2016 (10) TMI 1315

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....disposal. 3. The sole issue raised by the Department in this appeal is on the directions of ld. Commissioner of Income Tax (Appeals) to allow set off unabsorbed deprecation of B95,33,900/-. Assessee had filed a return disclosing total loss of B12,30,461/- and assessment was completed u/s.143(3) of the Income Tax Act, 1961 (herein referred as ' the Act') on 26.12.2008. Assessee was not allowed its claim for set- off of unabsorbed depreciation of B95,33,900/- pertaining to assessment year 1997-98. Ld. Assessing Officer was of the opinion that by virtue of Special Bench decision in the case of DCIT vs. Time Guaranty (2010) 4 ITR (Trib) 210 (Mum) (SB), unabsorbed depreciation loss was to be restricted as per the provisions prior to amendment....

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....r of the Tribunal, as contended by learned senior standing counsel for the Revenue. As per the amended provisions of section 32(2) of the Act, with effect from April 1, 1997, if the income from business for the assessment year is insufficient to absorb the depreciation allowance of that assessment year, the amended provision permits absorption of depreciation allowance of a business against profits and gains of any other business of the same assessment year. When the depreciation allowance of a business of the assessment year is not absorbed by any other business of the same assessment year, then the remaining unabsorbed depreciation allowance could be set off against the income under any other head, that is assessable for the same assessme....

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....R (St.) 12 ) also clarifies the issue to the following effect (page 27) : " Sub-section (2) of section 32, as it existed up to the assessment year 1996-97, provided that the unabsorbed depreciation of a year shall be added to the amount of the allowance for depreciation of the following previous year and deemed to be part of that allowance. Therefore, the unabsorbed depreciation allowance, if any, of the assessment year 1996-97 shall be added to the amount of the allow ance for depreciation of the assessment year 1997-98 and deemed to be part of the allowance for this year. In other words, the unabsorbed depreciation allowance of the assessment year 1996-97 shall be added to the allowance of 1997-98 and will be deemed to be the all....

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....n Sec. 40A(7)(b) of the Act. As per ld. Assessing Officer gratuity payment was covered by Sec. 43B(b) of the Act and actual payments alone were eligible for deduction. As per ld. Assessing Officer though payments effected by the assessee were to a approved gratuity fund and thus eligible for deduction u/s.40A(7)(b) of the Act, this did not cover the provision made for gratuity. According to him such provisions fell within the mischief of Sec. 43B(b) of the Act. Gratuity actually paid during the previous assessment year was allowed by the ld. Assessing Officer and provision for gratuity B36,32,090/- was disallowed. 11. Assessee had also claimed balance of additional depreciation of B2,92,95,364/- for which initial claim was allowed in pre....