SURESH INDUSTRIES P.LTD, MUMBAI V. ACIT 7(2), MUMBAI

ITA 5374/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8635 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 13-09-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 18-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR MANJUNATH KANKIHALTI
• Keywords: Depreciation; Revised return; Unabsorbed depreciation
• Section: 72(1); 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI BEFORE SHRI DINESH KUMAR AGARWAL, JUDICIAL MEMBER A ND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ITA NO.5374/MUM/2011 ASSESSMENT YEAR-2007-08 M/S. SURESH INDUSTRIES PVT. LTD., 418, ARUN CHAMBERS, 4 TH FLOOR, TARDEO, MUMBAI-400 034 PAN - AAACS 7408R VS. THE ACIT 7(2), MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI JAYESH DADIA RESPONDENT BY: SHRI DR. MANJUNATH KANKIHALTI DATE OF HEARING :13.09.2012 DATE OF PRONOUNCEMENT: 10.10.12 O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LD. CIT(A)- 13, MUMBAI DT. 7.4.2011 PERTAINING TO ASSESSMENT Y EAR 2007-08. 2. THE ASSESSEE HAS RAISED TWO SUBSTANTIVE GROUNDS OF APPEAL AS UNDER: 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACT S OF THE CASE IN CONFIRMING THE ACTION OF THE AO IN NOT ALLO WING CURRENT YEARS DEPRECIATION OF RS. 2,32,059/- WHIL E DETERMINING THE BUSINESS LOSS. THE ACTION IS UNJU STIFIED AND UNWARRANTED AND AGAINST THE PROVISIONS OF SEC. 32(1) OF THE I.T. ACT. 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE ACTION OF THE AO IN NOT ALLO WING SET OFF OF UNABSORBED LOSS OF RS. 6,42,208/- AGAINS T THE CURRENT YEARS LONG TERM CAPITAL GAIN. THE ACTION I S UNJUSTIFIED AND UNWARRANTED. ITA NO. 5374/M/2011 2 3. THE SUM AND SUBSTANCE OF THE ABOVE MENTIONED GRI EVANCE OF THE ASSESSEE SUGGESTS THAT (A) THE LD. CIT(A) SHOULD HA VE ALLOWED CURRENT YEARS DEPRECIATION AT RS. 2,32,059/- AS SET OFF FROM THE CAPITAL GAINS AND (B) THE UNABSORBED DEPRECIATION BROUGHT FORWARD FROM THE EA RLIER YEARS AT RS. 6,42,208/- SHOULD HAVE ALSO BEEN ALLOWED AS SET OFF AGAINST CURRENT YEARS LONG TERM CAPITAL GAIN. 4. THE FACTS GIVING RISE TO THE GRIEVANCE OF THE AS SESSEE SHOW THAT FOR THE YEAR UNDER CONSIDERATION, DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE CO MPANY HAD INCURRED LOSS OF RS. 17,48,195/-. THE ASSESSEE COMPANY ALSO HAD A LONG TERM CAPITAL GAINS TO THE TUNE OF RS. 1,30,00,000/-. THE ASSESS EE CLAIMED SET OFF OF BUSINESS LOSS FROM LONG TERM CAPITAL GAINS. THIS F ACT IS NOT IN DISPUTE. WHAT HAS BEEN QUESTIONED BY THE AO IS THE SET OFF CLAIME D BY THE ASSESSEE OF CURRENT YEARS DEPRECIATION AT RS. 2,32,059/- AT TH E BROUGHT FORWARD DEPRECIATION AT RS. 6,432,20/-. THE AO SOUGHT EXPL ANATION FROM THE