Case Law Details
Harvey Heart Hospitals Ltd. Vs. ACIT (Madras High Court)
Conclusion: Unabsorbed depreciation pertaining to the assessment year 1997-98 to 2001-02 can be carry forward and adjusted after the lapse of eight assessment years in view of the section 32(2) as amended by the Finance Act, 2001.
Held: In the instant case, with regard to dis-allowance on gains on slump sale and omission to set off business loss, assessee-company raised a plea that the sale of business assets though computed under the head income from capital gains, the sale would partake the character of the business income and accordingly, would be eligible for set off against business losses brought forward. Further, AO ought not to have ignored the expenditure incurred and depreciation and business losses brought forward while arriving at the business income at ‘nil’. CIT (A) dismissed the appeal filed by assessee and opined that when once a capital gain is computed in relation to sale of a capital asset notwithstanding its being in the nature of a business asset, the same cannot be allowed to be set off against unabsorbed brought forward business loss within the meaning of the provisions of Section 72 and also, confirmed the dis-allowance of the set-off of brought forward unabsorbed depreciation relating to the assessment year 1997-98 to 2000-01. Assessee sought the relief in respect of the issue whether the Tribunal was right in law in holding that the unabsorbed depreciation relating to Assessment Year 1997-98 to 2000-2001 was not eligible for set off against any income of assessee for the Assessment Year 2005- 06.It was held by the Hon’ble Supreme Court, in the case of 2019 (103) Taxmann.com 32(SC) [Commissioner of Income tax v. Bajaj Hindustan Ltd] that unabsorbed depreciation pertaining to the assessment year 1997-98 to 2001-02 can be carry forward and adjusted after the lapse of eight assessment years in view of the section 32(2) as amended by the Finance Act, 2001. Following the same, it was concluded that unabsorbed depreciation was eligible for set off against income even after the lapse of eight years.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
The appellant has filed the above Tax Case Appeal challenging the order dated 30.01.2009 passed by the Income Tax Appellate Tribunal, Chennai, in respect of the assessment year 2005-06.
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