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TMI Blog2017 (5) TMI 1555X X X X Extracts X X X X X X X X Extracts X X X X ..... rred in law and on facts in allowing the brought forward unabsorbed depreciation of Rs. 38,76,64,533/- beyond 8 years pertaining to A.Y.2000-01 which was rejected by the Assessing Officer as per provisions of subsection 2(iii)(b) of Section 32 of the IT. Act, without properly appreciating the facts of the case. 2. The Ld. CIT(A) has also erred in law in relying upon the decision of the Hon'ble Gujarat High Court in the case of General Motors(I) Pvt Ltd. as the facts of the said case law was different from the facts of the assessee's case in as much as that in the said decision the Hon'ble High Court has considered the issue in connection with reopening of the assessment." 3. In this case, the return of income declaring loss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of the Income Tax Act, it is noted that the present issue is squarely covered by the decision of Hon'ble Gujarat High Court in case of General Motors (I) Pvt. Limited 210 Taxman 20 wherein Hon'ble High Court has held as under: "The reason given by the Assessing Officer under section 147 is that section 32(2) was amended by Finance Act No .2 of 1996 with effect from assessment year 1997-98 and the unabsorbed depreciation for the asse(ssment year 1997-98 could be carried forward up to the maximum period of 8 years from the year in which it was first computed. According to the Assessing Officer, 8 years expired in the assessment year 2005-06 and only till then, the assessee was eligible to claim unabsorbed depreciation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 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 amendment that it is for enabling the industry to conserve sufficient funds to replace plant and machinery and, accordingly, the amendment dispenses with the restriction of 8 years for carry forward and set off of unabsorbed depreciation. This amendment has become applicable from assessment year 2002-03 and subsequent years meaning that any unabsorbed depreciation available to an assessee on 1st day of April, 2002 (assessment year 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would be carried forward till the time it is set off against the profits and gains of subsequent years. [Para 37] Therefore, it can be said that, current depreciation is deductible in the first place from the income of the business to which it relates. If such depreciation amount is in excess than the amount of the profits of that business, then such excess should be adjusted against the profits and gains from any other 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 yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also perused the judicial pronouncement delivered by the Hon'ble High Court of Gujarat in the case of General Motors India (P.) Ltd vs. DCIT (2012) 25 taxmann.com which was elaborated in detail by the Ld. CIT(A) in his order as supra in this order. We have also perused the judicial pronouncement of Hon'ble Gujarat High Court in the case of CIT vs. Gujarat Themis Biosyn Ltd. [2014] 44 taxmann. com 204 (Gujarat) in which after considering the judgment given in General Motors India (P) Ltd, it was held that carry forward of unabsorbed depreciation concerning impugned assessment years could be set off in subsequent years without any set time limit. In view of the above judicial pronouncement on the issue and the elaborate findings of the ld. C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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