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2014 (4) TMI 1001 - AT - Income TaxRevision u/s 263 of the Act – Rectification of mistake u/s 154 of the Act - Carry forward and set off of unabsorbed depreciation – Calculation of interest u/s 234B of the Act – Held that:- The revision order passed by the CIT u/s 263 of the Act is not only confusing but reveals non application of mind - the CIT has sought to revise the rectification order dated 18/08/2010 passed u/s 154 of the Act by the AO, but, actually the CIT has ended up revising the consequential order - The CIT has failed to substantiate with proper reasoning why the amendment made to the provision of section 32(2) of the Act by the Finance Act, 2001 removing time limit of 8 years, would not be applicable to the carry forward of unabsorbed depreciation pertaining to AY 1997-98 - The decision in GENERAL MOTORS INDIA PVT. LTD Versus DEPUTY COMMISSIONER OF INCOME-TAX [2012 (8) TMI 714 - GUJARAT HIGH COURT] followed - Current depreciation is deductible in the first place from the income of the business to which it relates - If such depreciation amount is larger than the amount of the profits of that business, then such excess comes for absorption from the profits and gains from any other business or business, if any, carried on by the assessee - If a balance is left even thereafter, that becomes deductible from out of income from any 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. 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 - once the Circular No.14 of 2001 clarified that the restriction of 8 years for carry forward and set off of unabsorbed depreciation had been dispensed with, the unabsorbed depreciation from A.Y.1997-98 up to the A.Y.2001-02 got carried forward to the assessment year 2002-03 and became part thereof, it came to be governed by the provisions of section 32(2) as amended by Finance Act, 2001 and were available for carry forward and set off against the profits and gains of subsequent years, without any limit whatsoever - the order passed by the AO u/s 154 of the Act cannot be said to be erroneous and prejudicial to the interests of the revenue so as to empower the CIT to revise it u/s 263 of the Act - the CIT has committed an error in revising the order passed u/s 154 of the Act - Even the CIT in the order passed u/s 263 has not mentioned that the issue being contentious one cannot be rectified u/s 154 of the Act – thus, the order u/s 263 of the Act is set aside – Decided in favour of Assessee.
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