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Issues:
1. Departmental appeal regarding the allowance of unabsorbed depreciation for an individual assessee. 2. Cross objection filed by the assessee regarding specific directions for setting off unabsorbed depreciation. Departmental Appeal Analysis: The Department filed an appeal against the assessee, an individual, seeking to set off unabsorbed depreciation from previous years against the current year's income. The AAC directed the ITO to allow the claim, citing oversight by the ITO. The Department's representative argued that the AAC's decision was unjustified, referencing the Bellarpur Collieries case. The assessee's representative supported the AAC's order, highlighting that unabsorbed depreciation is akin to any other loss and can be carried forward for future set-off. The ITAT examined the provisions of section 32(2) of the IT Act, confirming the assessee's entitlement to set off unabsorbed depreciation from earlier years against the current year's income, provided it was not already set off in the firms' files. The ITAT upheld the AAC's decision, emphasizing the correctness of the order and directing the ITO to verify the unabsorbed depreciation amount allocated to the assessee. Cross Objection Analysis: The assessee filed a cross objection, contending that the AAC did not provide clear directions to the ITO for setting off unabsorbed depreciation. However, the ITAT found the cross objection to be inconsequential in light of the departmental appeal's resolution. As a result, both the departmental appeal and the cross objection were dismissed by the ITAT. This judgment clarifies the treatment of unabsorbed depreciation for an individual assessee, emphasizing the statutory provisions under the IT Act and the entitlement of partners to set off such losses against their income. The ITAT's decision reaffirms the importance of following legal provisions and upholding the directions given by the appellate authority, ensuring proper assessment and set-off of losses for taxpayers.
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