TMI Blog2016 (10) TMI 1315X X X X Extracts X X X X X X X X Extracts X X X X ..... eld Tribunal has rightly come to the conclusion that the assessee is entitled to the unabsorbed depreciation brought forward as on April 1, 1997, and could be set off against the business profits and in order to give effect to that finding, the case was remitted to the file of the Assessing Officer for verification as to how much depreciation was available up to April 1, 1997, that could be included in the income of the assessee. Accordingly, we are of the opinion that ld. Commissioner of Income Tax (Appeals) is justified in taking a view that assessee was eligible for carried forward deprecation for the assessment year 1997-1998. Addition u/s.43B (b) or u/s.40A(7)(b) - provision made for gratuity - HELD THAT:- As in the case of CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner of Income Tax (Appeals) to allow set off unabsorbed deprecation of B95,33,900/-. Assessee had filed a return disclosing total loss of B12,30,461/- and assessment was completed u/s.143(3) of the Income Tax Act, 1961 (herein referred as the Act ) on 26.12.2008. Assessee was not allowed its claim for set- off of unabsorbed depreciation of B95,33,900/- pertaining to assessment year 1997-98. Ld. Assessing Officer was of the opinion that by virtue of Special Bench decision in the case of DCIT vs. Time Guaranty (2010) 4 ITR (Trib) 210 (Mum) (SB), unabsorbed depreciation loss was to be restricted as per the provisions prior to amendment to Sec.32 of the Act, which came into effect in assessment year 2002-2003. As per ld. Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of section 32(2) of the Act, with effect from April 1, 1997, if the income from business for the assessment year is insufficient to absorb the depreciation allowance of that assessment year, the amended provision permits absorption of depreciation allowance of a business against profits and gains of any other business of the same assessment year. When the depreciation allowance of a business of the assessment year is not absorbed by any other business of the same assessment year, then the remaining unabsorbed depreciation allowance could be set off against the income under any other head, that is assessable for the same assessment year. In the event of depreciation allowance of the year is unable to be absorbed by any other business inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s it existed up to the assessment year 1996-97, provided that the unabsorbed depreciation of a year shall be added to the amount of the allowance for depreciation of the following previous year and deemed to be part of that allowance. Therefore, the unabsorbed depreciation allowance, if any, of the assessment year 1996-97 shall be added to the amount of the allow ance for depreciation of the assessment year 1997-98 and deemed to be part of the allowance for this year. In other words, the unabsorbed depreciation allowance of the assessment year 1996-97 shall be added to the allowance of 1997-98 and will be deemed to be the allowance of that year. The limitation of eight years shall start from the assess ment year 1997-98. 6. In view of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payments alone were eligible for deduction. As per ld. Assessing Officer though payments effected by the assessee were to a approved gratuity fund and thus eligible for deduction u/s.40A(7)(b) of the Act, this did not cover the provision made for gratuity. According to him such provisions fell within the mischief of Sec. 43B(b) of the Act. Gratuity actually paid during the previous assessment year was allowed by the ld. Assessing Officer and provision for gratuity B36,32,090/- was disallowed. 11. Assessee had also claimed balance of additional depreciation of B2,92,95,364/- for which initial claim was allowed in previous year relevant to assessment year 2011-2012. The machinery on which additional depreciation was claimed was used for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orities below. So far as question whether provision of gratuity made in the account for payments to approved gratuity fund is allowable or not, the Hon ble Kerala High Court in the case of CIT vs. Common Wealth Trust (P) Ltd Anr 269 ITR 290 and Delhi High Court in the case of CIT vs. Bechtel India (P) Ltd 2 DTR 145 had held that harmonious construction of Sec. 40A(7) (b) and Sec. 43B(b) of the Act could clearly indicate that the legislature never intended to take away the benefit conferred under clause (b) of Sec. 40A(7) of the Act through the provisions of Sec. 43B(b) of the Act. So far as additional depreciation is concerned, balance of additional depreciation remaining after the claim of 50% in one year could be allowed in succeeding y ..... X X X X Extracts X X X X X X X X Extracts X X X X
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