9911796707
TMI Blog1981 (12) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... not be given to such allowance in the assessment of the partners, can be said unabsorbed depreciation allowance be allowed to be added to the depreciation allowance of the firm in the succeeding asst. yr. under s. 32(2) of the IT Act, 1961 for set off. The amount involved is Rs. 20,541. Now this issue arises from the following facts. 2. The assessee is a registered firm constituted of three partners namely, Sh. Prem Nath, Sant Parkash and Om Parkash. For the asst. yr. 1978-79, the assessee made a claim that unabsorbed depreciation of the earlier years amounting to Rs. 20,541, which had earlier been allocated to the partners but which had not been set off in their hands in their individual assessments, be taken into consideration for purp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucidation in the following manner: "Sec. 32(2) of 'the Act' corresponds to s. 10(2)(vi) proviso (b) of the Indian IT Act. 1922, hereinafter referred to as "the old Act" Sec. 32(1) makes depreciation allowable in respect of (a) buildings, (b) machinery, (c) furniture or (d) plant. The prime requisites for claiming depreciation allowance are : (a) the depreciable asset must be owned by the assessee and (b) the asset must be used for the purpose of the assessee's business of profession, subject to the provisions of s. 34 of 'the Act'. The section, inter alia, provides for the basis or grounds for allowing depreciation allowance and also provides the manner of calculation of the allowance. Sec. 32(2) lays down the manner in which depreciatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowance or partial effect may not be given for the reasons alluded in such cases depreciation allowance or part thereof, in respect of which effect could not be given, is required to be added to the amount of allowance of depreciation for the following previous year and the same shall be deemed to be a part of the allowance for that year and so on for the succeeding years. It is worthwhile mentioning that s. 32(2) postulates that losses which had been carried forward from past years should first be set off against business profits under s. 72; if any balance of profit still remains the unabsorbed depreciation allowance of the past years carried forward under s. 32(2) should be set off against such balance of profits. Similarly in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordships were called upon to interpret the provisions of s. 10(2)(vi) of 'the Act' corresponding to s. 32(2) of 'the Act' and s. 24(2) of 'the Act' corresponding to s. 32(2) of 'the Act' and s. 24(2) of 'the old Act' in CIT, Calcutta vs. Jaipuria China Clay Mines (P) Ltd. (1965) 59 ITR 555 (SC). Their Lordships observed: "The unabsorbed depreciation allowance is carried forward under proviso (b) to s. 10(2)(vi) and the method of carrying it forward is to add it to the amount of the allowance or depreciation in the following year and deeming it to be part of that allowance; the effect of deeming it to be part of that allowance is that it falls in the following year within cl. (vi) and has to be deducted as allowance. If the legislature ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lation business and cannot be applicable to 'carry forward' and "depreciation allowance". 5. The count further examined the issue from another angle in the following manner: "Let us look at the question whether the unabsorbed depreciation or part thereof to which effect has not been given is to be carried forward as a loss by the partners and they alone can set it off against their other income or such unabsorbed depreciation may be allowed to be set off by the firm itself in a succeeding year from another angle. As allowed, the depreciable asset is owned by the firm and used in the firm for the purpose of the assessee's business or profession. As such, a person other than the firm is required to establish that the owner of the deprec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n our opinion, s. 32(2) of 'the Act' is complete code dealing with set off and carry forward of depreciation allowance. This view finds support from the observations made by their Lordships in Jaipuria China clay Mines (P) Ltd. and S. Sankappa (1968) 68 ITR 760: AIR 1968 SC 816. We are of the opinion that depreciation allowance never loses its character, nature and colour as unabsorbed depreciation allowance and is always required to be set off and carried forward not by force of s. 72 and/or s. 73 but by virtue of the provisions of s. 72(2) itself. Applicability of ss. 72(2) and 73(3) is exclusively for the purpose of giving priority inter-se between losses and depreciation allowance.in this view of the matter, we are of the opinion that d ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
