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CIT v. Cochin Shipyard Ltd. (2018) 305 CTR 439 / 168 DTR 140 (Ker.)(HC)

S. 32 : Depreciation – Unabsorbed depreciation- Set-off – For the AY 1997-98, the claim for set off of unabsorbed depreciation is allowable against the income from other sources – However, in AY 1998-99, set off of carry forward unabsorbed depreciation could be allowed only against the profits and gains arising from business or profession. [S. 28(i), 32(2), 56, 263]

On appeal, held by the High Court that:

  1. Whatever be the intention expressed in the Budget Speech, the law passed by the Parliament alone is relevant and external aid need be resorted to only if there any ambiguity in the provision incorporated; and

From the relevant provisions [S.32(2)], it is clear that for the AY 1997-98 (ie., PY 1996-97), assessee is entitled to set-off unabsorbed depreciation against the IFOS also; however, in AY 1998-99, set off of carry forward unabsorbed depreciation could be allowed only against the profits and gains arising from business or profession.  Followed Peerless General Finance and Investment Company Limited v. CIT  (2017) 11 SCC 482 . Appeal of the revenue is partly allowed.   (AY. 1997-1998  1998-1999)