ASSESSEE FOR ITS CLAIM OF SET OFF OF CURRENT YEARS AND BROU GHT FORWARD DEPRECIATION. THE ASSESSEE FILED A DETAILED REPLY TO SUBSTANTIATE ITS CLAIM. THE CLAIM OF THE ASSESSEE WAS REJECTED BY THE AO AS THE AO WAS OF TH E OPINION THAT THE SET OFF OF CURRENT YEARS BUSINESS LOSS AGAINST THE INCOME UNDER THE OTHER HEADS OF INCOME DOES NOT INCLUDE UNABSORBED DEPRECIATION AS IT IS NOT A PART OF BUSINESS LOSS. THE AO FURTHER OBSERVED THAT SEC. 3 2(2) RESTRICTS THE ALLOWABLE DEPRECIATION OF THE CURRENT YEAR ONLY TO THE EXTENT OF PROFITS AND GAINS OF BUSINESS. THE OTHER REASON FOR REJECTING ASSESSEE S CLAIM WAS THAT THE ACT TREATS BUSINESS LOSS SEPARATELY FROM THE DEPRECIATI ON BECAUSE BUSINESS LOSS CAN BE CARRIED FORWARD ONLY FOR 8 ASSESSMENT YEARS WHEREAS DEPRECIATION CAN BE CARRIED FORWARD FOR UNLIMITED PERIOD. WHILE REJ ECTING THE CLAIM OF SET OFF OF DEPRECIATION IN TOTALITY, THE AO CONCLUDED THAT THE ASSESSEE HAS NOT CLAIMED THE AMOUNT IN RETURN AND ALSO NO REVISED RETURN WAS FILED. THE AO COMPLETED THE ASSESSMENT AFTER DISALLOWING THE CLAIM OF THE A SSESSEE FOR SET OFF OF CURRENT YEARS DEPRECIATION AS WELL AS BROUGHT FORW ARD DEPRECIATION. ITA NO. 5374/M/2011 3 5. THE ASSESSEE AGITATED THE MATTER BEFORE THE LD. CIT(A) BUT WITHOUT ANY SUCCESS. THE LD. CIT(A) CONSIDERED THE PROVISIO NS OF I.T. ACT 1922 VIS-- VIS 1961 ACT. THE SUM AND SUBSTANCE FOR REJECTING THE ASSESSEES APPEAL AS ENUMERATED BY THE LD. CIT(A) IN HIS ORDER SUGGESTS THAT THE LD. CIT(A) WAS OF THE OPINION THAT THE SET OFF CAN BE CLAIMED ONLY FROM PROFITS OR GAINS AND PROFITS OR GAINS ARE SPECIFICALLY CONFINED TO PROFI TS AND GAINS OF BUSINESS ONLY. THE LD. CIT(A) ALSO DISTINGUISHED THE FACTS OF THE ASSESSEES CASE WITH THOSE OF (A) CIT CALCUTTA VS JAIPURIA CHINA CLAY MINES P VT. LTD. 59 ITR 555 (SC) (B) RAJAPALAYAM MILLS LTD. VS CIT 115 ITR 777 (SC) AND (C) CIT VS VIRMANI INDUS. PVT. LTD & ORS 216 ITR 607 (SC). THE LD. CIT(A) HE LD THAT THE CURRENT YEARSS DEPRECIATION IS NOT ALLOWED TO BE SET OFF AGAINST THE INCOME UNDER THE HEAD LONG TERM CAPITAL GAINS. FURTHER THE CLAIM OF THE ASSESSEE FOR ALLOWING THE UNABSORBED DEPRECIATION OF EARLIER YEARS WAS ALSO NOT ALLOWED FOR THE REASON THAT THE ASSESSEE HAS NOT CLAIMED IN ITS COMPUTATIO N OF INCOME WHILE FILING THE RETURN. 6. THE ASSESSEE IS AGGRIEVED BY THIS FINDING OF THE LD. CIT(A) AND IS BEFORE US. THE LD. COUNSEL FOR THE ASSESSEE SUBMIT TED THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING AUTOMOTIVE PARTS SUCH AS GEAR COVER, HAND CHAIN WHE EL, ROUND WASHER ETC. THE LD. COUNSEL FURTHER SUBMITTED THAT THE ASSESSEE COMPANY FILED A RETURN OF INCOME CLAIMING BUSINESS LOSS AS WELL AS CURRENT YE ARS DEPRECIATION