TaxTMI 
TaxTMI 
TaxTMI 
2018 (3) TMI 1343
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....on claimed for AY 2001-02 and earlier years by assessee of Rs. 57,22,613/- as current depreciation and allowed to be set off against the income of current year i.e. AY 2006-07." 3. Briefly facts are that the AO disallowed the claim of brought forward depreciation for AY 1997-98 to 2001-02 totaling of Rs. 57,22,613/- by relying on the decision of Bombay Special Bench of this Tribunal in the case of Times Guarantee Ltd. (2010) 40 SOT 14 (Mum) by stating that unabsorbed depreciation up to FY 2001-02 can be carried forward for 8 years only and can be adjusted only against business income. Before CIT(A), the assessee has relied on the decision of Hon'ble Gujarat High Court in the case of General Motors India Pvt. Ltd vs DCIT(2013) 354 ITR 244 (Guj) and he allowed the claim of the assessee by observing in Para 4.3 to 4.6 as under:- "4.3 I have considered the facts of the Assessing Officer, the submissions of the appellant and case laws cited carefully. The first issue is whether unabsorbed depreciation for AY 2001-02 and earlier years can be carried forward and adjusted as part of current depreciation in AY 2006-07. No doubt the special bench of the ITAT in the case of Times Guarantee....
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.... as current depreciation and would be allowed to be set-off against income from any other head. By an amendment to the provisions of Section 32(2) of the Act, w.e.f. 01-04- 1997,treatment of un-absorbed depreciation underwent a change-because as per the amended provisions un-absorbed depreciation was no longer deemed to be part of current depreciation and the period available for set-off of such unabsorbed depreciation from profits of subsequent years was restricted to eight years. It is noteworthy that during earlier period(up to 31.03.1997) no such time limit was prescribed.Vide finance Act,2001 the provisions of Section 32(2)were once again amended and a result the position as it existed prior to 01-04-1997 was restored back. From the amendments to Finance Act,2001 it is clear that legislative intent was to allow un-absorbed depreciation to be carried forward beyond period of eight years. For the AY under consideration,correct law applicable was the law that prevailed as on the first day of April of that AY.In our opinion during the assessment year under consideration, amended provisions were applicable and AO was supposed to calculate the un-absorbed depreciation as required by....
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.... Board of Direct Taxes in the Circular No.14 of 2001. The relevant portion of the said Circular reads as under:- "Modification of provisions relating to depreciation 30.1 Under the existing provisions of section 32 of the Income-tax Act, carry forward and set off of unabsorbed depreciation is allowed for 8 assessment years. 30.2 With a view to enable the industry to conserve sufficient funds to replace plant and machinery, specially in an era where obsolescence takes place so often, the Act has dispensed with the restriction of 8 years for carry forward and set off of unabsorbed depreciation. The Act has also clarified that in computing the profits and gains of business or profession for any previous year, deduction of depreciation under section 32 shall be mandatory. 30.3 Under the existing provisions, no deduction for depreciation is allowed on any motor car manufactured outside India unless it is used (i) in the business of running it on hire for tourists, or (ii) outside in the assessee's business or profession in another country. 30.4 The Act has allowed depreciation allowance on all imported motor cars acquired on or after 1 st April, 2001. 30.5 These amendments will take....
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....n 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 unabsorbed depreciation is added to the current depreciation for such succeeding year and is deemed as part thereof. If, however, there is no current depreciation for such succeeding year, the unabsorbed depreciation becomes the depreciation allowance for such succeeding year. We are of the considered opinion 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, 2001. And once the Circula....