2007 (11) TMI 285

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.... 3. The assessee-company is engaged in the business of packing and printing. For the assessment year 2000-01, the assessee filed its return of income on 30.11.2000, declaring nil income. A notice under section 148 of the Income-tax Act, 1961, was issued on 13.9.2002. The return filed on 30.11.2000 was considered as the return filed in response to notice under section 148 of the Act. In the said return, the assessee claimed set off of capital gains amounting to Rs.10.57 lakhs against the brought forward unabsorbed depreciation. The assessee's explanation that prior to 1996 unabsorbed depreciation could be set off against any other head of income and could be carried forward individually. But, as per the amendment under Finance (No. 2) Act, 1....

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....ent year 2000-01?" 4. We heard the argument of the learned counsel for the Revenue and perused the materials on record. 5. We are not able to see any illegality or irregularity in the order of the Tribunal, as contended by the learned senior standing counsel for the Revenue. As per the amended provisions of section 32(2) of the Act, with effect from 01.04.1997, 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 ....

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....other head for the assessment year 1997-98 and seven subsequent years vide [1996] 222 ITR (St.) 36. Circular of the Central Board of Direct Taxes No.762, dated 18.02.1998 ([1998] 230 ITR (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 allowance for depreciation of assessment year 1997-98 and deemed to be part of the allowance for....