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2016 (4) TMI 1394 - AT - Income TaxSet off of income offered u/s.68 against the loss incurred by the assessee - AO had not allowed the set off of the income offered u/s.68 against the loss incurred in all the regular heads of income specified in Section 14 - HELD THAT:- As in M/S. ERODE ANNAI SPINNING MILLS P. LTD. [2015 (11) TMI 587 - ITAT CHENNAI] business loss of the assessment year under consideration could be set off against the income assessed u/s.68 under the head ‘other sources’. However, the issue on hand before us in this appeal is whether unabsorbed depreciation of earlier years could be set off against deemed income u/s.69 of the Act or not, which is totally different issue. Section 72 of the Act does not permit set off of accumulated losses and unabsorbed depreciation against any other head of income other than the income from “profits and gains of business or profession”. Being so, the above order of the Tribunal has no application to the facts of the present case. Once unabsorbed depreciation is considered as part of current depreciation, no doubt, the net result of computation under the head 'Profits and gains of business or profession' for any given year would be inclusive of such unabsorbed depreciation. Needless to say that any loss as a result of such computation whether on account of unabsorbed depreciation or not would not be susceptible to a set off against income under the head salaries on account of specific Bar contained in sub-s. (2A) of s. 71 of the Act. Neither s. 72 nor s. 32(2) of the Act would in any way affect the inter-head adjustments specified u/s 71 of the Act nor the application of specific bar contained in sub-s. (2A) thereof. This being the case, we are of the opinion that the AO as well as the learned CIT(A) was well justified in not allowing the claim of the assessee for having its unabsorbed depreciation from earlier years to be set off against salary income. Accordingly, we are of the opinion that the CIT(A) is justified in disallowing set off of unabsorbed depreciation from earlier years against income from other sources. Hence, the appeal of Revenue is allowed.
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