TaxTMI 
TaxTMI 
2022 (1) TMI 427
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....The appeal was admitted on 15.12.2015, on the following substantial questions of law:- "1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the unabsorbed depreciation for the assessment year 1996-97, can be set off against short term capital gain for the assessment year 2007-08? 2) Is not the finding of the Tribunal bad especially when the intention of the legislature was to allow the set off from other income relating to unabsorbed depreciation for the assessment year 1996- 97 upto 8 years only as per Section 32(2)? and 3) Whether, on the material placed before it, the Tribunal was right in setting aside the order passed under Section 263?" 3.Heard Mr.T.Ravikumar, learned Senior Sta....
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.... omission of the aforesaid proviso was enumerated by the Central Board of Direct Taxes, vide Circular No. 794 dated 9-8-2000 [(2000) 245 ITR (Statute)] 21 that the unabsorbed depreciation allowance could be set-off against the income under any other head even where the business was not carried on. Clause 22 of the said circular which is relevant is as under: "22. Requirement of continuance of same business for set-off of unabsorbed depreciation dispensed with: 22.1 Under the existing provisions of sub-section (2) of section 32 of the Income-tax Act, carried forward unabsorbed depreciation is allowed to be set-off against profits and gains of business or profession of the subsequent year, subject to the condition that the business or pro....
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....lowed to be set-off against the income from business as well as against the other heads of income and unabsorbed depreciation in carry forward and become part of the depreciation of the subsequent year and the total depreciation becomes current year's depreciation as per section 32(1) of the Act, which is allowed to be setoff against the income under any head of income. As per the provisions of section 32(2) of the Act r.w.s. 70, 71 and 72 of the Act, it becomes very clear that the total depreciation comprising of the depreciation of the relevant assessment year along with the unabsorbed depreciation of the earlier years becomes the total current year's depreciation which is allowed to be set off against income under any head of inc....
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....d 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 tha....