Income Tax

Carry forward of unabsorbed depreciation beyond 8 years-SC dismisses SLP of ITD

Carry forward of unabsorbed depreciation beyond 8 years for periods prior to amendment to section 32(2)- SC dismisses SLP of the ITD

ABCAUS Case Law Citation:
ABCAUS 2746 (2019) (01) SC

The Hon’ble Supreme Court has dismissed the Special Leave Petition (SLP) of the Income Tax Department against the decision of the High Court on the issue of carry forward of unabsorbed depreciation beyond 8 years for periods prior to amendment.

The Finance Act, 2001 had amended Section 32(2) of the Income Tax Act, 1961 (the Act). Prior to the amendment, the said section provided a restriction of eight years for the carry forward of depreciation. This restriction was brought in, by Finance Act, 1996 before which there was no restriction or cap in the carrying forward of depreciation.

The Hon’ble High Court had upheld the order of the ITAT that the unabsorbed depreciation pertaining to Assessment Year 1997-98 to Assessment Year 2001-02 was allowable to be carried forward and adjusted after the lapse of 8 assessment years in view of the Section 32(2) as amended by the Finance Act, 2001.

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