TMI Blog2015 (3) TMI 576X X X X Extracts X X X X X X X X Extracts X X X X ..... lanation 5 to 32 - Held that:- The Apex Court in Mahindra Mill’s case [2000 (3) TMI 3 - SUPREME Court] was not merely interpreting Section 34. It was interpreting Sections 28 to 43A and the scheme of the Act and has made it very clear that the assessee is not bound to claim depreciation nor the revenue can grant depreciation even without his asking. If claiming depreciation is not in the interest of the assessee, Income Tax Officer has an obligation to advise him suitably. At any rate, this was the law as on that date in view of the judgment of the Apex Court. That probably the reason why it became necessary to introduce the explanation 5. Explanation 5 makes it clear that for the removal of doubts, it is hereby declared that the provisions of this sub-section shall apply whether or not the assessee has claimed the deduction in respect of depreciation in computing his total income. Though the words for removal of doubts has been interpreted, the said provision is clarificatory in nature. In the instant case, clarification becomes necessary because of the law laid down by the Apex Court and therefore from the day explanation is introduced, the area is covered by legislation, the Sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nit and has set off against the profits of Seide Unit. The Assessing Officer restricted the claim of set off under Section 80HHC by setting off the entire loss from Filati Unit even before arriving at the quantum of deduction under Section 80HHC. Aggrieved by the said order of the assessing officer, appeals are preferred 3. The profit to the Seide Unit was arrived at after deduction of Loss of the Filate Unit computed under Section 10B of the Income Tax Act. The assessee computed the profits from the Seide Unit at ₹ 52,88,43,929/-. While arriving at this amount the assessee did not claim depreciation for the Seide Unit. The assessee had filed a note along with the return that the assessee did not claim depreciation for the Seide Unit and the same cannot be thrust in the light of the decision of the Supreme Court in the case of Mahindra Mills reported in 243 ITR 56. 4. The assessing officer observed that the assessee has given full particulars of the opening of WDV so far as the additions during the year. The assessee had not given the rate of depreciation and the actual amount of depreciation and deducted the same from the profits. The Assessing Officer also observed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings, these appeals are filed. 9. The following substantial questions of law are framed for consideration: ITA No.50/2009: 1. Whether on the facts and circumstances of the case the Tribunal was right in holding that entire loss of Filati unit Should be set off against the profits of Seide unit before computing deduction under Section 80HHC and not only the loss which does not fall within the ambit of exclusion under Section 10B? 2. Whether on the facts and circumstances of the case the Tribunal was right in not appreciating that exemption under Section 10B falls under Chapter III which specifically states that income which does not form part of total income and as such the entire income/(loss) of Section 10B unit should be excluded/ignored from the computation of total income? ITA No.51/2009: 1. Whether on the facts and circumstances of the case the Tribunal was right in holding that depreciation has to be allowed irrespective of the fact that the Assessee has not claimed depreciation in the Return of Income? 2. Whether on the facts and circumstances of the case the Tribunal was right in holding that depreciation is to be allowed in respect of the ASSESSMENT Y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted. However, we do not see any substance in the said contention. Though Section 34 of the Income Tax Act is referred to and the said Section is deleted, the Supreme Court was considering not only Section 34 but also Sections 32 and 37. The relevant para reads as under:- The language of the provisions of Sections 32 and 34 is specific and admits of no ambiguity. Section 32 allows depreciation as deduction subject to the provisions of section 34. Section 34 provides that deduction under Section 32 shall be allowed only if prescribed particulars have been furnished. We have seen rule 5AA of the Rules which though since deleted provided for the particulars required for the purpose of deduction under Section 32. Even in the absence of rule 5AA, the return of income in the form prescribed itself requires particulars to be furnished if the assessee claims depreciation. These particulars are required to be furnished in great detail. There is a circular of the Board dated August 31, 1965, which provides that depreciation could not be allowed where the required particulars have not been furnished by the assessee and no claim for the depreciation has been made in the return. The Income-t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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