In the instant case, the Assessing Officer observed that the addition of Rs 13,80,000/- was made u/s. 68 of the Income Tax Act which does not form part of any specific head of income and is also not business income, therefore brought forward unabsorbed depreciation cannot be allowed set off against the same.
On appeal, the Commissioner of Income Tax (Appeals) observed that brought forward depreciation can be set off against income under any other head other than business in subsequent years as section 32 provides that brought forward depreciation merges with the depreciation of the current year and becomes current year’s depreciation which is permitted to be set off against any income of the current year other than salary. Income determined u/s. 68 of the Income Tax Act is income under other sources and therefore the brought forward depreciation will have to be allowed as a set off against income determined u/s. 68 of the Income Tax Act.
Being aggrieved by the said order of the Commissioner of Income Tax (Appeals), the Revenue is in appeal before us.
We find that the Hon’ble Supreme Court in the case of CIT Vs. D.P. Sandu Bros. Chembur (P) Ltd. (2005) 273 ITR 1 (SC) has held as under:
” Section 14 of the Income-tax Act, 1961 as it stood at the relevant time similarly provided that pall income shall for the purposes of charge of income-tax and computation of total income be classified under six heads of income,” namely:-
B. Interest on Securities;
C. Income from house property;
D. Profits and gains of business or profession;
E. Capital gains;
F. Income from other sources unless otherwise, provided in the Act.
Section 56 provides for the chargeability of income of every kind which has not to be excluded from the total income under the Act, only if it is not chargeable to income-tax under any of the heads specified in section 14, items A to E.”
Thus, in view of the above decision of the Hon’ble Supreme Court, the amount which has been deemed as income u/s. 68 is assessable as income from other sources and because of the same, it forms part of the total income of the assessee.
It is not in dispute that brought forward unabsorbed depreciation can be set off against the income which is assessable under the head ‘income from other sources’. We, therefore, do not find any error in the order of the Commissioner of Income Tax (Appeals). It is confirmed. The ground of appeal of Revenue is dismissed.