TMI Blog2020 (9) TMI 770X X X X Extracts X X X X X X X X Extracts X X X X ..... ral Motors India (P) Ltd. Vs. DCIT [2012 (8) TMI 714 - GUJARAT HIGH COURT] where there is current depreciation for such succeeding year the unabsorbed depreciation is added to the current depreciation for such succeeding year and is deemed as part thereof. If, however, there is no current depreciation for such succeeding year, the unabsorbed depreciation becomes the depreciation allowance for such succeeding year. We are of the considered opinion that any unabsorbed depreciation available to an assessee on 1st day of April 2002 (A.Y. 2002-03) will be dealt with in accordance with the provisions of section 32(2) as amended by Finance Act, 2001. And once the Circular No.14 of 2001 clarified that the restriction of 8 years for carry forward and set off of unabsorbed depreciation had been dispensed with, the unabsorbed depreciation from A.Y.1997-98 upto the A.Y.2001-02 got carried forward to the assessment year 2002-03 and became part thereof, it came to be governed by the provisions of section 32(2) as amended by Finance Act, 2001 and were available for carry forward and set off against the profits and gains of subsequent years, without any limit whatsoever. - Decided against t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the reliance placed on the decision in the case of Peerless General Finance Investment Co. Ltd., would, in no manner, assist the case of the Revenue. We say so after referring to Circular No.14/2001 dated 22.11.2002 issued by the Central Board of Direct Taxes, which are Explanatory Notes on Provisions relating to Direct Taxes. Paragraph 30 of the said circular deals with modification of provisions relating to depreciation. 7. For better appreciation, we quote paragraphs 30.1 to 30.5 of the said circular as hereunder : 30.1 Under the existing provisions of section 32 of the Income-tax Act, carry forward and set off of unabsorbed depreciation is allowed for 8 assessment years. 30.2 With a view to enable the industry to conserve sufficient funds to replace plant and machinery, specially in an era where obsolescence takes place so often, the Act has dispensed with the restriction of 8 years for carry forward and set off of unabsorbed depreciation. The Act has also clarified that in computing the profits and gains of business or profession for any previous year, deduction of depreciation under section 32 shall be mandatory. 30.3 Under the existing pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Legislature been to allow the unabsorbed depreciation allowance worked out in A.Y. 1997-98 only for eight subsequent assessment years even after the amendment of section 32(2) by Finance Act, 2001 it would have incorporated a provision to that effect. However, it does not contain any such provision. Hence keeping in view the purpose of amendment of section 32(2) of the Act, a purposive and harmonious interpretation has to be taken. While construing taxing statutes, rule of strict interpretation has to be applied, giving fair and reasonable construction to the language of the section without leaning to the side of assessee or the revenue. But if the legislature fails to express clearly and the assessee becomes entitled for a benefit within the ambit of the section by the clear words used in the section, the benefit accruing to the assessee cannot be denied. However, Circular No.14 of 2001 had clarified that under Section 32(2), in computing the profits and gains of business or profession for any previous year, deduction of depreciation under Section 32 shall be mandatory. Therefore, the provisions of section 32(2) as amended by Finance Act, 2001 would allow the unabsorbed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve petition filed by the Revenue against the above decision was dismissed by the Hon'ble Supreme Court in the decision reported in 2019-TIOL-36-SC-IT [PCIT-3 Vs. M/s.Bajaj Hindustan Ltd]. 12. In the decision of the Punjab Haryana High Court in the case of CIT Vs. GTM Synthetics Ltd. [reported in (2012) 347 ITR 0458], an identical issue was considered in the following terms : 8. The effect of omission of the aforesaid proviso was enumerated by the Central Board of Direct Taxes, vide circular No. 794 dated 9.8.2000 [(2000) 245 ITR (Statute)] 21 that the unabsorbed depreciation allowance could be set off against the income under any other head even where the business was not carried on. Clause 22 of the said circular which is relevant is as under: 22. Requirement of continuance of same business for set-off of unabsorbed depreciation dispensed with: 22.1 Under the existing provisions of sub-section (2) of section 32 of the Incometax Act, carried forward unabsorbed depreciation is allowed to be set off against profits and gains of business or profession of the subsequent year, subject to the condition that the business or profession for which deprec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upheld. We also hold that as per provisions of section 72 of the Act, the unabsorbed business loss (other than speculative loss) of earlier years shall be allowed to be set off only against the profits and gains from business carried on by the assessee of the current year and so on. We order accordingly. However, our above decision with respect to ground no. (i) and (ii) raised in memo of appeal filed by Revenue should be read in conjunction with and subject to our findings with respect to ground no. (iii) and (iv) which are decided by us in the preceding para's of this order and the computation shall be made accordingly. 4. Having heard the learned counsel for parties and having perused the documents on record, we do not find any error in the order of the Appellate Tribunal. Gujarat High Court in the case of General Motors India (P) Ltd. (supra) had considered somewhat similar issue, of course in the backdrop of the assessee's challenge to a notice of reopening of the assessment. The Gujarat High Court had held and observed as under - 38 Therefore, it can be said that, current depreciation is deductible in the first place from the income of the business to which it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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