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TMI Blog2014 (10) TMI 1072X X X X Extracts X X X X X X X X Extracts X X X X ..... ed u/s 143(3) r.w.s. 147 of the Income-tax Act for the assessment year 2007-08. 2. The facts as culled out from the material on record are as under: 3. The assessee is a Company, stated to be engaged in the business of manufacturing of Cotton Yarn. The assessee filed its Return of Income for AY 2007-08 on 31.10.2007, declaring total income of Rs. Nil. The case was initially selected for scrutiny and assessment was framed u/s 143(3) vide order dated 03.12.2009 and total income was determined at Rs. Nil. Subsequently, the case was reopened u/s 147 of the Act by issuance of notice u/s 148 and thereafter, the assessment was framed u/s 143(3) r.w.s. 147 of the Act vide order dated 31.01.2013 and the total income was determined at Rs.17,40,65,341/-. Aggrieved by the order of the Assessing Officer, the assessee carried the matter before the CIT(A) who vide order dated 08.01.2014 dismissed the appeal of the assessee. Aggrieved by the order of the CIT(A), the assessee is now in appeal before us and has raised the following grounds:- 1. The learned Commissioner of Income-tax (Appeals)-IV, Rajkot erred in confirming the re-opening of assessment u/s 148 of the I.T. Act, 1961. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the profits or gains being less than the allowance, then, the allowance or the 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 that 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n disallowing the carry forward and set off of unabsorbed depreciation at Rs.16,04,96,163/- pertaining to A.Ys. 1996-97 to 1999-2000. This ground of appeal is dismissed. 5. Aggrieved by the order of CIT(A), the assessee is now in appeal before the us. 6. Before us, at the outset, the ld. AR submitted that the issue in the present case about the adjustment of unabsorbed depreciation is covered in favour of the assessee by the decision of various High Courts and Tribunal, including the decision of jurisdictional High Court in the case of General Motors India (P.) Ltd. vs. DCIT, reported in (2013) 257 CTR (Guj.) 123 - a copy of the aforesaid decision is also placed on record. The ld. AR, therefore, submitted that since the issue is covered in favour of the assessee, the matter be decided in favour of the assessee. 7. The ld. DR, on the other hand, supported the order of the Assessing Officer and CIT(A). 8. We have heard the rival submissions and perused the material on record. The issue in the present case is about the carry forward of unabsorbed depreciation. The Assessing Officer was of the view that as per provisions of Section 32(2) of the Act the unabsorbed deprec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereof could not be set off till the A.Y. 2002-03 then it would be carried forward till the time it is set off against the profits and gains of subsequent years. Current depreciation is deductible in the first place from the income of the business to which it relates. If such depreciation amount is larger than the amount of the profits of that business, 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 for such succeeding year. Thus any unabsorbed depreciation available to an assessee on 1st day of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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