TO BE ALLOWED AS SET OFF AGAINST THE LONG TERM CAPITAL GA INS. THE LD. COUNSEL FURTHER POINTED OUT THAT THE ASSESSEE COMPANY HAS A LSO UNABSORBED DEPRECIATION OF RS. 6,42,208/- OF EARLIER YEARS . THE COUNSEL STRONGLY OBJECTED TO THE OBSERVATION OF THE LOWER AUTHORITIE S THAT ASSESSEE HAS NOT SHOWN /CLAIMED UNABSORBED DEPRECIATION BROUGHT FORW ARD IN ITS RETURN OF INCOME. TO SUBSTANTIATE, THE LD. COUNSEL DREW OUR ATTENTION TO PAGES 1 & 2 OF THE PAPER BOOK WHICH ARE THE STATEMENT OF INCOME FOR THE YEAR UNDER CONSIDERATION. THE LD. COUNSEL CONTINUED ARGUING T HAT THE ASSESSEE HAS FILED PROFIT AND LOSS ACCOUNT AND BALANCE SHEET AND HAS C LAIMED CURRENT YEARS DEPRECIATION AT RS. 2,32,059/-. IT IS THE CONTENTIO N OF THE LD. COUNSEL FOR THE ITA NO. 5374/M/2011 4 ASSESSEE THAT THOUGH THE AO HAS ACCEPTED THE FIGURE OF BUSINESS LOSS BUT HAS DENIED CURRENT YEARS DEPRECIATION TO BE SET OFF AG AINST THE PROFIT UNDER THE HEAD LONG TERM CAPITAL GAINS. THE LD. COUNSEL FURT HER POINTED OUT THAT A COPY OF THE DEPRECIATION STATEMENT WAS FILED ALONG WITH TAX AUDIT REPORT AND THEREFORE THE DEPRECIATION WAS LEGALLY ALLOWABLE AS PER THE PROVISIONS OF SEC. 32(1) OF THE ACT AS PART OF THE BUSINESS LOSS. THE LD. COUNSEL FURTHER DREW OUR ATTENTION TO THE PROVISIONS OF SEC. 32(2) OF TH E ACT WHICH PROVIDES THAT THE UNABSORBED DEPRECIATION IS DEEMED TO BE MERGED WITH CURRENT YEARS DEPRECIATION AND ACCORDINGLY THE ASSESSEE COMPANY I S ENTITLED TO SET OFF OF UNABSORBED DEPRECIATION RELATING TO EARLIER ASSESSM ENT YEARS WITH THE INCOME UNDER THE HEAD LONG TERM CAPITAL GAINS. THE LD. CO UNSEL CONCLUDED THAT THE ASSESSEES CLAIM OF SET OFF OF CURRENT YEARS AS WE LL AS BROUGHT FORWARD DEPRECIATION IS AS PER THE PROVISIONS OF LAW AND SH OULD BE ALLOWED TO BE SET OFF AGAINST THE INCOME UNDER THE HEAD LONG TERM CAP ITAL GAINS. 7. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE STRO NGLY RELIED UPON THE FINDINGS OF THE LOWER AUTHORITIES. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND HAVE CAREFULLY CONSIDERED THE RELEVANT PROVISIONS OF THE ACT AND THE PAPER BOOK SUBMITTED BY THE ASSESSEE. A PERUSAL OF THE STATEMENT OF INCOME FOR THE YEAR UNDER CONSIDERATIO N SHOW THAT THE ASSESSEE HAS SHOWN LONG TERM CAPITAL GAINS AT RS. 1,30,00,00 0/- AFTER CLAIMING EXEMPTION U/S. 54EC OF THE ACT. THE ASSESSEE HAS A LSO SHOWN NET LOSS FROM BUSINESS BEFORE DEPRECIATION AT RS. 17,48,195/-. T O THIS, THE ASSESSEE ADDED CURRENT YEARS DEPRECIATION AT RS. 2,32,059/- AND U NABSORBED DEPRECIATION BROUGHT FORWARD FROM ASSESSMENT YEARS 1999-2000 AND 2002-03 AT RS. 6,42,208/- AND CLAIMED SET OFF AMOUNTING TO RS. 26, 22,462/- FROM THE LONG TERM CAPITAL GAINS AT RS. 