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TMI Blog2014 (6) TMI 1034X X X X Extracts X X X X X X X X Extracts X X X X ..... re the issue is restored back to the file of AO for fresh decision. Thus, this ground of assessee s appeal is allowed for statistical purposes. Disallowance of setting off of brought forward unabsorbed depreciation u/s.32(2) against income from other sources - HELD THAT:- In the case in hand, the assessee-company is under liquidation and, therefore, no activity is being carried out by the assessee. However, the ratio laid down by the Hon ble Apex Court in the case of CIT vs. Virmani Industries Pvt.Ltd. [ 1995 (10) TMI 1 - SUPREME COURT] would be applicable to the extent for availing the benefit u/s.32(2) of the Act. The assessee need not carry on any business or profession. It is not coming out of the records that from which year the depreciation was being carried forward by the assessee and why the assessee has accepted the decision of the ld.CIT(A) in the Asst.Year 2004-05 since no ground against the rejection of claim was raised by the assessee before the Tribunal in [ 2012 (11) TMI 658 - ITAT AHMEDABAD] . In the present year, the CIT(A) has followed the decision rendered in the AY 2004-05. Under these facts, we are unable to accept the claim of the assessee and, theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce for that previous year . Therefore, appellant prays your Honour to hold so now and direct the ld.A.O. to allow set off of the brought forward of unabsorbed depreciation against assessed income. 2. Briefly stated facts are that the assessee filed the return of income declaring the total loss at ₹ 169.20 lacs. The case was picked up for scrutiny assessment and the assessment u/s.143(3) of the Income Tax Act,1961 (hereinafter referred to as the Act ) was framed vide order dated 26/11/2008, thereby the Assessing Officer (AO in short) made disallowance amounting to ₹ 13,89,000/-. Against this, assessee filed an appeal before the ld.CIT(A) and assessee had challenged rejection of the claim of the assessee in respect of expenses claimed against the income from other sources. The assessee had also made additional grounds against in not allowing set off of brought forward losses and also not allowing the brought forward unabsorbed depreciation u/s.32(2) of the Act against assessed total income. The ld.CIT(A) also did not accept the contention of the assessee and dismiss the appeal following the order in the AY 2004-05. Now, the assessee is in appeal before us. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision passed by the Tribunal in ITA No.170/Ahd/2008 (supra). Another component with regard to the rental income, the Coordinate Bench in ITA No.170/Ahd/2008(supra) has decided the issue by observing as under:- 8.1. Another head of income, in addition to the interest income as discussed above, is under the head rent income . The question is that whether legal expenses, car running expenses, traveling expenses, data processing charges, electricity and water charges and entertainment expenses, salary expenses, printing stationery expenses, telephone expenses, etc. could be allowed as deduction against the income which according to us is under the head property income . To assess property income , the provisions applicable are enumerated in sections 23 and 24 of IT Act. There was no such discussion in the assessment order. First of all, Assessing Officer has to verify the exact nature of the earning of an income and then it is suggested to verify the nature of expenditure having any nexus with the earning of rental income. Only that portion of the expenditure which has connection with the earning of rental income is therefore an admissible deduction subject to the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of any business, no income is taxable in business head and hence the depreciation of earlier years cannot be allowed under business head. He held that Even during AY 1997-98 to 200102; the depreciation was given the same treatment as is given to the business losses. Since appellant s unabsorbed depreciation falls in this category, the same cannot be set off in assessment year 2004-05 from income from other sources. Following the same, it is held that, in the year in question also unabsorbed appreciation and carried forward business losses cannot be set off against the income assessed under the head income from other sources. Hence the additional grounds of appeal are also dismissed. 7.1. It appears that the ld.CIT(A) has followed the order in the AY 2004-05, but this issue was not raised by the assessee before the Tribunal in ITA No.170/Ahd/2008(supra). The reasoning given by the ld.CIT(A) is that since the appellant had no business activity since AY 1997-98, depreciation for earlier years cannot be set off from income from other sources . In the absence of any business, no income is taxable in business head and, hence, the depreciation of earlier years cannot be allow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut where it is carried forward, it stands on exactly the same footing as the current depreciation . In the present case, the claim of the assessee was declined on the basis that there was no business activity. However, the Hon ble Apex Court in the case of CIT vs.Virmani Industries Pvt.Ltd.(supra) has held that setting off of the brought forward loss is not restricted only to the business income and it has also been held by the Hon ble Apex Court that it is not necessary that the assessee carry on any business or profession for availing of benefit of sub-section(2) of section 32 of the Act. In the present case, the facts are different as those were before the Hon ble Supreme Court in the case of CIT vs. Virmani Industries Pvt.Ltd.(supra). In the case in hand, the assessee-company is under liquidation and, therefore, no activity is being carried out by the assessee. However, the ratio laid down by the Hon ble Apex Court in the case of CIT vs. Virmani Industries Pvt.Ltd. would be applicable to the extent for availing the benefit u/s.32(2) of the Act. The assessee need not carry on any business or profession. It is not coming out of the records that from which year the depreciation w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... geable for that previous year or there is no allowance for that previous year . Therefore, appellant prays your Honour to hold so now and direct the ld.A.O. to allow set off of the brought forward of unabsorbed depreciation against assessed income. (A) ITA No.2662/Ahd/2013 AY 2008-09 1.0 On the facts and in the circumstances of appellant s case, and in law and in total disregard of the Order dtd. 13-1-2012 of the Hon ble ITAT, Ahmedabad for the Asst.Year 2004-05, the ld.CIT(Appeals) has erred upholding disallowance of deduction of administration and interest expenses etc., on the ground that it has not been established that expenses claimed meet the requirements of the provisions of section 57(iii) of the Act while computing the income under the head Income from other sources . Your appellant submits that the expenses as claimed by your appellant are allowable as deduction while computing the income under the head Income from other sources and therefore prays your Honour to kindly hold so now and direct the ld.A.O. to allow the deductions of expenses as claimed by your appellant. 2.0 On the facts and in the circumstances of your appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and he too would have incurred quite large litigation expenses. It would be a salutary guideline that when courts condone the delay due to laches on the part of the applicant, the court shall compensate the opposite party for his loss. 10.1. The Revenue could not point out that there was any deliberate act for delay or the assessee has tried to take advantage of delay. The Revenue also could not point out any mala fide on the part of the assessee. Therefore, respectfully following the ratio laid down by the Hon ble Apex Court in the case of N.Balakrishnan vs. M.Krishnamurthy(supra), we hereby condone the delay. The appeals are admitted for adjudication. 10.2. In both the appeals, facts are identical to the facts as were in ITA No.411/Ahd/2012 for AY 2006-07 in assessee s own case(supra) and the Revenue has not placed anything contrary on record. Therefore, on the same reasoning passed in ITA No.411/Ahd/2012, we allow the first ground in both the appeals for statistical purposes and reject the second ground in both the appeals. As a result, ITA Nos.2661 2662/Ahd/2013 for AYs 2007-08 2008-09 are partly allowed for statistical purposes. 11. Lastly, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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