TMI Blog2004 (4) TMI 273X X X X Extracts X X X X X X X X Extracts X X X X ..... absorbed depreciation for earlier years against the income from house property for the year under consideration (hereinafter referred to as 'the impugned claim of the assessee') was disallowed by the Assessing Officer keeping in view the provisions of Section 32(2) as amended by Finance (No.2) Act, 1996 with effect from 1-4-1997. The learned CIT(A), however, allowed this claim of the assessee relying on the speech of the Finance Minister in Parliament while moving the Finance (No.2) Bill of 1996 assuring that the unabsorbed depreciation as on 1-4-1997 will be allowed to be set off against taxable business profits or income under any other head for assessment year 1997-98 and seven subsequent assessment years. Before us, the learned DR has m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h effect from 1-4-1997- "(2) Where, in the assessment or the assessee, full effect cannot be given to any allowance under clause (ii) of sub-section (1) in any previous year, owing to there being no profits or gains chargeable for that previous year, or owing to the profits or gains being less than the allowance, then, subject to the provisions of sub-section (2) of section 72 and sub-section (3) of section 73, the allowance or part of the allowance to which effect has not been given, as the case may be, shall be added to the amount of the allowance for depreciation for the following previous year and deemed to be part of that allowance, or if there is no such allowance for that previous year, be deemed to be the allowance for that previo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard to the following assessment year not being more than eight assessment years immediately succeeding the assessment year for which the aforesaid allowance was first computed: [Provided that the business or profession for which the allowance was originally computed continued to be carried on by him in the previous year relevant for that assessment year:] Provided [further] that the time limit of eight assessment years specified in sub-clause (b) shall not apply in the case of a company for the assessment year beginning with the assessment year relevant to the previous year in which the said company has become a sick industrial company under sub-section (1) of section 17 of the Sick Industrial Companies (Special Provisions) Act, 1985 (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the large number of post-budget memorandum the Finance Minister assured in his speech on moving the Finance (No. 2) Bill, 1996 that this proposed amendment will have prospective effect, inasmuch as the cumulative unabsorbed depreciation brought forward as on 1-4-1997 could still be set off against taxable business profits or income under any other head in assessment year 1997-98 and seven subsequent assessment years. The Finance Minister also made it clear in his Speech that the proposed amendment in Section 32(2) accordingly will have effect only after eight years and there is no cause for immediate concern about its likely impact on industry. It is thus clear that the effects of the amendment made in Section 32(2) by the Finance (No.2) A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... added to the allowance of 1997-98 and will be deemed to be the allowance of that year. The limitation of eight years shall start from the assessment year 1997-98." 6. A perusal of the aforesaid Circular issued by the CBDT, further makes it clear that the unabsorbed depreciation allowance of assessment year 1996-97 has to be added to the amount of allowance for depreciation of assessment year 1997-98 and the same having been deemed to be considered as the depreciation allowance for assessment year 1997-98, the assessee will be entitled to set off the same against business income or income under any other head for assessment year 1997-98. Under section 119, the CBDT has power, inter alia, to tone down the rigour of the law and ensure a fai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h circular. 7. In the present case, the relief allowed by the learned CIT(A) to the assessee in terms of adjustment of unabsorbed depreciation of the earlier years against the income from house property for the year under consideration i.e. assessment year 1997-98 was based on the assurance given by the Finance Minister in his Speech at the time of the relevant Finance Bill and since the same was further fortified by the aforesaid Board's Circular incorporating such assurance given by the Finance Minister, we are of the view that it was not open to the Revenue to challenge the relief so allowed by the learned CIT(A) on the plea that the same is not in consonance with the relevant provisions of law. In that view of the matter, we find no m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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