1995 (1) TMI 24

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....ng question has been referred under section 256(1) of the Income-tax Act, 1961, for the opinion of this court : " Whether, on the facts and in the circumstances of the case and on a correct interpretation of the provisions of sub-section (2) of section 32 of the Income-tax Act, 1961, the Tribunal was justified in holding that the unabsorbed depreciation of a registered firm which could not be s....

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....ter took the matter to the Commissioner of Income-tax (Appeals) to the effect that the Assessing Officer erred in allocating the unabsorbed depreciation to the partners instead of carrying it forward for the purpose of setting off against the future profits of the firm. The Commissioner of Income-tax (Appeals) turned down the contention of the assessee. Therefore, the assessee took up the matter b....

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....remains thereafter has obviously to be carried forward by the firm which is the assessee referred to in the sub-section.... This construction is also strengthened by the last part of the sub-section. When it talks of the depreciation allowance carried forward being added to the allowance for depreciation for the following previous year, it obviously refers to the depreciation allowance due to the ....

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....ch will be adjusted against the business and other income of each of the partners pro tanto ; (iii) If full effect cannot be given to the depreciation allowance of the assessee by the above processes and some depreciation remains unadjusted, the assessee-firm will carry it forward to the succeeding assessment year. " Going through the question referred and the facts and circumstances of the ....