Assessee entitled to Carry Forward Depreciation loss beyond 8 Years: Madras High Court [Read Judgment]
![Assessee entitled to Carry Forward Depreciation loss beyond 8 Years: Madras High Court [Read Judgment]](https://www.taxscan.in/wp-content/uploads/2021/08/Depreciation-loss-Madras-High-Court-Taxscan.jpg "Assessee entitled to Carry Forward Depreciation loss beyond 8 Years: Madras High Court [Read Judgment]")
The Madras High Court ruled that the assessee is entitled to Carry Forward Depreciation loss beyond 8 Years. The Revenue has filed the appeal under Section 260A of the Income Tax Act, 1961, directed against the order on the file of the Income Tax Appellate Tribunal, Chennai for the assessment year 2006-07. The issue raised was unabsorbed depreciation loss pertaining to the assessment...
The Madras High Court ruled that the assessee is entitled to Carry Forward Depreciation loss beyond 8 Years.
The Revenue has filed the appeal under Section 260A of the Income Tax Act, 1961, directed against the order on the file of the Income Tax Appellate Tribunal, Chennai for the assessment year 2006-07.
The issue raised was unabsorbed depreciation loss pertaining to the assessment year 1997-98 could be set off against income of the assessment year 2006-07 and is not the finding of the Tribunal directing the Assessing Officer to set off the unabsorbed depreciation pertaining to the assessment year 1997-98 based, especially when the intention of the legislature was not to carry forward the unabsorbed depreciation beyond eight years from the year of computation.
The division bench of Justice T.S. Sivagnanam and Justice Sathi Kumar Sukumara Kurup took into consideration the case CIT vs. Sanmar Speciality Chemicals Ltd. wherein it was held that the current year's depreciation is allowed to be set off against the income from the business as well as against the other heads of income and unabsorbed depreciation in carrying forward and become part of the depreciation of the subsequent year and the total depreciation becomes current year's depreciation as per section 32(1) of the Act, which is allowed to be set off against the income under any head of income. As per the provisions of section 32(2) of the Act r.w.s. 70, 71, and 72 of the Act, it becomes very clear that the total depreciation comprising of the depreciation of the relevant assessment year along with the unabsorbed depreciation of the earlier years becomes the total current year's depreciation which is allowed to be set off against income under any head of income including Long Term Capital Gain.
The court heard Mr.M.Swaminathan, Senior Standing Counsel for the appellant, M/s.Venkateshwara Leather Private Limited and Mr.A.S.Sriraman, counsel for the respondent.
To Read the full text of the Judgment CLICK HERE
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