TMI Blog2019 (8) TMI 1414X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri A.D. Jain, Vice President, And Shri N.K. Billaiya, Accountant Member For the Assessee : Shri Salil Kapoor, Adv, Shri Sumit Lal Chandani, Adv For the Revenue : Shri N.K. Bansal, Sr. DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER: This appeal by the assessee is preferred against the order of the Commissioner of Income Tax [Appeals], Aligarh dated 08.02.2016 pertaining to assessment year 2011-12. 2. The sum and substance of the grievance of the assessee is that the CIT(A) erred in not allowing set off of unabsorbed depreciation by wrongly interpreting the provisions relating to unabsorbed depreciation and its set off. 3. Representatives of both the sides were heard at length and case records perused carefully. 4. Facts on record show that assessment was framed u/s 143(3) of the Income-tax Act, 1961 [hereinafter referred to as 'the Act'] vide order dated 18.0.2014. The returned income was assessed by disallowing the claim of depreciation of ₹ 10.67 lakhs and loss declared by the assessee was reduced to ₹ 1.77 lakhs. F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re is no provision under the Act which may allow such set off. Accordingly, the Assessing Officer held that the brought forward unabsorbed depreciation cannot be allowed to be set off from income under the head Income from house property and income from other sources . Aggrieved by this, the assessee is before us. 11. At the very outset, the ld. AR stated that the under lying facts are identical to the facts considered by the co-ordinate bench in the case of M/s Suresh Industries Pvt Ltd ITA No. 5374/Mum/2011 wherein the Tribunal has considered the decision of the Hon'ble Supreme Court in the case of Jaipuria China Clay Mines Pvt Ltd 59 ITR 555, Rajapalayam Mills 115 ITR 777 and Virmani Industries Pvt Ltd 216 ITR 607. 12. The ld. AR further pointed out that similar view was taken by the Special Bench of the Tribunal in the case of Times Guaranty Ltd 4 ITR [T] 210. The ld. AR further pointed out that the Lucknow Bench of the Tribunal has followed the order of the Mumbai Bench. The ld. AR further drew our attention to the order passed by the CIT(A) for A.Y 2007-08 and also by the Assessing Officer for A.Y 2013-14, wherein the CIT(A) and the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at allowance, or if there is no such allowance for that previous year, be deemed to be the allowance for that previous year, and so on for the succeeding previous years.] 9. A perusal of the aforementioned section shows that Sec. 32(2) has been subjected to the provisions of Sec. 72(2) and 73(3) of the Act. Before discussing the provisions of Sec. 72(2) let us first analyze the provisions of Sec. 32(2) of the Act prior to this amendment w.e.f. 1.4.2002 Substituted by the Finance Act, 2001, w.e.f. 1-4-2002. Prior to its substitution, sub-section (2), as amended by the Taxation Laws (Amendment and Miscellaneous Provisions) Act, 1986, w.e.f. 1-4-1988, Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989 and Finance Act, 1992, w.e.f. 1-4-1993, substituted by the Finance (No. 2) Act, 1996, w.e.f. 1-4-1997 and further amended by the Finance Act, 2000, w.e.f. 1-4-2001, read as under : '(2) Where in the assessment of the assessee full effect cannot be given to any allowance under clause (ii) of sub-section (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 being le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned should be restricted to profits or gains of business or profession cannot be accepted because had that been the intention of the legislature it would not have deleted phrase of any business or profession in the post amended provisions of Sec. 32(2). The law regarding set off of unabsorbed depreciation upto 1.4.1996 was very liberal and set off was allowable against any income. This was also upheld by the Hon'ble Supreme Court in the case of CIT Vs CIT Vs Virmani Indus. Pvt. Ltd Ors 216 ITR 607 (SC) (supra). However, the law regarding such set off was changed by the Finance Act No. 2 of 1996 and from A.Y. 1997-98 to 2002-03 the unabsorbed depreciation was put at par with business losses u/s. 72. However the status quo have been restored from A.Y. 2003-04 and therefore the ratio laid down by the Hon'ble Supreme Court in the case of CIT Vs Virmani Indus. Pvt. Ltd Ors 216 ITR 607 (SC) (supra) once again hold good and so now unabsorbed depreciation can be set off against any income. Thus, the claim of current year's depreciation of ₹ 2,32,059/- is directed to be set off against the income under the head Capital gains . Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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