Unabsorbed depreciation can be set off against capital gain from sale of depreciable asset

Brief facts of the case: The appellant is engaged In the business of plying taxis and letting out heavy equipments. The appellant has filed a ‘NIL’ return for assessment year 1999-2000 after setting carry forward depreciation loss under section 32(2) of the income tax act relating to the assessment years 1995-96 and 1997-98 and business loss under section 72 relating to assessment year 1997-98. While doing assessment under sec 143(3) of the income tax act,AO has reduced the carry forward loss for setting off under sec 72 and 32(2) of the IT act. AO initiated the re-assessment proceedings u...