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2020 (3) TMI 679 - AT - Income TaxDisallowances of set off of unabsorbed depreciation allowances against income under the head salary - Whether the provision of section 32(2) has not made any distinction between current year deprecation and unabsorbed depreciation? - HELD THAT:- From the language used in provisions of section 71(2A) and the explanatory memorandum to Finance Act, 2004, it is very clear that any losses under the head income from business or profession cannot be allowed to set off against income assessable under the head salaries. Therefore, we are of the considered view that the Ld. AO, as well as the Ld.CIT(A) were right in disallowed set off of unabsorbed depreciation allowances against income under the head salaries. This legal position has been strengthened by the decision of ITAT, Mumbai in the case of DCIT vs Time Guaranty Limited [2010 (6) TMI 516 - ITAT, MUMBAI] where the law has been explained, in light of provision of section 32(2) and held that losses under the head income from business or profession cannot be set off against income under the head income from other sources. In this view of the matter and respetfully following case laws considered hereinabove, including the decision of ITAT, Mumbai, in the case of DCIT vs Time Guaranty Ltd. (surpa), we are of the considered view that losses under the head income from business or profession, including unabsorbed depreciation, if any cannot be set off against income assessable under the head salaries. The Ld.CIT(A) after considering relevant facts has rightly confirmed disallowances of unabsorbed depreciation losses against income under the head salaries and hence, we are inclined to uphold the findings of the Ld.CIT(A) and reject ground taken by the assessee. Assessee made an alternate argument that if at all unabsorbed depreciation loss ise not allowed to be set off against salary income, and then said unabsorbed depreciation allowances may be allowed to carry forward to subsequent years. We find that there is no restriction, as per the provisions of section 72 to carry forward unabsorbed deprecation to subsequent years. Therefore, if the assessee has fulfilled conditions prescribed therein for carry forward of unabsorbed depreciation, then the ld. AO is directed to allow carry forwarded of unabsorbed deprecation to subsequent years.
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