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TMI Blog2006 (7) TMI 291X X X X Extracts X X X X X X X X Extracts X X X X ..... t six assessment years. Further, the clear condition that is laid down in this section is that in the assessment year in which the assessee is claiming the set off of the unabsorbed depreciation, the assessee must be carrying on that business and the income from that business must exist. To put it in other words, if the business from which the depreciation claim arose is not carried out in any of the assessment years, the assessee would not be entitled to the set off. Thus, we decide the question in the negative, i.e., in favour of the revenue. The appeal is dismissed. No costs. - HON'BLE A. KALYANASUNDHARAM, SR. VICE-PRESIDENT, N.D. RAGHAVAN AND M.K. CHATURVEDI, VICE PRESIDENTS For the Appellant : C.V. Rajan and S.P. Chidambram, Advs. For the Respondent : C. Venkateswarlu, Adv. ORDER A. Kalyanasundharam, Senior Vice President.- 1. The assessee, a Registered firm, has filed this appeal against the order of the Commissioner of Income-tax (Appeals)-I, Madurai dated 19-2-2004. This Special Bench has been constituted for considering the following question: In view of the provisions of section 32(2)(iii) whether it is possible to set off the br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e part of allowance to which effect has not been given (hereinafter referred to as 'unabsorbed depreciation allowance'), as the case may be,- (i) shall be set off against the profits and gains, if any, of any business or profession carried on by him and assessable for the assessment year; (ii) if the unabsorbed depreciation allowance cannot be wholly set off under clause (i), the amount not so set off shall be set off from the income under any other head, if any, assessable for that assessment year; (iii) if the unabsorbed depreciation allowance cannot be wholly set off under clause (i) and clause (ii), the amount of allowance not so set off shall be carried forward to the following assessment year and - (a) it shall be set off against the profits and gains, if any, of any business or profession carried on by him and assessable for that assessment year; (b) if the unabsorbed 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 allowa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and gains of a business of an assessment year is unable to absorb the depreciation of that assessment year, then that income from any other head including capital gains both short-term and long-term is available for adjustment of the unabsorbed depreciation and this is limited to the same assessment year in which the depreciation claim falls short of the income from business. Not applicable 5. 32(2)(ii) Not applicable When the depreciation allowance of a business of the assessment year is unable to be absorbed by any other business of the same assessment year, then the remaining. unabsorbed depreciation allowance could be set off against income under any other head that is assessable for the same assessment year. 6. 72 (carry forward of business preference would be losses) Not applicable Section 72(2) of the Act states that given to set off of losses over unabsorbed depreciation. 7. 32(2)(iii) Not applicable In the event of the depreciation allowance of the year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. This being not the fact of the present case, the claim of the assessee that unabsorbed depreciation should be allowed to be adjusted against capital gains is incorrect because this provision is not attracted to the facts of the present case. 7. The facts of the present case, as they are, attract the provisions of section 32(2)(iii) of the Act. This is because the unabsorbed depreciation is for the assessment year 1997-98 and the assessment year before us is 1999-2000. The unabsorbed depreciation being two years older to the present assessment year all that the assessee would be entitled to is carry forward of the said unabsorbed depreciation to be set off against the profits and gains of the business to which this depreciation is related to is still carried on and will be allowed to be carried forward for set off for the following six assessment years because already two assessment years have lapsed. 8. During the course of discussion when the Special Bench of the Tribunal was being insisted upon, the decisions of the Tribunal in Uttam Air Products (P.) Ltd. v. Dy. CIT [IT Appeal No. 767/Delhi/2001] for assessment year 1997-98 [2006] 99 TTJ (Delhi) 718, order dated 28-10-2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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