2012 (2) TMI 649

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....77; 19,94,620/- against the "Income from Other Sources" in A.Y. 2009-10 which is in contravention of section 32(2), 72(2) & 73(3) of the I.T. Act, 1961 by ignoring the recent decision of Hon'ble Special Bench of ITAT Mumbai 'E' Bench in the case of DCIT vs. Times of Guaranty Limited (2010) 131 TTJ (Mumbai) (SB) 257 and without appreciating the full facts of the case." 2. Brief facts apropos this issue are that the assessee, a Private Limited Company, in the relevant assessment year was engaged in the business of manufacture and sale of M.S. Ingots. It had filed its return on 29.09.2009 declaring Nil income. In this case, survey u/s 133A of the Act was conducted during the F.Y. 2008-09 and the assessee company had surrendered an amount of &....

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....bined reading of sections 32(2), 72(2), 73(3) & 71(2A) clearly establishes that unabsorbed brought forward depreciation can be set off against the current years income even if it is under the head "income from other sources". The main grievance of the department is that ld. CIT(A) has not considered the decision of Special Bench in the case of DCIT vs. Times of Guaranty (Mum.) (SB). In this case, the Tribunal had considered the decision in the case of Virmani Industries (supra) and the effect of amendment to section 32(2) and has concluded as under in para 38 of its order: - "38. The legal position of current and brought forward unadjusted/unabsorbed depreciation allowance in the three periods, is summarized as under:- A. In the first p....

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.... the third period ( i.e. A.Y. 2002-03 onwards) i. `First unadjusted depreciation allowance' can be set off upto A.Y. 2004-05, that is, the remaining period out of maximum period of eight A.Y.s (as per Bi. above) against income under any head. ii. `Second unabsorbed depreciation allowance' can be set off only against the income under the head `Profits and gains of business or profession' within a period of eight A.Ys. succeeding the A.Y. for which it was first computed. iii. Current depreciation for the year u/s 32(1), for each year separately, starting from A.Y. 2002-03 can be set off against income under any head. Amount of depreciation allowance not so set off (hereinafter called the `Third unadjusted depreciation allowance') shall ....