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2020 (2) TMI 730 - HC - Income TaxRevision u/s 263 - Respondent sought for rectification of the assessment order by setting-off the brought forward business loss and unabsorbed depreciation against the assessed income - whether claim of the assessee made for rectification has been justifiably allowed by the assessing officer? - Tribunal setting aside the order of the CIT passed under Section 263 - HELD THAT:- VIRMANI INDUSTRIES PVT. LIMITED [1995 (10) TMI 1 - SUPREME COURT] held that the expression “profits or gains chargeable” could not be confined to profits and gains from the business whose income was being computed under Section 10 of the Act. Proceeding further, Supreme Court held that effect must be given to depreciation allowance first against the profits or gains of the particular business whose income was being computed under Section 10 and if the profits of that business are not sufficient to absorb the depreciation allowance, the allowance to the extent to which it was not absorbed would be set-off against the profits of any other business and if a part of the depreciation allowance still remained unabsorbed, it would be liable to be set-off against the profits or gains chargeable under any other head and it is only if some part of the depreciation allowance still remained unabsorbed then only it can be carried forward to the next assessment year. Supreme Court explained that carried forward depreciation allowance is deemed to be part of and stands on exactly the same footing as the current depreciation for the assessment year under consideration and thus allowable as a deduction. Following the decision of the Supreme Court in Virmani Industries Pvt. Ltd. (supra), Tribunal took the view that this issue was conclusively decided and therefore, not allowing setting off the carried forward depreciation with the income of the assessment year under consideration was a mistake made by the assessing officer which was apparent from the record. When this mistake was pointed out to the assessing officer, he had rightly rectified the same under Section 154. In so far contention of Mr. Pinto that carried forward depreciation cannot be set-off against deemed income is concerned, we are of the view that such a situation does not arise in the present case. On a thorough consideration of the matter, we are in agreement with the view expressed by the Tribunal and find no error or infirmity therein. No substantial question of law.
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