TMI Blog2013 (7) TMI 974X X X X Extracts X X X X X X X X Extracts X X X X ..... from 18/06/1986. During the year under consideration, the assessee has set off of brought forward losses to the extent of ₹ 14,76,08,608/- pertaining to AYs 1988-89 to 2006-07. However, the assessee is eligible to set off of brought forward losses to the extent of ₹ 8,31,93,807/- only as pr Finance (No.) Bill, 1996 i.e., losses from the AY 1988-89 to AY 2000-01 cannot be set off. Hence, there is an excess claim of brought forward losses to the extent of ₹ 6,44,14,801/-. In this regard, vide notice u/s 142(1) dated 21/07/2011, the assessee was asked to explain as to why the excess set off of brought forward losses of ₹ 6,44,14,801/- should not be disallowed. In response, the assessee vide letter dated 16/08/2011 subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000 and 2000-01 were eligible for set off against the income for the assessment year 2007-08, therefore, this should be allowed and the WDV of the block of assets should be changed accordingly. 5. The CIT(A) after discussing the issue elaborately, held as follows: 5. The second argument of the appellant is that the current depreciation for the AYs. 1999-2000 and 2000-01 is eligible for set off against the income for the AY 2007-08 as it falls within a period of 8 assessment years. 5.1 Given the above facts and circumstances, I hold that for the assessment years 1997-98 to 2001-02, the period of 08 years for carry forward of unabsorbed depreciation applies. The interpretation of the AO is correct. However, the appellant is to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an 8 years, on which the appellant relied during the assessment proceedings. 7. The learned DR placed reliance on the order of the CIT(A). 8. The learned counsel for the assessee submitted the issue under consideration is squarely covered by the decision of Hon ble Gujarat High Court in the case of General Motors India (P) Ltd. Vs. DCIT, [2012] 25 Taxmann.com 364. 9. We have heard the arguments of both the parties, perused the record and have gone through the orders of the authorities below as also the decisions cited. From the fact that the issue of carry forward of unabsorbed depreciation in the context of various amendments to sec 32(2) from 1.4.1998 has been taken to the Special Bench in the case of Times Guaranty Ltd would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in that previous year shall be carried forward and added to the depreciation allowance of the next year and he deemed to be part thereof.' [Para 31] So, the unabsorbed depreciation allowance or assessment year 1996-97 would be added to the allowance of assessment year 1997-98 and the limitation or 8 years for the carry-forward and setoff' of such unabsorbed depreciation would start from assessment year 1997-98. [Para 32] The provision of section 32(2) was introduced by Finance (No. 2) Act, 1996 and further amended by the Finance Act, 2000. The provision introduced by Finance (No. 2) Act was clarified by the Finance Minister to be applicable with prospective effect. [Para 34] The said CBDT Circular clarifies the intent of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be denied However. Circular No. 14 of 2001 had clarified that under section 32(2). in computing the profits and gains 01 business or profession for any previous year, deduction of depreciation under section 32 shall he mandatory. Therefore. the provisions of section 32(2) as amended by Finance Act, 2001 would allow the unabsorbed depreciation allowance available in the assessment years 1997-98, 1999-2000, 2000-01 and 2001-02 to be carried forward to the succeeding years. and if any unabsorbed depreciation or part there of could not set off till the assessment year 2002-03 then it would be carriedforward -till the time it is set off against the profit and gains of subsequent years. (Para 37) Therefore, it can be said that, curr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of section 32(2) as amended by Finance Act, 2001 and were available for carry forward and set of/against the profits and gains of subsequent years, without any limit whatsoever. [Para 38] 11. In view of the above decision, we are inclined to hold that restriction of 8 years for carry forward and set off of unabsorbed depreciation has been dispensed with from AY 2002-03. Thus, whatever the unabsorbed depreciation up to 2001-02 is governed by the earlier provisions of section 32(2) of the IT Act. Being so, the unabsorbed depreciation relating to AY 1994-95 to 2001-02 cannot be considered to be carried forward for set off in AY 2007-08. On the other hand, the unabsorbed depreciation from AY 2002-03 could be set off of by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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