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TMI Blog2022 (9) TMI 1475X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessment Year (A.Y) 2007-08. 2. The solitary and effective ground raised by the Revenue is the ld. CIT(A) has erred in deleting the addition of Rs. 5,22,76,985/- made on account of disallowance of unabsorbed brought forward depreciation for Assessment Year 1996-97 to 1998-99 which is beyond eight Assessment Years. None appeared on behalf of the assessee in spite of notices issued to the office of the official liquidator. 3. The brief facts of the case is that the assessee was engaged in the business of manufacturing of cotton yarn and also doing job work. For the Assessment Year 2007-08, regular assessment u/s. 143(3) was completed on 30.11.2009 accepting NIL income. Thereafter an assessment was reopened by issuing a notice u/s. 148 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ujarat High Court in case of General Motors India P. Ltd. (supra). Relying on these two decisions as well as several other decisions which have been mentioned in its submission earlier, it is prayed that the unabsorbed brought forward depreciation of Rs.5,22,76,985/- should be considered as allowable to be carried forward without restricting the same for eight years. 5.3. I have carefully considered the contention of the appellant and the Assessment orders. The AO has held that the unabsorbed depreciations pertaining to A.Ys. 96-97 & 97-98 cannot be carried forward beyond eight years as per the provisions of s.32(2). This issue has been squarely dealt with by the Hon'ble Jurisdictional High Court in the case of General Motors P. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard of Direct Taxes (CBDT) in the form of Explanatory Notes categorically provided, that the unabsorbed depreciation allowance for any previous year to which full effect cannot be given in that previous year shall be carried forward and added to the depreciation allowance of the next year and be deemed to be part thereof. 32. So, the unabsorbed depreciation allowance of A.Y. 1996-97 would be added to the allowance of A. Y. 1997-98 and the limitation of 8 years for the carryforward and set-off of such unabsorbed depreciation would start from A.Y. 1997- 98.........'..................... 35. Section 32(2) of the Act was amended by Finance Act, 2001 and the provision so amended reads as under :- "Where, in the assessment of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... larified 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 provisions, no deduction for depreciation is allowed on any motor car manufactured outside India unless it is used (i) in the business of running it on hire for tourists, or (ii) outside in the assessee's business or profession in another country. 30.4 The Act has allowed depreciation allowance on all imported motor cars acquired on or after 1st April, 2001. 30.5 These amendments will take effect from the 1st April, 2002, and will, accordingly, apply in relation to the assessment year 2002-03 and subsequent years. " 37. The CBDT Circular clari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 depreciation allowance available in the A.Y. 1997-98, 1999-2000, 2000-01 and 2001-02 to be carried forward to the succeeding years, and if any unabsorbed depreciation or part thereof could not be set off till the A. Y. 2002-03 then it would be carried forward till the time it is set off against the profits and gains of subsequent years. 38. Therefore, it can be said that, current depreciation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overned 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.'" 5.4 Respectfully following the decision of the Hon'ble Gujarat High Court (supra), it is held that the appellant is entitled to carry forward the unabsorbed depreciation of Rs.5,22,76,985/- for the period 96-97 to 98-99 restricting the same for eight years. The AO is directed to allow the carry forward of the unabsorbed depreciation and recomputed the income accordingly. This ground of appeal is allowed. 3.2. During the course of the hearing, the Ld. D.R. Mr. Shramdeep Sinha fairly admitted this issue is squarely covered by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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