VERITAS CHEMICALS (P) LTD. Vs. ITO

JUDGEMENT

(1.) THIS is an appeal filed by the assessee and is directed against the order of Commissioner (Appeals), dated 8 -10 -1995 for the assessment year 1992 -93.

(2.) IN ground No. 1, the grievance of the assessee is regarding set off of unabsorbed carried forward depreciation. According to the assessee there was unabsorbed carried forward depreciation amounting to Rs. 8,75,143. As per the provisions of section 34A the assessee claimed set -off of unabsorbed depreciation for the year under consideration at the rate of 6 -2/3 per cent amounting to Rs. 5,83,370. According to the assessing officer the amount of depreciation is amounting to Rs. 5,64,033 and by application of section 34A, the assessing officer allowed the sum of Rs. 3,76,022. The assessing officer calculated the unabsorbed carried forward depreciation at Rs. 5,64,033 on the basis of capitalised incidental expenses which were not considered for depreciation for the assessment year 1986 -87. Therefore, the assessing officer recalculated the carried forward unabsorbed depreciation. According to the assessee the assessing officer had no power to recalculate unabsorbed carried forward depreciation. According to the assessment framed for earlier years there was unabsorbed depreciation amounting to Rs. 8,19,840. For this proposition heavy reliance has been placed on the decision of Hon'ble Madras High Court in the case of CIT v. : [1999]239ITR23(Mad) , though the said decision is in respect of section 32A relating to investment allowance. It is the contention of the learned authorised representative that the provisions of section 32A are in pari materia with the provisions of section 32(2). Therefore, the learned authorised representative contended this decision is equally applicable to the provisions of section 32(2) of the Income Tax Act, 1961. According to the learned authorised representative, as long as the assessment order of earlier years operates, the assessee is entitled to have the benefit thereunder and is entitled to carry forward of the depreciation to the following assessment years and in the subsequent years. It is not permissible or open to the assessing officer to sit in judgment over the order passed by preceding assessing officer and once again determine the question that whether the depreciation granted by the preceding assessing officer was correct or not. As the unabsorbed depreciation was quantified by earlier order, the assessee is entitled to carry forward the depreciation and the assessee thus has acquired an indefeasible right to carry forward the same.

(3.) THE learned Departmental Representative, however, relied on the orders of assessing officer and Commissioner (Appeals).