2010 (6) TMI 516 - AT - Income Tax

Carry forward or set off of unabsorbed depreciation - whether depreciation for assessment years 1997-98 to 1999-2000 which could not be absorbed, can be set off against `Income from other sources’ in assessment years 2003-2004 and 2004-2005 - Section 32(2) deeming the unadjusted depreciation allowance of the current year as the current depreciation allowance of the following year, is subject to the provisions of section 72(2) and section 73(3) - It is this clarification by the Finance Minister that sealed the fate of the unadjusted brought forward depreciation upto the end of the first period as available for set off against taxable profits or income under any other head for the assessment year 1997-98 and seven subsequent assessment years - it is obvious that section 32(2) is a deeming provision and by the legal fiction, the amount of depreciation allowance u/s.32(1) which is not fully absorbed against income for that year is deemed to be the part of depreciation allowance for the succeeding year - As the assessee is seeking to claim the set off of such brought forward unabsorbed depreciation allowance against income under the head `Income from other sources’, that cannot be accepted - Accordingly decided against the assessee