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TMI Blog2004 (4) TMI 273X X X X Extracts X X X X X X X X Extracts X X X X ..... sides and also perused the relevant material on record. It is observed that the assessee's claim to set off the unabsorbed depreciation for earlier years against the income from house property for the year under consideration (hereinafter referred to as 'the impugned claim of the assessee') was disallowed by the Assessing Officer keeping in view the provisions of Section 32(2) as amended by Finance (No. 2) Act, 1996 with effect from 1-4-1997. The learned CIT(A), however, allowed this claim of the assessee relying on the speech of the Finance Minister in Parliament while moving the Finance (No. 2) Bill of 1996 assuring that the unabsorbed depreciation as on 1-4-1997 will be allowed to be set off against taxable business profits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act 1996 as well as subsequent to such amendment: - Provisions of section 32(2) prior to amendment made by Finance (No.2) Act, 1996 with effect from 1-4-1997- "(2) Where, in the assessment or the assessee, full effect cannot be given to any allowance under clause (ii) of sub-section (1) in any previous year, owing to there being no profits or gains chargeable for that previous year, or owing to the profits or gains being less than the allowance, then, subject to the provisions 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 de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... depreciation allowance cannot be wholly so set off, the amount of unabsorbed depreciation allowance not so set off shall be carried forward to the following assessment year not being more than eight assessment years immediately succeeding the assessment year for which the aforesaid allowance was first computed: [Provided that the business or profession for which the allowance was originally computed continued to be carried on by him in the previous year relevant for that assessment year:] Provided [further] that the time limit of eight assessment years specified in sub-clause (b) shall not apply in the case of a company for the assessment year beginning with the assessment year relevant to the previous year in which the said company ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dment would adversely effect the growth of the industry and in order to alloy these fears expressed by the Members of Parliament as well as in the large number of post-budget memorandum the Finance Minister assured in his speech on moving the Finance (No. 2) Bill, 1996 that this proposed amendment will have prospective effect, inasmuch as the cumulative unabsorbed depreciation brought forward as on 1-4-1997 could still be set off against taxable business profits or income under any other head in assessment year 1997-98 and seven subsequent assessment years. The Finance Minister also made it clear in his Speech that the proposed amendment in Section 32(2) accordingly will have effect only after eight years and there is no cause for immediate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d deemed to be part of the allowance for this year. In other words, the unabsorbed depreciation allowance of assessment year 1996-97 shall be added to the allowance of 1997-98 and will be deemed to be the allowance of that year. The limitation of eight years shall start from the assessment year 1997-98." 6. A perusal of the aforesaid Circular issued by the CBDT, further makes it clear that the unabsorbed depreciation allowance of assessment year 1996-97 has to be added to the amount of allowance for depreciation of assessment year 1997-98 and the same having been deemed to be considered as the depreciation allowance for assessment year 1997-98, the assessee will be entitled to set off the same against business income or income under any ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s contrary to the terms of the Statute. The Hon'ble Apex Court also held that it is not open to the Revenue to file an appeal which is contrary to such circular. 7. In the present case, the relief allowed by the learned CIT(A) to the assessee in terms of adjustment of unabsorbed depreciation of the earlier years against the income from house property for the year under consideration i.e. assessment year 1997-98 was based on the assurance given by the Finance Minister in his Speech at the time of the relevant Finance Bill and since the same was further fortified by the aforesaid Board's Circular incorporating such assurance given by the Finance Minister, we are of the view that it was not open to the Revenue to challenge the relief ..... X X X X Extracts X X X X X X X X Extracts X X X X
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