2008 (2) TMI 901 - AT - Income Tax

Summary

Issues involved: Appeal filed by the department against the order of the Commissioner of Income-tax (Appeals) regarding adjustment of brought forward losses, unabsorbed depreciation under section 10A of the Income-tax Act, 1961.

Summary:

Issue 1: Adjustment of brought forward losses and unabsorbed depreciation under section 10A

The department objected to the order of the Commissioner of Income-tax (Appeals) regarding the adjustment of brought forward losses and unabsorbed depreciation against the income under section 10A of the Income-tax Act, 1961. The assessment for the year under appeal did not show any adjustment for set off of brought forward losses or unabsorbed depreciation. Section 10A of the Act allows for the carry forward and set off of losses and unabsorbed depreciation from earlier assessment years. The Supreme Court in Rajapalayam Mills Ltd., v. CIT clarified that once losses and unabsorbed depreciation from earlier years have been adjusted against profits of other businesses, they cannot be claimed as adjustable in the current year. The Tribunal upheld the order of the Commissioner of Income-tax (Appeals), stating that the department's claim for adjustment was unjustified and not in accordance with the law.

Decision: The appeal by the revenue department is dismissed.