2002 (9) TMI 88

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....that unabsorbed depreciation of an earlier year could not be allowed to be set off against the income taxed under section 56 (sic) of the Income-tax Act, 1961? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in upholding the allowance of only 10 per cent. of the total expenditure incurred by the assessee as expenditure for earning the income that was the subject-matter of tax?" The assessee-company, initially incorporated as a public limited company under the name and style of "CGR India Ltd.", was engaged in the business of manufacturing and assembling x-ray equipment. However, its business activity stopped from January 1, 1981, as the foreign collaborator had withdrawn from the company. The name....

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....er allowed set off of the carry forward unabsorbed depreciation of earlier years against the income computed under the head 'Income from other sources". The assessable income was thus reduced to nil. The assessee as well as the Revenue, being aggrieved by the order of the Commissioner of Income-tax (Appeals) took the matter in further appeal to the Tribunal. The Tribunal dismissed the appeal of the assessee regarding disallowance of the expenses but allowed the appeal filed by the Revenue, holding that the depreciation brought forward from earlier years could not be set off against income from other sources. On the assessee's moving an application under section 256(1) of the Act, the afore-noted questions, as corrected, have been refe....

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....depreciation allowance relating to the assessment year 1956-57 against the income for the following assessment years, any depreciation allowance still remained unabsorbed, it could be set off against the income for the accounting period relevant to the assessment year 1965-66. For coming to the said conclusion, the Supreme Court relied on its earlier two decisions in CIT v. Jaipuria China Clay Mines (P.) Ltd. [1966] 59 ITR 555 and Rajapalayam Mills Ltd. v. CIT [1978] 115 ITR 777, wherein it was observed that the unabsorbed depreciation was not only to be set off against other heads of income in the relevant previous year but where it is carried forward, it "stands exactly on the same footing as the current depreciation". Thus, reiterating t....