Unabsorbed depreciation not eligible for set off against salary income

In Chandrakumar v. Asst.CIT (2010) 5 ITR(Trib)540 (Chennai) the assessee who had income by way of salary from a spinning mill, income from house property and income from other sources filed his return of income with reduction towards unabsorbed depreciation which originated under the head 'income from business or profession'.

The tribunal held that unabsorbed depreciation is to be treated as current depreciation in the subsequent year which means it is part of income or loss that year under the head 'business or profession'. It was held that once unabsorbed depreciation becomes current depreciation by virtue of sec.32(2), the net result of computation under the head 'business or profession' would be inclusive of such unabsorbed depreciation. The loss under the 'head business or profession' inclusive of such unabsorbed depreciation therefore is not eligible for set off against income from salary in view of the explicit bar contained in sec 71(2A) of the Act. The decision thus was in favour of the Revenue.