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2014 (7) TMI 1268 - HC - Income TaxAdjustment of accumulated unabsorbed depreciation allowance brought forward as against income from house property and income from other sources - whether the assurance of the Finance Minister in Parliament that set-off of the cumulative unabsorbed depreciation brought forward from earlier years as on April 01, 1997 can be set off against the profits and gains of a business or profession or any other income of the tax payer for the assessment year 1997-98 and subsequent year forms part of the legislative intent and any construction contrary thereto is erroneous? - Held that:- the provisions introduced suggest that the unabsorbed depreciation allowance could not be wholly set off against the profits and gains, if any, of any business or profession carried on by the assessee. The unabsorbed depreciation allowance could be set off from the income under any other head during the assessment year 1997-98. If the unabsorbed depreciation allowance could not be wholly set off during the assessment year 1997-98, the left over could only be set off against the profits and gains, if any, of the business or profession in the assessment year 1998-99. This submission of Mr. Agarwal appears to be plainly correct on the basis of the wordings used in sub-section (2) of Section 32 as amended by the Finance (No.2) Act, 1996 with effect from 1st April, 1997. Both the questions are answered in the negative and in favour of the revenue. Another submission advanced by Mr. Bagchi that the unabsorbed depreciation of the previous year becomes depreciation of the current year as would appear from the Circular issued by the CBDT which has also been taken into account by the learned Tribunal may be correct, but that does not materially alter the situation. The intention of the legislature appearing from the amendment made by the Finance (No.2) Act, 1996 is that the depreciation unabsorbed or otherwise or current would be set off against the income arising from business or profession or any other income, but the left over portion thereof could not be set off in the assessment year 1998-99 except against the income arising from business or profession. Therefore, this submission of Mr. Bagchi does not help his case nor does the same lead to a different result of the appeal.
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