TaxTMI 
TaxTMI 
2017 (12) TMI 881
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to as the 'Act'), dated 28.12.2011. 2.The assessee has raised the following grounds of appeal: 1.That the impugned order dated 22nd December 2015 passed by the learned Commissioner of Income Tax,(appeals) - 2 is liable to be quashed since it has been passed in haste without application of mind and without considering the evidences furnished & submissions made by the appellant in course of hearing of the appeal. 2.That on the facts & circumstances and in law the learned Commissioner of Income Tax, (appeals)-2 ought to have held that rectification order passed in the instant case was outside the purview of power vested with the assessing officer u/s154 of the Income tax act. 1961 in as much as the issues involved were debatable content....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eals) -2ought to have held that unabsorbed depreciation can be carried forward and set off in subsequent years without any time limit. 7. The appellant craves leave to add, alter, amend and modify any of the grounds before or at the time of hearing of this appeal." 3. Although, in this appeal, the assessee has raised a multiple grounds of appeal but at the time of hearing, the main grievance of the assessee has been confined to the issue that AO disallowed the claim of assessee for set off of brought forward unabsorbed depreciation relating to A.Y 1995-96 to 2000-01 against the income of A.Y 2009-10. 4.The brief facts qua the issue are that on scrutiny of the assessment order passed u/s 143(3) on 28.12.2011, the assessing officer found....
X X X X Extracts X X X X
X X X X Extracts X X X X
....wance cannot be wholly so set off, the amount ofunabsorbed depreciation allowance not so set off shall be carried forward to thefollowing assessment year not being more than eight assessment years immediatelysucceeding the assessment year for which the aforesaid allowance was firstcomputed." Therefore, going by the provisions of section 32(2) as it was before amendment andsince the amendment in Finance Act, 2001 was not retrospective, unabsorbed depreciation forthe Assessment Years 1995-96 to 2000-01 could not be set off beyond eight years. For example, unabsorbeddepreciation for the A.Y. 1995-96 could be set offagainst profit & gains upto A.Y 2003-04 and unabsorbed depreciation for the A.Y. 2000-01 could be set off against profit & gains....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ears without any time limit. Therefore it can be said that, current depreciation is deductible in the first place from the income of the business to which it 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 unabsorbed depreciation and it is taken to the next succeeding year. Where there is current depreciation for such succeeding year, the un....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y noted in our earlier para and is not being repeated for the sake of brevity. 8. We have heard the rival submissions and perused the materials available on record, we note that the CBDT Circular clarifies the intent of the amendment that it is for enabling the industry to conserve sufficient funds to replace plant and machinery and accordingly the amendment dispensed with the restriction of 8 years for carry forward and set off of unabsorbed depreciation. The amendment is applicable from assessment year 2002-03 and subsequent years. This means that any unabsorbed depreciation available to an assessee on 1st day of April, 2002 (A.Y. 2002-03) will be dealt with in accordance with the provisions of section 32(2) as amended by Finance Act, 20....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he A.Y. 2002-03 then it would be carried forward till the time it is set off against the profits and gains of subsequent years.Therefore, it can be said that, current depreciation is deductible in the first place from the income of the business to which it 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 unabsorbed depreciation and it is take....