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TMI Blog2015 (3) TMI 1136X X X X Extracts X X X X X X X X Extracts X X X X ..... r the following years have lapsed in view of the provisions of section 32(2) and therefore, will not be available for set off:- A.Y. 2005-06 A.Y. 2006-07 A.Y. 2007-08 A.Y. 2008-09 Rs.5,60,855/- for the A.Y. 1997-98 Rs.5,49,314/- for the A.Y. 1998-99 Rs.7,35,730/- For the A.Y. 1999-2000 Rs. 24,40,070/- for the A.Y. 2000-01 2. The brief background of the case are that, assessee is engaged in the business of trading in cut and polished diamonds. In the assessment orders passed u/s 143(3) read with section 147, the Assessing Officer held that unabsorbed business losses were not set off prior but unabsorbed depreciation. Further unabsorbed depreciation for the assessment year, where 8 years have lapsed will not be allowe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set off, after a period of 8 years without any limit. The copy of such decisions were also filed before us. 4. On the other hand, Ld. DR relied upon the order of the Ld. CIT(A). 5. After considering the material placed on record and the relevant finding of the Ld. CIT(A) and the decisions relied upon before us, the only issue for our adjudication is, whether the finding of the AO and Ld. CIT(A) based on the decision of Special Bench in the case of Times Guarantee would be applicable or not. The AO as well as Ld. CIT(A) after relying upon the Special Bench decision have held that the unabsorbed depreciation for the A.Y. 1997-98; A.Y. 1998-99; A.Y. 1999- 2000 and A.Y. 2000-01 shall be considered as lapsed in the A.Y. 2005- 06, A.Y. 2006-07, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst income under any other head. (iii) Amount of current depreciation for assessment years 1997-98 to 2001-02 which cannot be so set off as per (ii) above, hereinafter called the 'Second unabsorbed depreciation allowance' shall be carried forward for a maximum period of eight assessment years from the assessment year immediately succeeding the assessment year for which it was first computed, to be set off only against the income under the head 'Profits and gains of business or profession'. C. In the third period (i.e., assessment year 2002-03 onwards) (i) 'First unadjusted depreciation allowance' can be set off up to assessment year 2004-05, that is, the remaining period out of maximum period of eight assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years for carry forward and set off of unabsorbed depreciation. The amendment is applicable from assessment year 2002-03 and subsequent years. This means that any unabsorbed depreciation available to an assessee on 1st day of April, 2002 (A.Y. 2002-03) will be dealt with in accordance with the provisions of section 32(2) as amended by Finance Act, 2001 and not by the provisions of section 32(2) as it stood before the said amendment: HHad the intention of the Legislature been to allow the unabsorbed depreciation allowance worked out in A.Y. 1997-98 only for eight subsequent assessment years even after the amendment of section 32(2) by Finance Act, 2001 it would have incorporated a provision to that effect. However, it does not contain any s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ption from the profits and gains from any other business or business, if any, carried on by the assessee. If a balance is left even thereafter, that becomes deductible from out of income from any source under any of the other heads of income during that year. In case there is a still balance left over, it is to be treated as unabsorbed depreciation and it is taken to the next succeeding year. Where there is current depreciation for such succeeding year the unabsorbed depreciation is added to the current depreciation for such succeeding year and is deemed as part thereof. If, however, there is no current depreciation for such succeeding year, the unabsorbed depreciation becomes the depreciation allowance for such succeeding year. We are of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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