TaxTMI 
TaxTMI 
2023 (10) TMI 138
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....short term capital gains? 2. The counsel agreed that instead of admitting and framing substantial question of law, the Court could hear the Appeal finally at this stage itself. 3. Appellant Bond Safety Belts (Dissolved) was a partnership firm and it came to be dissolved with effect from 6th December 2014. The Appeal therefore is filed through the erstwhile partners. 4. The firm had filed its return of income for the Assessment Year ("AY") 2010-2011 declaring total income of Rs. 2,02,07,915/- which was arrived at after claiming deduction for write off of debit balances amounting to Rs. 1,29,039.75/-. This included sundry creditors of Rs. 18,262.45 and deposits to various utilities amounting of Rs. 20,190/-. 5. The firm also had claimed as set-off against income, of unabsorbed depreciation amounting to Rs. 39,19,416/- which included unabsorbed depreciation of Rs. 13,89,661/- pertaining to AY 1996-97 to 2001-02. The depreciation of Rs. 39,19,416/- was set-off against net short term capital gains of Rs. 2,41,27,331/- and hence, the total income declared was Rs. 2,02,07,915/-. 6. The Assessing Officer ("AO") passed an assessment order dated 28th March 2013 under Section 1....
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....d which has been subsequently dismissed. 11. Mr. Sheth stated that he would not press the substantial question No. 1 proposed as quoted above due to the amounts being small. We make it clear that we have not expressed any opinion on that question. 12. As regards the 2nd substantial question of law proposed on the unabsorbed depreciation, a Division Bench of this Court in PCIT vs. Gunnebo India Pvt Ltd. ITA No. 1337 of 2016 dated 11th February 2019 (unreported), dismissed the appeal by following the judgment in General Motors (supra). The High Court while considering the appeal in Gunnebo (supra), has quoted the relevant portion of the order of ITAT which had dismissed the revenue's appeal where ITAT has held that as per the provisions of Section 32(2) of the Act read with Sections 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 income including long term capital gain and hence did not find any reason to interfere with th....
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....se in the backdrop of the assessee's challenge to a notice of reopening of the assessment The Gujarat High Court had held and observed as under - "38. Therefore, it can be said that, current depreciation is deductible in the first place from the income of the business to which it relates. If such depreciation amount is larger than the amount of the profits of that business, then such excess comes for absorption from the profits and 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 that a....
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....essee's business or profession in another country. 30.4 The Act has allowed depreciation allowance on all imported motor cars acquired on or after 1st April, 2001. 30.5 These amendments will take effect from the 1st April, 2002, and will, accordingly, apply in relation to the assessment year 2002-03 and subsequent years." 15. Therefore, the intent of the amendment was for enabling the industry to conserve sufficient funds to replace plant and machinery and accordingly dispense with the restriction of 8 years for carry forward and set-off of unabsorbed depreciation. The purpose of amendment in Section 32(2) of the Act by Finance Act 2001 should be interpreted purposively and harmoniously with the intent as it appears from CBDT circular. While construing taxing statutes, rule of strict interpretation has to be applied giving fair and reasonable construction to the language of the Section without leaning to the side of the Assessee or Revenue. But if the legislature fails to express clearly and the Assessee becomes entitled for a benefit within ambit of the Section, the benefit accruing to the Assessee cannot be denied. Therefore, as stated in General Motors (supr....
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....ciation. The Act has also clarified that in computing the profits and gains of business or profession for any previous year, deduction of depreciation under section 32 shall be mandatory. 30.3 Under the existing provisions, no deduction for depreciation is allowed on any motor car manufactured outside India unless it is used (i) in the business of running it on hire for tourists, or (ii) outside in the assessee's business or profession in another country. 30.4 The Act has allowed depreciation allowance on all imported motor cars acquired on or after 1st April, 2001. 30.5 These amendments will take effect from the 1st April, 2002, and will, accordingly, apply in relation to the assessment year 2002-03 and subsequent years." 37. The CBDT Circular clarifies the intent of the amendment that it is for enabling the industry to conserve sufficient funds to replace plant and machinery and accordingly the amendment dispenses with the restriction of 8 years for carry forward and set off of unabsorbed depreciation. The amendment is applicable from assessment year 2002-03 and subsequent years. This means that any unabsorbed depreciation available to an asses....