TMI Blog2002 (7) TMI 226X X X X Extracts X X X X X X X X Extracts X X X X ..... djustment was determined at nil. On the facts and in the circumstances of the case, the learned CIT(A) was not justified in holding that the unabsorbed depreciation for the asst. yrs. 1979-80 to 1989-90 should be carried forward for further period of 8 years starting from the asst. yr. 1997-98 after adjustment of the unabsorbed depreciation with the income from house property and income from other source of this year." 3. The facts of the case, in brief, are that the assessee filed original return on 18th Nov., 1997, declaring total loss of Rs. 22,69,310 and the income under s. 115JA was computed at nil after making adjustment of unabsorbed depreciation or unabsorbed business loss. The assessee filed a revised return on 30th March, 1999, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ff of carried forward and set off into the asst. yr. 1997-98. He has therefore, reiterated that the claim of the assessee relating to unabsorbed depreciation allowance for the asst. yr. prior to 1989-90 lapses in the asst. yr. 1997-98 as the first year of computation of depreciation allowance in all the cases fall beyond the stipulated period of 8 years. The learned Departmental Representative stated that a plain reading of s. 32(2)(iii)(b) will even confirm that the statute does not authorise to permit such benefit as claimed by the assessee. He has, therefore, urged the Tribunal to confirm the decision of the AO. 6. The learned, counsel, on the other hand, stated that s. 32(2) of the IT Act underwent substantial amendment by the Financ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce (No. 2) Bill, 1996, to s. 32(2) restricting carry forward and set off of unabsorbed depreciation there was severe confusion amongst tax payers and the industrial community expressed apprehension that the proposed amendment would adversely affect the growth of industry. While moving the Bill in the Lok Sabha the Finance Minister kept in mind the fear expressed by the industry and clarified the amending provisions that the proposed amendment is only prospective inasmuch as the cumulative unabsorbed depreciation brought forward as on 1st April, 1997, can still be set off against taxable business profits or income under any other head for the asst. yr. 1997-98 and seven subsequent assessment years and further a drafting amendment was also p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , on the basis of the calrification placed on the floor of the House, the cumulative unabsorbed depreciation as at the end of the asst. yr. 1996-97 is carried forward to the asst. yr. 1997-98 to become the current depreciation for the asst. yr. 1997-98. He has further contended that once the said unabsorbed depreciation merged! into and becomes the current depreciation for the asst. yr. 1996-97, such unabsorbed depreciation loses its character as unabsorbed depreciation of an earlier year and hence it is to be treated as depreciation allowance for the assessment year in which it merges namely, the asst. yr. 1997-98. It was, therefore, reiterated that any amount remaining unabsorbed therefrom can after be set off with business income for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preciation allowance for such succeeding year. In this connection the decision of the Hon'ble Bombay High Court in CIT vs. Ravi Industries Ltd. (1963) 49 ITR 145 (Bom) may be referred to. In the case of CIT vs. Virmani Industries (P) Ltd. (1995) 129 CTR (SC) 189 : (1995) 216 ITR 607 (SC) the apex Court has observed that to avail of the benefit of sub-s. (2) of s. 32 two views are possible in his behalf i.e., (1) since sub-section speaks of unabsorbed depreciation on being carried forward to the next year and "added to the amount of the allowance for depreciation for the following previous year and deemed to be part of that allowance" sub-section necessarily contemplates the existence of business in the following years, and (2) inasmuch as s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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