TMI Blog2013 (5) TMI 975X X X X Extracts X X X X X X X X Extracts X X X X ..... rm Capital Gain, ₹ 2,45,109/- as Short Term Capital Gain and not considering unabsorbed depreciation of ₹ 20031133/- for requisite set off. 3. Brief facts are that the assessee has transferred all its fixed assets for the block of land, plant and machinery and office equipments during the year, however, no capital gains were offered in this regard. Assessing Officer called for explanation. Assessee explained that the block of assets were transferred for consideration of ₹ 42,50 lacs and the WDV of the block was ₹ 76.95 lacs, thus, resulting in gross short term capital gains of ₹ 65.55 lacs. However, unabsorbed depreciation available for set off was ₹ 200,31,133/-. Therefore, the assessee had no income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee an opportunity of being heard. 6. Accordingly, the matter was taken up by the Assessing Officer. The assessee was asked to file the requisite details and accordingly, Assessing Officer computed the capital gain as under:- Long term capital gains: As per the provisions of section 50 of the Act it is ascertained that the sale of land does not come under the purview of short term capital gains as no depreciation is being claimed on it. Hence, the sale of land is taken under long term capital gains and the amount of long term capital gains is calculated as under:- Consideration of transfer of land ₹ 55,60,247/- Less: Indexed cost of acquisition Cost of acquisition x Cost of Index of 2005-06 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set off from brought forward business loss or unabsorbed depreciation. 7. Upon assessee s appeal Ld. Commissioner of Income Tax (A) noted that the contention of the assessee that assessee was not required to file return of income for A.Y. 2001-02 to 2005-06 is not correct. That it is only from the return of income that the Department can know whether the assessee has earned any income or incurred any loss. When the assessee has not filed any return for the A.Y. 2001-02 to 2005-06, it is not possible for the Assessing Officer to know how much income / loss was incurred by the assessee. He further observed that when a claim is made by the assessee that there was no income during these years, the onus lies upon the assessee to substantiat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital gain (long term and short term) cannot be set off from brought forward business loss or unabsorbed depreciation. Upon assessee s appeal Ld. Commissioner of Income Tax (A) has affirmed the action of the Assessing Officer and has inter-alia observed that the assessee has not filed return of intervening period for A.Y. 2001-02 to 2005-06 and hence, assessee cannot be allowed to avail the set off of the unabsorbed depreciation. In this regard, Ld. Commissioner of Income Tax (A) has observed that the case laws relied upon by the assessee are not applicable. Furthermore, he has referred that Punjab and Haryana High Court s Case in the case of C.I.T. vs. Haryana Hotels Ltd. (Supra) supports the case of the Assessing Officer. 10. In thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce for depreciation for the following previous year and deemed to be part of that allowance, or if there is no such allowance for that previous year, be deemed to be the allowance for that previous year, and so on for the succeeding previous years. 12. We further find that the decision of the Hon ble Punjab and Haryana High Court in the case of Haryana Hotels Ltd. (Supra) had dealt both with unabsorbed business loss and unabsorbed depreciation. 12.1 With regard to business loss the Hon ble High Court has held as under: A business loss cannot be carried forward unless it has been determined in pursuance of a return filed under s. 139. In order to be entitled to carry forward a business loss, the assessee must submit a return under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... off from current year s income. However, only the business losses of earlier years which are notified by the Assessing Officer are allowed to be carried forward and set off from the current year s income. Similarly, there is no provision under the Act which makes it mandatory for the assessee to file return for carry forward and set off of unabsorbed depreciation which is to be notified by the Assessing Officer as in the case of unabsorbed business loss. Therefore, the Tribunal was right in holding that the assessee is entitled to get unabsorbed depreciation of the earlier years 1984-85 and 1985-86 set off in 1987-88 even if no valid return for the asstt. yr. 1986-87 had been filed by the assessee. 13. A reading of the provisions of sec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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