AI Drafter 
TaxTMI 
TaxTMI 
2014 (10) TMI 1072
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.... 3. The assessee is a Company, stated to be engaged in the business of manufacturing of Cotton Yarn. The assessee filed its Return of Income for AY 2007-08 on 31.10.2007, declaring total income of Rs. Nil. The case was initially selected for scrutiny and assessment was framed u/s 143(3) vide order dated 03.12.2009 and total income was determined at Rs. Nil. Subsequently, the case was reopened u/s 147 of the Act by issuance of notice u/s 148 and thereafter, the assessment was framed u/s 143(3) r.w.s. 147 of the Act vide order dated 31.01.2013 and the total income was determined at Rs.17,40,65,341/-. Aggrieved by the order of the Assessing Officer, the assessee carried the matter before the CIT(A) who vide order dated 08.01.2014 dismissed ....
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....depreciation to the extent of Rs.16,04,96,163/- in view of provisions of Section 32(2) and it cannot be treated as current depreciation and accordingly disallowed the claim of the assessee. Aggrieved by the order of the Assessing Officer, the assessee carried the matter before the CIT(A). The CIT(A), after considering the submissions of the assessee and remand report from the Assessing Officer, upheld the order of the Assessing Officer by holding as under:- "8. Section 32(2) of the LT. Act, 1961, as it stands today is substituted by the Finance Act 2001, w.e.f. 1.4.2002. Prior to its substitution, sub-section (2), as amended by the Taxation Laws (Amendment and Miscellaneous Provisions) Act, 1986, w.e.f. 1-4- 1988, Direct Tax Laws (....
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....e wholly so set off, the amount of unabsorbed depreciation allowance not so set off shall be carried forward to the following assessment year not being more than eight assessment years immediately succeeding the assessment year for which the aforesaid allowance was first computed: Provided further that the time limit of eight assessment years specified in sub-clause (b) shall not apply in the case of a company for the assessment year beginning with the assessment year relevant to the previous year in which the said company has become a sick industrial company under sub-section (1) of section 17 of the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986) and ending with the assessment year relevant to the previous ye....
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....case-laws relied upon by the AR are distinguishable on facts. Even the circular quoted cannot help the argument of AR. I do not agree with the argument of AR discussed in the foregoing paragraph. When the law is plain & clear, there is no room for any other interpretation. Therefore, I uphold the action of A.O. in disallowing the carry forward and set off of unabsorbed depreciation at Rs.16,04,96,163/- pertaining to A.Ys. 1996-97 to 1999-2000. This ground of appeal is dismissed." 5. Aggrieved by the order of CIT(A), the assessee is now in appeal before the us. 6. Before us, at the outset, the ld. AR submitted that the issue in the present case about the adjustment of unabsorbed depreciation is covered in favour of the assessee by the ....
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....t would be governed by Section 32 as amended by Finance Act 2001? The Hon'ble High Court decided the issue by holding as under:- "Depreciation - carry forward and setting off of unabsorbed depreciation- Effect of amendment of Section 32 by Finance Act 2001 - Issue was whether unabsorbed depreciation pertaining to A.Y. 1997-98 could be allowed to be carried forward and set off after a period of eight years or it would be governed by Section 32 as amended by Finance Act 2001 - Held, Circular No.14 of 2001 clarified that restriction of 8 years for carry forward and set oof of unabsorbed depreciation had been dispensed with - Unabsorbed depreciation from A.Y. 1997-98 can be carried forward and set off against income of A.Y. 2006-07 - A....
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.... 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. Thus any unabsorbed depreciation available to an assessee on 1st day of April 2002 (A.Y. 2002-03) will be dealt with in accordance with the provisions of section 32(2) as amended by Finance Act, 2001. And o....