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2022 (9) TMI 505 - Income Tax
Rectification u/s 154 - set-off of unabsorbed depreciation against the income from other source in violation of Section 115BBE - Scope of CBDT circular No. 11/2019 dated 19.06.2019 - HELD THAT:- CBDT Circular No. 11/2019 dated 19.06.2019 which specifically issued in order to instruct the AOs to allow the set off of unabsorbed loss/depreciation in the assessment years prior to the amendment. We note that the circular was brought by Central Board of Direct Taxes to ensure the same treatment to be given to unabsorbed depreciation in the matter of set off of losses / depreciation against the addition made u/s 68 / 69/ 69A/ 69B / 69C/ 69D of the Act.
This Circular was brought out in view of amendment brought about by Finance Act, 2016 w.e.f 01.04.2017 which provides that no set off of any loss shall be given to assessee under the any of provision of the Act against the income as referred to in Clause A and B of sub-section (1) of Section 115BBE of the Act. Prior to that there was no provision existed in the Act and therefore it is permissible to set off of unabsorbed depreciation/losses against the said income. So in order to set the controversy at rest , a Circular No. 11/2019 dated 19.06.2019 was brought as the AOS were not allowing the set off.
A perusal of the Circular, abundantly makes it clear that prior to AY 2017-18 the said set off of loss has to be allowed and so the unabsorbed depreciation. Therefore, we do not find any merit in the conclusion drawn by the Ld. CIT(A) on this issue and accordingly we are inclined to reverse the same by directing the AO to allow the set off of unabsorbed depreciation to the assessee. We are not adjudicating the plea raised by the assessee that the withdrawal of set off in respect of unabsorbed depreciation allowed earlier by ways order u/s 154 is not permissible as the same is not apparent mistake. Resultantly, the appeal of the assessee is allowed.