1996 (5) TMI 47

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.... current depreciation but not by carried forward losses or depreciation or investment allowance for the purpose of relief under section 80J ? " The brief facts of the case are that the Income-tax Officer first set off unabsorbed depreciation, development rebate and brought forward losses claimed under section 80J for the earlier years before adjusting the deduction under section 80J of the current year. The order of the Income-tax Officer was confirmed in appeal. In the second appeal before the Tribunal it was observed that for the purpose of determining priorities the profits and gains for the current year should be reduced by current depreciation allowable but not by the amount of carried forward losses or depreciation or investment al....

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....is first brought into use or the business of the hotel starts functioning (such assessment year being hereafter in this section, referred to as the initial assessment year) and each of the four assessment years immediately succeeding the initial assessment year : .... (3) Where the amount of the profits and gains derived from the industrial undertaking or ship or business of the hotel, as the case may be, included in the total income (as computed without applying the provisions of section 64 and before making any deduction under Chapter VI-A in respect of the previous year relevant to an assessment year commencing on or after the 1st day of April, 1967 (not being an assessment year prior to the initial assessment year or subsequent to th....

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....ut not by carried forward losses or depreciation or investment allowance for the purpose of relief under section 80J. If various provisions of the Act including sections 32, 32A, 33, 33A and 72 are taken into consideration, it would be seen that the current year depreciation as contemplated by section 32(1) of the Act is the first charge which gets priority. The next number comes of the carried forward business losses in accordance with section 72(1) and (2) of the Act and then the unabsorbed depreciation comes at No. 3. The unabsorbed development rebate under section 33(2)(ii) and the current year's development rebate under section 32(1) come thereafter. The provisions of section 72(2) are subject to the provisions of section 32(2). The De....