Unabsorbed depreciation and business losses can be set off against short-term capital gains from depreciable business assets under Section 72

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....The HC upheld reassessment proceedings validity following precedent in Galiakot Containers, as the assessee failed to challenge the Tribunal's reopening determination favoring revenue. However, the HC ruled in favor of the assessee regarding set-off of unabsorbed depreciation and business losses against short-term capital gains. The court distinguished between Section 72(1) requiring computation "under the head profits and gains of business" versus Section 72(1)(i) permitting set-off "against profits and gains of any business." Despite capital gains being assessed under different heads, the HC determined that gains from sale of depreciable business assets retain business income characteristics, particularly regarding depreciation recoupment.........