1,30,00,000/-. PROFIT AN D GAINS OF BUSINESS OR PROFESSION ARE COMPUTED IN ACCORDANCE WITH THE PROV ISIONS CONTAINED IN SEC. 30 TO 43 OF THE ACT. DEPRECIATION IS ALLOWED AS PER THE PROVISIONS OF SEC. ITA NO. 5374/M/2011 5 32(1) OF THE ACT. SECTION 32(2) OF THE ACT CONTAIN S PROVISIONS RELATING TO UNABSORBED DEPRECIATION WHICH IS AS UNDER: WHERE, IN THE ASSESSMENT OF THE ASSESSEE, FULL EFF ECT CANNOT BE GIVEN TO ANY ALLOWANCE UNDER SUB-SECTION (1) IN ANY PREVIOUS YEAR, OWING TO THERE BEING NO PROFITS OR GAINS CHARGEABLE FOR THAT PREVIOUS YEAR, OR OWING TO THE PROFITS OR GAINS CHARGEABLE B EING LESS THAN THE ALLOWANCE, THEN, SUBJECT TO THE PROVISIONS OF SUB-S ECTION (2) OF SECTION 72 AND SUB-SECTION (3) OF SECTION 73 , THE ALLOWANCE OR THE PART OF THE ALLOWANCE TO WHICH EFFECT HAS NOT BEEN GIVEN, AS TH E CASE MAY BE, SHALL BE ADDED TO THE AMOUNT OF THE ALLOWANCE FOR D EPRECIATION FOR THE FOLLOWING PREVIOUS YEAR AND DEEMED TO BE PART OF TH AT ALLOWANCE, OR IF THERE IS NO SUCH ALLOWANCE FOR THAT PREVIOUS YEAR, BE DEEMED TO BE THE ALLOWANCE FOR THAT PREVIOUS YEAR, AND SO ON FOR THE SUCCEEDING PREVIOUS YEARS.] 9. A PERUSAL OF THE AFOREMENTIONED SECTION SHOWS TH AT SEC. 32(2) HAS BEEN SUBJECTED TO THE PROVISIONS OF SEC. 72(2) AND 73(3) OF THE ACT. BEFORE DISCUSSING THE PROVISIONS OF SEC. 72(2) LET US FIRS T ANALYZE THE PROVISIONS OF SEC. 32(2) OF THE ACT PRIOR TO THIS AMENDMENT W.E.F . 1.4.2002 SUBSTITUTED BY THE FINANCE ACT, 2001, W.E.F. 1-4-2 002. PRIOR TO ITS SUBSTITUTION, SUB-SECTION (2), AS AMENDED BY THE TA XATION LAWS (AMENDMENT AND MISCELLANEOUS PROVISIONS) ACT, 1986, W.E.F. 1-4-1988, DIRECT TAX LAWS (AMENDMENT) ACT, 1987, W.E.F. 1-4-1 989 AND FINANCE ACT, 1992, W.E.F. 1-4-1993, SUBSTITUTED BY THE FINA NCE (NO. 2) ACT, 1996, W.E.F. 1-4-1997 AND FURTHER AMENDED BY THE FI NANCE ACT, 2000, W.E.F. 1-4-2001, READ AS UNDER : '(2) WHERE IN THE ASSESSMENT OF THE ASSESSEE FULL E FFECT CANNOT BE GIVEN TO ANY ALLOWANCE UNDER CLAUSE (II) OF SUB-SEC TION (1) IN ANY PREVIOUS YEAR OWING TO THERE BEING NO PROFITS OR GA INS CHARGEABLE FOR THAT PREVIOUS YEAR OR OWING TO THE PROFITS OR G AINS BEING LESS THAN THE ALLOWANCE, THEN, THE ALLOWANCE OR THE PART OF ALLOWANCE TO WHICH EFFECT HAS NOT BEEN GIVEN (HEREINAFTER REF ERRED TO AS UNABSORBED DEPRECIATION ALLOWANCE), AS THE CASE MAY BE, (I) SHALL BE SET OFF AGAINST THE PROFITS AND GAIN S, IF ANY, OF ANY BUSINESS OR PROFESSION CARRIED ON BY HIM AND ASSESS ABLE FOR THAT ASSESSMENT YEAR ; (II) IF THE UNABSORBED DEPRECIATION ALLOWANCE CANN OT BE WHOLLY SET OFF UNDER CLAUSE (I), THE AMOUNT NOT SO SET OFF SHALL BE ITA NO. 5374/M/2011 6 SET OFF FROM THE INCOME UNDER ANY OTHER HEAD, IF AN Y, ASSESSABLE FOR