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Section 32, read with section 72 & 73 of Income-tax Act, 1961, read with clause (v) of Annexure I of App. II to Income-tax Rules, 1962 – Depreciation – Unabsorbed depreciation – Assessment years 1969-70 and 1970-71 - Whether unless unabsorbed depreciation is adjusted in next previous accounting year it can not be taken in to account later on for purpose of computation of total income of assessee in any subsequent year – Held, yes FACTS In earlier years the assessee-company ran some business but the same was closed long ago. In those earlier years, there was some unabsorbed depreciation which remained unadjusted. During the assessment years 1969-70 and 1970-71, the assessee earned income from rent as also income under section 41(2). The assessee also claimed certain losses from the business which were disallowed by the ITO. On appeal, the AAC rejected the assessee's additional claim for set off of aforesaid unabsorbed depreciation against the profits for the years under reference on the ground that in the earlier assessment orders unabsorbed depreciation was not carried forward from year to year. The Tribunal dismissed the assessee's appeals. On reference: HELD The provisions of section 32(2) read with section 72 and 73 and clause (v) of Annexure I of App. II to the I.T. Rules, 1962, clearly show that unless the unabsorbed depreciation is adjusted in the next previous accounting year it cannot be taken into account later on for the purpose of computation of total income of the assessee in any subsequent year. Therefore, the Tribunal was right in rejecting the assessee's claim for adjustment of unabsorbed depreciation of the earlier years against the income of the assessment years 1969-70 & 1970-71. CASES REFERRED TO CIT v. Jaipuria China Clay Mines (P.) Ltd. [1966] 59 ITR 555 (SC) and CIT v. Rampur Timber & Turnery Co. Ltd. [1973] 89 ITR 150 (All.) Note: The decision was in favour of revenue. JUDGMENT Deb, J.—The following question is involved in this reference under s. 256(1) of the I.T. Act, 1961 : "Whether, on the facts and in the circumstances of the case, the Tribunal was right in rejecting the assessee's claim for adjustment unabsorbed…

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