Alapatt Jewellers Vs DCIT (Kerala High Court)
Kerala High Court held that depreciation allowance is deemed to be business loss for section 71 and 72 and can be set off only against profits or gains of business and not against income from any other sources.
Facts- The petitioner is an assessee under the Income Tax Act, 1961. For the assessment year 2023 – 2024, the petitioner filed its return of income, which was processed under Section 143(1) of the 1961 Act. According to the petitioner, though it had claimed a carry forward loss of Rs.1,14,60,832/-, only an amount of Rs.21,71, 999/- was allowed. It is submitted that the amount of Rs.1,14,60,832/- forms part of unabsorbed depreciation. The petitioner filed an application for rectification under Section 154 of the 1961 Act, claiming that full set off of the unabsorbed depreciation had to be granted and the denial of that benefit to the petitioner is illegal. The petition filed by the petitioner has been rejected. Accordingly, being aggrieved, the present petition is filed.
Conclusion- Held that it is clear from the reading of the provisions of Section 72 of the 1961 Act that even if the depreciation allowance under Section 32 of the 1961 Act, which was carried forward in terms of sub-section (2) of Section 32, is deemed to be a business loss for the purposes of Sections 71 and 72, it can be set off only against profits or gains of any business or profession and it cannot be set off against income from any other sources.
Comments are closed.