THAT ASSESSMENT YEAR; (III) IF THE UNABSORBED DEPRECIATION ALLOWANCE CA NNOT BE WHOLLY SET OFF UNDER CLAUSE (I) AND CLAUSE (II), TH E AMOUNT OF ALLOWANCE NOT SO SET OFF SHALL BE CARRIED FORWARD T O THE FOLLOWING ASSESSMENT YEAR AND (A) IT SHALL BE SET OFF AGAINST THE PROFITS AND GAINS, IF ANY, OF ANY BUSINESS OR PROFESSION CARRIED ON BY HIM AND ASSESSABLE FOR THAT ASSESSMENT YEAR ; (B) IF THE UNABSORBED DEPRECIATION ALLOWANCE CANNO T BE WHOLLY SO SET OFF, THE AMOUNT OF UNABSORBED DEPRECIATION ALLOWANCE NOT SO SET OFF SHALL BE CARR IED FORWARD TO THE FOLLOWING ASSESSMENT YEAR NOT BEING MORE THAN EIGHT ASSESSMENT YEARS IMMEDIATELY SUCCEEDING THE ASSESSMENT YEAR FOR WHICH THE AFORES AID ALLOWANCE WAS FIRST COMPUTED : PROVIDED THAT THE TIME LIMIT OF EIGHT ASSESSMENT YEARS SPECI FIED IN SUB-CLAUSE (B) SHALL NOT APPLY IN THE CASE OF A COMPANY FOR THE ASSESSMENT YEAR BEGINNING WITH THE ASSESSMENT Y EAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE SAID COM PANY HAS BECOME A SICK INDUSTRIAL COMPANY UNDER SUB-SECTION (1) OF SECTION 17 OF THE SICK INDUSTRIAL COMPANIES (SPECIAL PROVISIONS) ACT, 1985 (1 OF 1986) AND ENDING WITH THE ASSESSMEN T YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE ENTIRE N ET WORTH OF SUCH COMPANY BECOMES EQUAL TO OR EXCEEDS THE ACCUMU LATED LOSSES. 10. A COMPARATIVE STUDY OF PRE-AMENDMENT AND POST A MENDMENT PROVISIONS OF SEC. 32(2) SUGGESTS THAT PRIOR TO THE AMENDMENT, THE SET OFF WAS RESTRICTED TO THE PROFITS AND GAINS, IF ANY, OF ANY BUSINESS OR PROFESSION WHEREAS POST AMENDMENT (I.E. THE LAW APPLICABLE FOR THE YEAR UNDER CONSIDERATION) THE SET OFF IS AVAILABLE FROM PROFIT S OR GAINS CHARGEABLE FOR THE PREVIOUS YEAR. THE CLAIM OF THE LOWER AUTHORITIES THAT PROFITS OR GAINS SO MENTIONED SHOULD BE RESTRICTED TO PROFITS OR GAINS OF BUSINESS OR PROFESSION CANNOT BE ACCEPTED BECAUSE HAD THAT BEEN THE INTENT ION OF THE LEGISLATURE IT WOULD NOT HAVE DELETED PHRASE OF ANY BUSINESS O R PROFESSION IN THE POST AMENDED PROVISIONS OF SEC. 32(2). THE LAW REGARDING SET OFF OF ITA NO. 5374/M/2011 7 UNABSORBED DEPRECIATION UPTO 1.4.1996 WAS VERY LIBE RAL AND SET OFF WAS ALLOWABLE AGAINST ANY INCOME. THIS WAS ALSO UPHELD BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS CIT VS VIRMANI INDUS. P VT. LTD & ORS 216 ITR 607 (SC) (SUPRA). HOWEVER, THE LAW REGARDING SUCH SET OFF WAS CHANGED BY THE FINANCE ACT NO. 2 OF 1996 AND FROM A.Y. 1997-98 TO 2002-03 THE UNABSORBED DEPRECIATION WAS PUT AT PAR WITH BUSINESS LOSSES U/ S. 72. HOWEVER THE STATUS QUO HAVE BEEN RESTORED FROM A.Y. 2003-04 AND THEREF ORE THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS VIRMANI INDUS. PVT. LTD & ORS 216 ITR 607 (SC) (SUPRA) ONCE AGAIN HOLD GOOD A ND SO NOW UNABSORBED DEPRECIATION CAN BE SET OFF AGAINST ANY INCOME. TH US, THE CLAIM OF CURRENT YEARS DEPRECIATION OF RS. 2,32,059/- IS DIRECTED T O BE SET OFF AGAINST THE INCOME UNDER THE HEAD CAPITAL GAINS. ACCORDINGLY , GROUND NO. 1 OF THE APPEAL IS ALLOWED. 