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TMI Blog2020 (2) TMI 730X X X X Extracts X X X X X X X X Extracts X X X X ..... art of the depreciation allowance still remained unabsorbed, it would be liable to be set-off against the profits or gains chargeable under any other head and it is only if some part of the depreciation allowance still remained unabsorbed then only it can be carried forward to the next assessment year. Supreme Court explained that carried forward depreciation allowance is deemed to be part of and stands on exactly the same footing as the current depreciation for the assessment year under consideration and thus allowable as a deduction. Following the decision of the Supreme Court in Virmani Industries Pvt. Ltd. (supra), Tribunal took the view that this issue was conclusively decided and therefore, not allowing setting off the carried forward depreciation with the income of the assessment year under consideration was a mistake made by the assessing officer which was apparent from the record. When this mistake was pointed out to the assessing officer, he had rightly rectified the same under Section 154. In so far contention of Mr. Pinto that carried forward depreciation cannot be set-off against deemed income is concerned, we are of the view that such a situation does not arise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order by setting-off the brought forward business loss and unabsorbed depreciation against the assessed income. Assessing officer in his order dated 06.06.2014 accepted the above contention of the respondent by taking the view that it was a mistake apparent from the record. Accordingly, the assessment order was rectified by setting-off the unabsorbed depreciation of earlier years aggregating to ₹ 18,16,28,888.00 to the extent of the assessed income and thereafter the remaining unabsorbed amount to be carried forward to the next year for the set-off. 6. The jurisdictional commissioner i.e., Commissioner of Income Tax-6, Mumbai took the view that the subsequent claim made by the respondent was a debatable issue which required a hearing. It was not a mistake which could be construed to be apparent from the record. In such circumstances, the Commissioner invoked jurisdiction under Section 263 of the Act by taking the view that the rectification order was erroneous in as much as it was prejudicial to the interest of the Revenue and by the order dated 26.08.2014, set aside the rectification order passed by the assessing officer with the direction that rectification application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matter back to the assessing officer for re-hearing of the matter does not arise. 11. Submissions made by learned counsel for the parties have been considered. Also perused the materials on record. 12. After hearing learned counsel for the parties and on going through the materials on record, the issue involved in rectification proceedings is quite evident. By the order passed by the assessing officer under Section 154 of the Act, he had allowed unabsorbed depreciation of earlier years to be set-off against the income of the respondent for the assessment year under consideration, further allowing unabsorbed depreciation and unabsorbed business loss to be carried forward to the next year for setoff. 13. In Virmani Industries Pvt. Ltd. (supra), Supreme Court was considering the meaning and interpretation of sub-section (2) of Section 32 of the Act which deals with carry forward of depreciation of the following previous year and deemed to be part of that allowance and so on for the succeeding previous years. In the said case it was found that for the relevant assessment year, depreciation under Section 32(1)(ii) was more than the profits or gains of the assessee. Assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of its partners, full effect cannot be given to any such allowance..... and held on that basis that the expression profits or gains chargeable in the said sub-section is not confined to profits and gains from business or profession but takes within its ambit all heads of income. This Court was of the opinion that while amending Section 10(2) (vi) of the Indian Income Tax Act, 1922 by the Amendment Act 25 of 1953, the Parliament has accepted the interpretation placed upon the said expression by several High Courts to the above effect. It referred to the decisions of Lahore High Court in Karam Ilahi Mohammad Shafi v. CIT, (1929) 3 ITC 456, Madras High Court in A. Suppan Chettiar Co. v. CIT, (1929) 4 ITC 211, East Punjab High Court in Laxmichand Jaipuria Spg. Wvg. Mills, In re, (1950) 18 ITR 919 and Bombay High Court in Ambika Silk Mills Co. Ltd. v. CIT, (1952) 22 ITR 58 besides the judgment of the Judicial Commissioner, Nagpur in Ballarpur Collieries v. CIT, (1929) 4 ITC 255 interpreting the said expression as covering all heads of income. The Court further pointed out that even after the said amendment, the Bombay and Gujarat High Courts have taken the same view in CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... age 785): Now, it is well settled, as a result of the decision of this court in CIT v. Jaipuria China Clay Mines (P) Ltd., [1966] 59 ITR 555 (SC), that the words no profits or gains chargeable for that year are not confined to profits and gains derived from the business whose income is being computed under section 10, but they refer to the totality of the profits or gains computed under the various heads and chargeable to tax. and added (at page 785): It is, therefore, clear that effect must be given to depreciation allowance first against the profits or gains of the particular business whose income is being computed under section 10 and if the profits of that business are not sufficient to absorb the depreciation allowance, the allowance to the extent to which it is not absorbed would be set off against the profits of any other business and if a part of the depreciation allowance still remains unabsorbed, it would be liable to be set off against the profits or gains chargeable under any other head and it is only if some part of the depreciation allowance still remains unabsorbed that it can be carried forward to the next assessment year. But where any part ..... X X X X Extracts X X X X X X X X Extracts X X X X
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