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2015 (3) TMI 576 - HC - Income TaxComputation of deduction under Section 80HHC - entire loss of Filati unit Should be set off against the profits of Seide unit before computing deduction under Section 80HHC and not only the loss which does not fall within the ambit of exclusion under Section 10B as held by tribunal - Held that:- Identical questions as contained in substantial questions of law arose for consideration before this Court in CIT & ACIT Versus M/s SASKEN COMMUNICATION TECHNOLOGIES LTD [2014 (1) TMI 1538 - KARNATAKA HIGH COURT]. However, the Court was considering Section 80HHE which is in paramateria to Section 80HHC. After considering the arguments and relevant provisions, the said question was answered in favour of the assessee Depreciation claim - Tribunal held that depreciation has to be allowed irrespective of the fact that the Assessee has not claimed depreciation in the Return of Income? - Tribunal held that depreciation is to be allowed in respect of the ASSESSMENT YEARS 2001-02 i.e., prior to insertion of/coming into force of Explanation 5 to 32 - Held that:- The Apex Court in Mahindra Mill’s case [2000 (3) TMI 3 - SUPREME Court] was not merely interpreting Section 34. It was interpreting Sections 28 to 43A and the scheme of the Act and has made it very clear that the assessee is not bound to claim depreciation nor the revenue can grant depreciation even without his asking. If claiming depreciation is not in the interest of the assessee, Income Tax Officer has an obligation to advise him suitably. At any rate, this was the law as on that date in view of the judgment of the Apex Court. That probably the reason why it became necessary to introduce the explanation 5. Explanation 5 makes it clear that for the removal of doubts, it is hereby declared that the provisions of this sub-section shall apply whether or not the assessee has claimed the deduction in respect of depreciation in computing his total income. Though the words for removal of doubts has been interpreted, the said provision is clarificatory in nature. In the instant case, clarification becomes necessary because of the law laid down by the Apex Court and therefore from the day explanation is introduced, the area is covered by legislation, the Supreme Court judgment would have no application. Therefore Explanation 5 is necessarily to be read as prospective in nature. Admittedly, in the instant case, the explanation has no application to the Assessment year 2001-02 as the explanation was inserted with effect from 01.04.2002. Therefore, the view taken by the Tribunal is incorrect and requires to be interfered with. Decided favour of the assessee.
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