S.32(2) : Depreciation – Unabsorbed depreciation – Set off – Set off against income from other sources – Section 72(2) does not controls operation of section 32(2) to have set off of unabsorbed depreciation against income from other sources. [S.72(2)]
The assessee had unabsorbed depreciation as well as unabsorbed loss. The Assessing Officer adjusted loss brought from earlier years against business income and arrived at the business income as NIL. The assessee sought for adjustment of carried forward of unabsorbed depreciation in the income from other sources. The claim of the assessee was negatived by the Assessing Officer for reason that the assessee should have exhausted first the unabsorbed carried forward loss for earlier years before claiming any set off on unabsorbed depreciation. The Commissioner (Appeals) upheld the order of the Assessing Officer.
The Tribunal held that the assessee was entitled to set off unabsorbed depreciation as against the income from other sources. On appeal High Court held that in cases where after having set off of business loss as against current year income from business, there existed no further business income, assessee was entitled to set off unabsorbed depreciation against income from other sources. The court held that section 72(2) does not controls operation of section 32(2) to have set off of unabsorbed depreciation against income from other sources. In favour of assessee. (A.Y. 1998-99)
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