TMI Blog1962 (2) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... h was fixed at ₹ 5,360. Deducting the depreciation from the total income mentioned above the assessee had a net income for that year amounting to ₹ 8,681. The assessee was however disclosing losses for the past years and there stood in its favour an unabsorbed depreciation aggregating ₹ 76,857 besides losses. Out of the losses the Income-tax Officer gave a set-off of ₹ 8,681 against the income of the year and finally computed business income to be nil for that year. The company had income from dividends received in that year amounting to ₹ 2,01,130. The total income for the year was computed by the said officer at ₹ 2,01,130 leaving the unabsorbed depreciation to be carried forward. It was contended by the assessee that the depreciation for the year should not only be ₹ 5,360 but should be reckoned to be the total of the said sum along with the unabsorbed depreciation of ₹ 76,857, namely, ₹ 82,217. It was further claimed that under proviso (b) to section 10(2)(vi) the whole of the unabsorbed depreciation of prior years should be deducted from the business income resulting in a loss of ₹ 68,176. Under section 24(1) the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd to the next year and so on. There is no limit to the number of years in which this can be done but the aggregate of all allowances in respect of depreciation cannot in any case exceed the original cost to the assessee of the buildings, machinery, plant or furniture, as the case may be. So far I have been dealing with the case of an assessee who has only one business but if the assessee has more than one business or if he has several heads under which he derives his income, section 24 of the Act has got to be taken into consideration in computing his total income. If the assessee has several businesses in respect of each of which he can claim depreciation the total of the different amounts under the head depreciation must be taken into account and deducted from the total of his income from the different businesses so as to find the net result under the head business, profession or vocation . If he wants to set off loss incurred under the above head against his income, profits or gains under any other head in that year he can do so under section 24(1) of the Act which provides that where any assessee sustains a loss of profits or gains in any year under any of the heads men ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 10(2)(vi), proviso (b), becomes depreciation for the said following year. In other words in giving effect to section 24(2) one must first set off the loss and then the depreciation. This seems to be logical in view of the fact that loss can be carried forward to six years only whereas depreciation can be carried forward ad infinitum. On this view of the section it appears to me that as there was no loss in the business of the assessee during the relevant year apart from the unabsorbed depreciation, it was open to the assessee to set off the whole of the depreciation towards the income from dividends. The only authority directly in point which was cited at the Bar is the case of Ambika Silk Mills Co. Ltd. v. Commissioner of Income-tax [1952] 22 ITR 58. There the assessee made a capital gain of ₹ 90,400 by sale of some machinery. The total assessable profit as computed by the Income-tax Officer before providing for depreciation in respect of the year of account amounted to ₹ 37,703. The total depreciation allowable under the Act in respect of the year under reference amounted to ₹ 52,985. The Income-tax Officer ascertained the assessee's business l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owed a profit in the future and it was argued that unabsorbed depreciation in a business can only be set off against its profits if and when made. I do not think that was what the learned Chief Justice meant because his conclusion as shown from the following paragraph was that .the department was right when it contended that the sum of ₹ 15,282 which could not be set off against profits could be set off against the capital gains, viz., ₹ 90,400 . The conclusion of the learned Chief Justice was that unabsorbed depreciation which could not be fully set off against profits of the business for the year could be set off against income from any other head mentioned in section 6. According to the decision in the Bombay case therefore the conclusion would be in the assessee's favour, namely, that the whole of the unabsorbed depreciation of ₹ 76,857 carried forward to the year of assessment should be added to the depreciation for the year and set off against the dividend income. In the case of Laxmichand Jaiporia Spinning and Weaving Mills, In re [1950] 18 ITR 919 , the question at issue was whether having regard to proviso (b) to section 10(2) (vi) that pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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