2011 (11) TMI 776

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..... 2. Briefly stated, facts of the case are that the assessee for the assessment year 2006-07 had business income of Rs. 21,61,463/- which had been set off against brought forward business loss for the assessment year 1998-99 to 2002-03 aggregating to Rs. 51,86,380/- and there was thus net business loss of Rs. 29,48,917/- for the year. There was also unabsorbed brought forward depreciation aggregating to Rs. 19,63,526/- for the assessment year 1998-99 to 2005-06. The assessee had also earned gain of Rs. 1,36,45,567/- from transfer of depreciable assets which had to be assessed as short term capital gain under deeming provisions of section 50. The assessee had set off unabsorbed business loss of Rs. 29,48,917/- and unabsorbed brought forwa....

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.... hand supported the order of the AO and placed reliance on the decision of the Special Bench of the Tribunal in the case of DCIT vs. Times Guarantee Ltd. (4 ITR (Trib.) 210). 4. We have perused the records and considered the rival contentions carefully. The dispute is regarding set off of brought forward business loss and unabsorbed depreciation against the deemed short term capital gain under section 50 of the IT Act. There is no dispute that brought forward business loss and unabsorbed depreciation can be set off against business income and, therefore, in case the short term capital gain is treated as business income, the claim of the assessee has to be allowed. The real dispute is, therefore, nature of income of deemed short term capi....