off against the brought forward business losses of Asst Year 1999-2000. The assessment was completed u/s 143(3) by the Learned AO on 23.11.2009. The total income was assessed at Rs. 2,61,32,164/- before allowing set off of the brought forward unabsorbed depreciation for earlier years. The Learned AO allowed set off of the unabsorbed depreciation of Rs. 2,61,32,164/- for the Asst Years 1983-84 to 1992- 93. He also passed an order to the effect that balance unabsorbed brought forward depreciation and unabsorbed business losses as shown in Annexure 11 of Tax Audit Report are allowed to be carried forward. The assessee accepted the said order and no appeal was filed against such adjustment of unabsorbed depreciation with the income so assessed. However, the assessee filed an appeal against different additions and disallowances made in the assessment order dated 23.11.2009 u/s 143(3) of the Act. Later the assessee was served with a notice u/s 154 of the Act dated 1.3.2011 alleging that the assessment order u/s 143(....
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.... "That on the facts and circumstances of the case, the ld.CIT(A) has erred in deleting the disallowance of set-off of unabsorbed depreciation of Rs. 2,61,32,164/-, which pertains to the period beyond the stipulated period of eight years limit." 5. The Learned DR argued that Section 32(2) of the Act was amended by Finance Act 1996 with effect from 1.4.1997 curtailing the number of years of set off of unabsorbed depreciation to 8 years and bringing it at par with set off of unabsorbed business losses. Again Section 32(2) of the Act was amended by Finance Act 2001 with effect from 1.4.2002 reintroducing the old version of section 32(2). He argued that the Explanatory Memorandum to Finance Act 2001 clearly states that the amended section 32(2) of the Act is prospective in nature and is effective only from Asst Year 2002-03 and hence in this scenario, the assessee could get the benefit of set off of brought forward unabsorbed deprecation losses for an infinite period only in respect of losses arising from Asst Year 2002-03 onwards and not for earlier years. He placed reliance on the judgements of Hon'ble Madras High Court in the case of CIT vs Pioneer Asia Packing P Ltd reported i....
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....out the intention behind this amendment which is as below:- With a view to enable the assesses to conserve sufficient funds to replace capital assets, specially in an era where obsolescence takes place so often, the Bill proposes to dispense with the restriction of 8 years for carry forward and set off of unabsorbed depreciation. This clearly goes to prove the intention of the legislature to provide the benefit of brought forward unabsorbed depreciation to be allowed to be eternally carried forward for an infinite period irrespective of the years to which it pertains. Though it is stated that the proposed amendment will take effect from 1st April 2002, going by the intention behind the amendment to this section vide Finance Act 2001 restoring back to the same old provisions as it was then existing prior to 1.4.1997 , it could only be logical to conclude that the legislature in its wisdom thought it fit not to disturb any of the unabsorbed depreciation losses to be made available for set off for an infinite period. In other words, the same has to be understood as the legislature only intended that any unabsorbed depreciation available to an assessee as on 1st April 2002 will b....
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....isions of two court judgements rendered by Hon'ble Madras High Court in the case of CIT vs Pioneer Asia Packing P Ltd reported in 310 ITR 198 (Mad) and CIT vs S&S Power Switchgear Ltd reported in 318 ITR 187 (Mad). We find that the issue before the Hon'ble Madras High Court and decision rendered thereon is as below:- As a result of the amendment of section 32(2) of the Income Tax Act, 1961, with effect from April 1, 1997, the deeming fiction of treating the earlier years unabsorbed depreciation as the current year's depreciation was removed. The period available for absorbing the unabsorbed depreciation against the profit of the succeeding years wsa limited to eight years. Held accordingly, that the Tribunal was right in its conclusion that the unabsorbed depreciation brought forward as on April 1, 1997, could be set off against the business profits and in remitting the matter to the file of the Assessing officer for verification as to how much depreciation was available upto April 1, 1997, that could be included in the income of the assessee. Similar was the decision rendered by the Hon'ble Madras High Court in 318 ITR 187 (Mad). We find that these judgements did not d....