1983 (1) TMI 123

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... matter went up to the CIT(A) he after interpreting the provisions of s. 32(2) as also considering the fact that the assessee was no longer the owner of such assets in the accounting year and that the business itself wherein such assets were employed ceased to be carried on long ago confirmed the action of the ITO. 3. The assessee has come up in further appeals before the Tribunal and the ld. counsel for the assessee contended that the CIT(A) wrongly interpreted the said s. 32(2) of the IT Act 1961 and other relevant provision of the Act in coming to the conclusion that the unabsorbed depreciation of earlier years can not be off against the income for the year under appeal. He urged that u/s 32(2) the business in which the depreciation was .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... under clause (i) of sub-section (1A) in any previous year owing to there being no profits or gains chargeable for that previous year or owing to the profits or gains chargeable being less than the allowance then subject to the provision of sub-section (2) of section 72 and sub-section (3) of section 73, the allowance or part of the allowance to which effect has not been given as the case may be shall be added to the amount of the allowance for depreciation for the following previous year and deemed to be part of that 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 year." The plain language of s. 32 means that in the computation of .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ear in which the set-off is claimed the unabsorbed depreciation by fiction becomes the depreciation allowance of that year even if that business has no depreciable assets. It is a well known rule of interpretation of statues that a legal fiction has to be carried to its logical conclusion by imagining if necessary something to exist which in fact does not exist." 5. Then again, the Karnataka High court in the case of kapila Textile has held inter alia as under. "The requirement that the business should have been carried on during the relevant previous year is a condition applicable for claming set off of unabsorbed losses. Further carrying forward of losses is not permitted beyond eight years in view of s. 72(4) All these conditions are .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X