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Section 32 of the Income-tax Act, 1961 - Depreciation - Allowance /Rate of - Assessment year 2000-01 - Set off of prior years' unabsorbed depreciation brought forward as on 1-4-1997 was to be allowed against short-term capital gains For the Assessment year 2000-01, the assessee had set off prior years' business loss and unabsorbed depreciation against short-term capital gains but the Assessing Officer disallowed the same. However, the Tribunal allowed the assessee's claim. Held that the question of law framed in the appeal was covered against the revenue in the case of CIT v. Pioneer Asia Packing (P.) Ltd. decided by the instant Court on 21-11-2007 in Tax Case (Appeal) No. 1423 of 2007 reported at [2008] 214 CTR (Mad.) 202. In view of the amended provisions of section 32(2), with effect from 1-4-1997, the deeming fiction of treating the earlier years' unabsorbed depreciation as current year depreciation was removed. The period available for absorbing the unabsorbed depreciation against the profit of the succeeding years was limited to eight years. The clarification of the Finance Minister in the Parliament was also to the effect that the cumulated unabsorbed depreciation brought forward as on 1-4-1997 could still be set off against the taxable business profit or income under any other head for the assessment year 1997-98 and seven subsequent years. In view of the above position of law, the assessee was entitled to the unabsorbed depreciation brought forward as on 1-4-1997 and could set it off against short-term capital gains. CASES REFERRED TO Uttam Air Products v. Deputy CIT [2006] 99 TTJ 718 (Delhi),Commissioner of Income-tax v. Pioneer Asia Packing P. Ltd. [2009] 310 ITR 0198 (Mad.) JUDGMENT The of the court was delivered by K. Raviraja Pandian J. - The appeal is filed against the order of the Income-tax Appellate Tribunal, Madras " C" Bench, dated February 2, 2007, made in I. T. A. No. 1964/Mds/2003 for the assessment year 2000-01. The facts of the case culminating in filing of the above appeal culled out from the statement of facts contained in the memorandum of appeal go as follows : For the assessment year 2000-01, the assessee had set off the prior…

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