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TMI Blog2012 (11) TMI 674X X X X Extracts X X X X X X X X Extracts X X X X ..... on 32(2), the same is also to be allowed to be set off from the Long Term Capital Gains - In the result, appeal filed by assessee is allowed. - IT Appeal No. 5374 (Mum.) of 2011 - - - Dated:- 10-10-2012 - Dinesh Kumar Agarwal And N. K. Billaiya, JJ. Jayesh Dadia for the Appellant. Dr. Manjunath Kankihalti for the Respondent. ORDER N. K. Billaiya, Accountant Member This appeal by the assessee is directed against the order of Ld. CIT(A)-13, Mumbai dt. 7.4.2011 pertaining to assessment year 2007-08. 2. The assessee has raised two substantive grounds of appeal as under: 1. The Ld. CIT(A) has erred in law and on the facts of the case in confirming the action of the AO in not allowing current year's depreciation of ₹ 2,32,059/- while determining the Business loss. The action is unjustified and unwarranted and against the provisions of Sec. 32(1) of the I.T. Act. 2. The Ld. CIT(A) has erred in law and on the facts of the case in confirming the action of the AO in not allowing set off of unabsorbed loss of ₹ 6,42,208/- against the current year's Long Term Capital Gain. The action is unjustified and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of I.T. Act 1922 vis- -vis 1961 Act. The sum and substance for rejecting the assessee's appeal as enumerated by the Ld. CIT(A) in his order suggests that the Ld. CIT(A) was of the opinion that the set off can be claimed only from profits or gains and profits or gains are specifically confined to profits and gains of business only. The Ld. CIT(A) also distinguished the facts of the assessee's case with those of (a) CIT v. Jaipuria China Clay Mines (P.) Ltd. [1966] 59 ITR 555 (SC) (b) Rajapalayam Mills Ltd. v. CIT [1978] 115 ITR 777 (SC) and (c) CIT v. Virmani Indus. (P.) Ltd. [1995] 216 ITR 607. The Ld. CIT(A) held that the current years' depreciation is not allowed to be set off against the income under the head Long Term capital gains. Further the claim of the assessee for allowing the unabsorbed depreciation of earlier year's was also not allowed for the reason that the assessee has not claimed in its computation of income while filing the return. 6. The assessee is aggrieved by this finding of the Ld. CIT(A) and is before us. The Ld. Counsel for the assessee submitted that the assessee is a private limited company engaged in the business of manufacturing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the year under consideration show that the assessee has shown Long Term capital gains at ₹ 1,30,00,000/- after claiming exemption u/s. 54EC of the Act. The assessee has also shown net loss from business before depreciation at ₹ 17,48,195/-. To this, the assessee added current year's depreciation at ₹ 2,32,059/- and unabsorbed depreciation brought forward from assessment years 1999-2000 and 2002-03 at ₹ 6,42,208/- and claimed set off amounting to ₹ 26,22,462/- from the Long Term capital gains at ₹ 1,30,00,000/-. Profit and gains of business or profession are computed in accordance with the provisions contained in Sec. 30 to 43 of the Act. Depreciation is allowed as per the provisions of Sec. 32(1) of the Act. Section 32(2) of the Act contains provisions relating to unabsorbed depreciation which is as under: Where, in the assessment of the assessee, full effect cannot be given to any allowance under 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 chargeable being less than the allowance, then, subject to the provisions of sub-section (2) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orbed 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 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 has become a sick industrial company under sub-section (1) of section 17 of the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986) and ending with the assessment year relevant to the previous year in which the entire net worth of such company becomes equal to or exceeds the accumulated losses. 10. A comparative study of pre-amendment and post amendment provisions of Sec. 32(2) suggests that prior to the amendment, the set off was restricted to the profits and gains, if any, of any business or profession whereas post amendment (i.e. the law applicable for the year under consideration) the set off is availa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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