TMI Blog2008 (10) TMI 663X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO to allow set off of the depreciation relating to asst. yr. 1996-97 with the income from other sources of these assessment years. Briefly stated, the facts of the case are that in these assessment years, the assessee has income from other sources and it is having carried forwarded a depreciation relating to the asst. yr. 1996-97 and the assessee has set off the depreciation with the income from other sources. The AO disallowed the claim of the assessee. However, the learned CIT (A) in view of the judgment of Hon ble Supreme Court in the case of CIT vs. Virmani Industries (P) Ltd. (1995) 129 CTR (SC) 189 : (1995) 216 ITR 607 (SC), allowed the claim of the assessee. Against this, the Revenue is in appeal before us. 3. The learned Dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the asst. yr. 1997-98 and the assessment year in question is 1999-2000. The unabsorbed depreciation being two years older to the present assessment year all that the assessee would be entitled to is carry forward of the said unabsorbed depreciation to be set off against the profits and gains of the business to which this depreciation is related to is still carried on and will be allowed to be carried forward for set off for the following six assessment years because already two assessment years have lapsed. Further, the clear condition that is laid down in this section is that in the assessment year in which the assessee is claiming the set off of the unabsorbed depreciation, the assessee must be carrying on the business and the income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (supra) is squarely applicable to the facts of the present case and as such, the learned CIT(A) was justified in allowing the claim of the assessee. 5. We have heard both the parties and perused the material placed on record. Original s. 32(2) of the IT Act, 1961 upto the asst. yr. 1996-97 reads as follows : Upto asst. yr. 1996-97 Where, in the assessment of the assessee, full effect cannot be given to any allowance under cl. (ii) of sub-s. (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 chargeable being less than the allowance, then, subject to the provisions of sub-s. (2) of s. 72 and sub-s. (3) of s. 73, the allowance or part of the allowance to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and gains, if any, of any business or profession carried on by him and assessable for that assessment year; (b) if the unabsorbed depreciation allowance cannot be wholly so set off, the amount of unabsorbed depreciation allowance not so set off, shall be carried forward 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. Later, this section was once again repealed and original section was restored by the Finance Act, 2001 w.e.f. 1st April, 2002, which reads as follows : Where, in the assessment of the assessee, full effect cannot be given to any allowance under subs. (1) in any previous year, owing to there being no pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riod relevant to the asst. yr. 1965-66. The decision of Tribunal (Special Bench),Chennai, in the case of Southern Travels vs. Asstt. CIT (supra), which was relied upon by the learned Departmental Representative shows that unabsorbed depreciation involved relates to asst. yr. 1997-98, which the assessee claimed to set off against the capital gains in the asst. yr. 1999-2000, where the Tribunal held that provision of s. 32(2)(iii), which was in force w.e.f. 1st April, 1997 was applicable. As such, the assessee is not entitled to set off of the unabsorbed depreciation relating to asst. yr. 1997-98 with the capital gains in asst. yr. 1999-2000. However, in the present case, the assessment years involved are 2004-05 and 200506 and the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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