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TMI Blog2004 (10) TMI 266X X X X Extracts X X X X X X X X Extracts X X X X ..... der any other head for assessment year 1997-98 and seven subsequent assessment years. Therefore, the assessee's claim, in the present case, to set-off unabsorbed depreciation brought forward from assessment years 1995-96 and 1996-97 against income under 'House Property' for the assessment year 1998-99 is to be allowed, and, we order accordingly. Consequently, the issue involved in the Cross Objection filed by the assessee is decided in favour of the assessee. Before parting with the issue, we may put it on record that we have noticed a decision where a similar view has been taken by the Income Tax Appellate Tribunal, Delhi Bench 'A' in the case of ITO v. Selchem Engineers (P.) Ltd. [ 2004 (4) TMI 273 - ITAT DELHI-A] . Both the Revenue's appeal and the assessee's Cross Objection were allowed. The Tribunal decided the issue of surcharge on Municipal-tax in favor of the Revenue and allowed the assessee's claim to set off unabsorbed depreciation against income from house property. - Member(s) : K. K. GUPTA., C. L. SETHI. ORDER Per Shri C.L. Sethi, Judicial Member . - The Revenue is in appeal against the ld. CIT(A)'s order dated 7th March, 2002 for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorities below. 9. To appreciate the controversy involved in this appeal in its right and correct perspective, it is useful to refer to the provisions of section 32(2) as existed prior to the amendment made by the Finance (No. 2) Act, 1996 as well as subsequent to such amendment. 10. Provision of section 32(2) as it stood prior to the amendment made by the Finance (No. 2) Act, 1996 with effect from 1st April, 1997 is as under: "(2) Where, in the assessment of the assessee, full effect cannot be given to any allowance under clause (ii) of 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 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 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 the allowance for that previous year, and so on for the succeeding pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... poses of this clause, "net worth" shall have the meaning assigned to it in clause (ga) of subsection (1) of section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986)." 12. It is further seen that provision of section 32(2) as amended by Finance (No. 2) Act, 1996 w.e.f. 1-4-1997 has been substituted by the Finance Act, 2001 w.e.f. 1-4-2002 as under: - "(2) 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 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 the allowance for that previous year, and so on for the succeeding previous years." 13. On reading the provisions of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rbed depreciation can be allowed to be carried forward and set off against income from other sources in a subsequent year notwithstanding the fact that the business in respect of which it arose ceased to exist in the year of such set off. However, certain restrictions have been put, for and from assessment year 1997-98 by an amendment made by the Finance (No. 2) Act, 1996, on allowance of unabsorbed depreciation as the old section 32(2) operative upto assessment year 1996-97 has been substituted. According to section 32(2), as substituted by the Finance (No. 2) Act, 1996 w.e.f. 1-4-1997, the unabsorbed depreciation of earlier years can be carried forward to the following assessment year and can only be set off against the profit and gains, if any, of any business or profession carried on by the assessee and assessable for that assessment year and following assessment year not being more than eight assessment years immediately succeeding the assessment year for which the aforesaid allowance was first computed. However, for availing the benefit of carried forward of unabsorbed depreciation, it is essential that the business or profession for which the allowance was originally compute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d is brought forward to the assessment year 1997-98 is also to be governed by the said substituted section 32(2). In other words, the controversy revolve around the issue as to whether the depreciation allowance allowed to the assessee upto and inclusive assessment year 1996-97 which remained unabsorbed and brought forward to the assessment year 1997-98 will continue to set off as per the pre-amended provisions of section 32(2) as stood prior to 1-4-1997 and it is only the current depreciation allowance for the assessment year 1997-98 onwards which remains unabsorbed will be governed by the amended provisions of section 32(2) as substituted by the Finance (No. 2) Act, 1996 w.e.f. 1-4-1997. 15. To resolve the said controversy and to find out the true intent of the Legislature in substituting the section 32(2) w.e.f. 1-4-1997, a useful inferences may be taken from the Speech of the Finance Minister while moving the Finance (No. 2) Bill, 1996 for consideration in Lok Sabha on September 11,1996 as reported in [1996] 222 ITR 36 (St.). The following is the relevant extract of the Speech of the Finance Minister: - "4. Clause 11 of the Bill seeks to amend section 32 of the Income-tax Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee for the assessment year 1997-98. If it is not possible to set off the entire amount of unabsorbed depreciation brought from earlier years upto and including assessment year 1996-97, the unabsorbed amount can be carried forward to the next 7 assessment years for being set off against the profits and gains of a business or profession or income under any other head. (ii) If full effect cannot be given to the current depreciation allowance of the assessment year 1997-98, and subsequent assessment years, it can be carried forward for being set-off only as per amended provisions of section 32(2) substituted w.e.f. 1-4-1997 by the Finance (No. 2) Act, 1996. 18. To remove the ambiguity in interpretating the amended provisions of section 32(2)(w.e.f. 1-4-1997) and to ascertain the object and purpose in amending section 32(2), the Speech made by the Finance Minister can certainly be referred to, inasmuch as, this is an accord with the recent trend in juristic thought not only in western countries but also in India that interpretation of a statute being an exercise in the ascertainment of meaning, everything which is logically relevant should be admissible. The Hon'ble Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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