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TMI Blog2018 (5) TMI 748X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the restriction of 8 years for carry forward and set off of unabsorbed depreciation had been dispensed with, the unabsorbed depreciation from A.Y.1997-98 upto the A.Y.2001-02 got carried forward to the assessment year 2002-03 and became part thereof, it came to be governed by the provisions of section 32(2) as amended by Finance Act, 2001 and were available for carry forward and set off against the profits and gains of subsequent years, without any limit whatsoever - Decided in favour of assessee. - I.T.A. No. 5191/Mum/2015 - - - Dated:- 7-5-2018 - Shri B.R. Baskaran (AM) And Shri Pawan Singh (JM) For The Assessee : Shri H.N. Motiwalla For The Department : Shri M.C. Omi Ningshen ORDER Per B.R. Baskaran (AM) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4917 4918/Mum/2008 dated 30.6.2010. 4. We have heard the parties and perused the record. We noticed that this issue has been decided in favour of the assessee by Hon'ble Gujarat High Court in the case of General Motors India (P) Ltd. Vs. DCIT (2012) 25 taxman.com 364. For the sake of convenience, we extract below the operative portion of the order passed by Hon'ble Gujarat High Court in the above said case:- 31. Prior to the Finance Act No.2 of 1996 the unabsorbed depreciation for any year was allowed to be carry forward indefinitely and by a deeming fiction became allowance of the immediately succeeding year. The Finance Act No.2 of 1996 restricted the carry forward of unabsorbed depreciation and set-off to a limit of 8 ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e profits or gains chargeable for that previous year, owing to the profits or gains chargeable 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 the 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 deemed to be part of that allowance, or if there is no such allowance for that previous year, be deemed to be allowance of that previous year, and so on for the succeeding previous years. 36. The purpose of this amendment has been clarified by Central Board of Direct Taxes in the Circular No.14 of 2001. The relevant p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the restriction of 8 years for carry forward and set off of unabsorbed depreciation. The amendment is applicable from assessment year 2002- 03 and subsequent years. This means that any unabsorbed depreciation available to an assessee on 1st day of April, 2002 (A.Y. 2002- 03) will be dealt with in accordance with the provisions of section 32(2) as amended by Finance Act, 2001 and not by the provisions of section 32(2) as it stood before the said amendment. Had the intention of the Legislature been to allow the unabsorbed depreciation allowance worked out in A.Y. 1997-98 only for eight subsequent assessment years even after the amendment of section 32(2) by Finance Act, 2001 it would have incorporated a provision to that effect. However, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, then such excess comes for absorption from the profits and gains from any other business or business, if any, carried on by the assessee. If a balance is left even thereafter, that becomes deductible from out of income from any source under any of the other heads of income during that year. In case there is a still balance left over, it is to be treated as unabsorbed depreciation and it is taken to the next succeeding year. Where there is current depreciation for such succeeding year the unabsorbed depreciation is added to the current depreciation for such succeeding year and is deemed as part thereof. If, however, there is no current depreciation for such succeeding year, the unabsorbed depreciation becomes the depreciation allowance fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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