11. HAVING CONSIDERED THE PROVISIONS OF SEC. 32(2), IT IS ALSO CLEAR THAT IF THE CURRENT YEARS DEPRECIATION CANNOT BE SET OFF O WING TO THE PROFITS OR GAINS CHARGEABLE BEING LESS THAN THE ALLOWANCE, THE ALLOW ANCE OR THE PART OF THE ALLOWANCE TO WHICH EFFECT HAS NOT BEEN GIVEN SHALL BE ADDED TO THE AMOUNT OF ALLOWANCE FOR DEPRECIATION FOR THE FOLLOWING PRE VIOUS YEAR AND DEEMED TO BE PART OF THE ALLOWANCE WHICH MEANS THAT BROUGHT F ORWARD DEPRECIATION MERGES WITH THE CURRENT YEARS DEPRECIATION BECAUSE OF THE LEGAL FICTION CREATED BY PROVISIONS OF SEC. 32(2) OF THE ACT. HO WEVER, THIS FICTION HAS BEEN SUBJECTED TO THE PROVISIONS OF SEC. 72(2) AND 73(3) OF THE ACT. 12. LET US FIRST CONSIDER THE PROVISIONS OF SEC. 72 (2) OF THE ACT WHICH PROVIDES AS UNDER: WHETHER ANY ALLOWANCE OR PART THEREOF IS, UNDER SU B-SECTION 2 OF SEC. 32 OR SUB SECTION (4) OF SEC. 35, TO BE CAR RIED FORWARD, EFFECT SHALL FIRST BE GIVEN TO THE PROVISIONS OF TH IS SECTION. 13. A SIMPLE READING OF THIS SECTION SUGGESTS THAT IN CASE OF SET OFF OF BUSINESS LOSS VIS-A-VIS DEPRECIATION, THE FIRST PRE FERENCE SHALL BE GIVEN TO THE ITA NO. 5374/M/2011 8 BUSINESS LOSS AS PER THE PROVISIONS OF SEC. 72(1) O F THE ACT FOR THE SIMPLE REASON THAT THE BUSINESS LOSS CAN BE CARRIED FORWAR D ONLY UPTO 8 ASSESSMENT YEARS WHEREAS THE DEPRECIATION CAN BE CARRIED OVER UPTO UNLIMITED PERIOD. AS HAS BEEN DISCUSSED HEREINABOVE, THE BROUGHT FORWARD UNABSORBED DEPRECIATION IS TREATED AS CURRENT YEARS DEPRECIAT ION BECAUSE OF THE LEGAL FICTION, THEREFORE THE TREATMENT GIVEN TO THE CURRE NT YEARS DEPRECIATION IS EQUALLY APPLICABLE TO BROUGHT FORWARD DEPRECIATION AFTER THE APPLICATION OF FINANCE ACT, 2001. 14. WE HAVE ALREADY HELD THAT CURRENT YEARS DEPREC IATION IS TO BE ALLOWED AS SET OFF FROM THE LONG TERM CAPITAL GAINS AND BRO UGHT FORWARD DEPRECIATION IS TO BE TREATED AS CURRENT YEARS DEPRECIATION AS PER THE LEGAL FICTION OF SECTION 32(2), THE SAME IS ALSO TO BE ALLOWED TO BE SET OFF FROM THE LONG TERM CAPITAL GAINS. ACCORDINGLY, GROUND NO. 2 OF T HE APPEAL IS ALSO ALLOWED. 15. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 10 TH DAY OF OCTOBER, 2012 SD/- SD/- (DINESH KUMAR AGARWAL) (N.K. BILLAIYA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED 10 TH OCTOBER, 2012 RJ COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR E BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI