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2018 (2) TMI 1585 - AT - Income TaxAddition u/s 68 - set off of unabsorbed depreciation - Held that:- Instant case the addition was cash credits u/s 68 and the income required to be taxed as income from other sources and to be included in the gross total income. Once the addition is included in the gross total income, the AO has to allow the set off of unabsorbed depreciation loss as provided u/s 71 of the IT Act. Hon’ble Supreme court in CIT vs. Mother India Refrigeration Industries Private Ltd. (1985 (8) TMI 2 - SUPREME Court) held that the unabsorbed carried forward depreciation par takes the character of current year depreciation in the following year and the same is allowed to be set off against other heads of income of that year. AO has not assigned any reason for denying the claim of the assessee for set off of unabsorbed depreciation. Section 71 deals with the set off of loss from one head against income from another head. After setting up of losses against income under the same head, if the net result is still losses, the assessee can set off the such losses u/s 71 against income of the same year under any other head. Section 71 permits the assessee to set off losses other than capital gains against the income from other heads. Since the unabsorbed depreciation par takes the character of current year’s depreciation in the following year, we hold that the CIT(A) has rightly allowed the set off of unabsorbed depreciation and we do not find any infirmity in the well reasoned order of the Ld. CIT(A) and the same is upheld. - Decided against revenue.
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