TMI Blog1996 (8) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... was correct in law in holding that the unabsorbed depreciation is not to be deducted for working out the written down value for the purpose of allowing deduction under section 80J of the Income-tax Act ?" The assessee is a limited company engaged in the manufacture and sale of graphite electrodes and graphite anodes, in collaboration with a French company. The claim of the assessee for deduction under section 80J of the Act on the amount of unabsorbed depreciation was disallowed by the Assessing Officer who did not accept the assessee's contention that only the depreciation actually allowed should be deducted from the cost of the assets to arrive at the written down value (for short "WDV"), for the purposes of working out the deduction un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee, a deduction from such profits and gains (reduced by the deduction, if any, admissible to the assessee under section 80HH or section 80HHA) of so much of the amount thereof as does not exceed the amount calculated at the rate of six per cent. per annum on the capital employed in the industrial undertaking or ship or business of the hotel, as the case may be, computed in the manner specified in sub-section (1A) in respect of the previous year relevant to the assessment year (the amount calculated as aforesaid being hereafter, in this section, referred to as the relevant amount of capital employed during the previous year) . . . (1A)(I) For the purposes of this section, the capital employed in an industrial undertaking or the business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he cost of any asset has been satisfied otherwise than in cash, the then value of the consideration actually given for the asset shall be treated as the actual cost of the asset." From the perusal of section 80J, it is manifest that in computing the total income of the assessee derived from an industrial undertaking or a ship or the business of a hotel to which the said section applies, the deduction from such profits and gains is to be allowed of so much of the amount thereof as does not exceed the amount calculated at the rate of six per cent. per annum of the capital employed in the industrial undertaking or ship or business of the hotel, subject to the other provisions of the said section, in respect of the previous year relevant to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b-section (2) of section 32 shall be deemed to be depreciation "actually allowed". It is, thus, clear that if full effect cannot be given to any allowance relevant to the depreciation under section 32 of the Act, in any previous year, owing to there being no profits or gains chargeable for that previous year or profits or gains chargeable being less than the allowance, the same though carried forward as unabsorbed depreciation, shall count under Explanation 3 to section 43(6) of the Act for calculating the written down value as deemed to be depreciation actually allowed. The Tribunal, in its order dated December 9, 1991, held that the judgment of the Calcutta High Court was not per incuriam and came to the conclusion that in the context o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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