depreciation and salary set off
This query is : Resolved
CA. Praveen Narayan
(Querist)
02 October 2010
Dear friends,
Is it allowed to claim set off of unabsorbed depreciation against Salary income? Income tax Act clearly distinguish unabsorbed Depre and business loss. The Act doesnt permit to set off of business loss against Salary, but does not specifically disallows in the case of unabsorbed depre..
Can any1 help me out in ths matter..?
Thanx n Advance..
Is it allowed to claim set off of unabsorbed depreciation against Salary income? Income tax Act clearly distinguish unabsorbed Depre and business loss. The Act doesnt permit to set off of business loss against Salary, but does not specifically disallows in the case of unabsorbed depre..
Can any1 help me out in ths matter..?
Thanx n Advance..
02 October 2010
i think yes..
coz..as per sec 32 unabsorbed depreciation can set off against "ANY" other head of income & there is no specific disallowance against salary.
coz..as per sec 32 unabsorbed depreciation can set off against "ANY" other head of income & there is no specific disallowance against salary.
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Aditya Maheshwari
(Expert)
02 October 2010
Discussed in depth in these links
https://www.caclubindia.com/forum/set-off-against-salary-62177.asp
and
https://www.caclubindia.com/forum/is-unabsorbed-deprreciation-can-be-setoff-from-salary-or-not-53900.asp
https://www.caclubindia.com/forum/set-off-against-salary-62177.asp
and
https://www.caclubindia.com/forum/is-unabsorbed-deprreciation-can-be-setoff-from-salary-or-not-53900.asp
Message likes :
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03 October 2010
I always wish NOT to give an incorrect view... & so went thru the links pasted above & saw a lot of discussions done with different / opinions / views on this topic......
one conceptual point i came across was that,
earlier set off of PGBP loss against salary was allowed till an amendment was brought about by the FA 2004 which dissallowed set off salary with pgbp loss..
b4 such ammendment both pgbp loss and unabsorbed dep cud be set off with salary w/o any limit
the ammendment came bcoz... ppl showed fictitous pgbp loss to set off salary and claim refund of tds...& to plug the lacuna the amendment was introduced....
now a participant in the discussions was of the view that
"this manipulation was however tough with ubsorbed dep as an assessee needed actual fixed assets to claim dep and the amendment came only for denying set off salary income with pgbp loss...pgbp loss is always diff from unabsorbed dep...as they are governed by different dections...& sec 32 doesnt deny benefit of such set off"
Also the actual lines of FA 2004 are....
"Sub-Section (2A) has been inserted in Section 71 to prohibit set off of
business loss against income assessable under the head ‘Salaries’."
CONCLUSION at last:
The AMENDMENT was brought in SEC 71 & NOT 32(2)... THUS SET OFF OF UNABSORBED DEPRECIATION u/s 32(2) AGAINST IS CONTINUED.
one conceptual point i came across was that,
earlier set off of PGBP loss against salary was allowed till an amendment was brought about by the FA 2004 which dissallowed set off salary with pgbp loss..
b4 such ammendment both pgbp loss and unabsorbed dep cud be set off with salary w/o any limit
the ammendment came bcoz... ppl showed fictitous pgbp loss to set off salary and claim refund of tds...& to plug the lacuna the amendment was introduced....
now a participant in the discussions was of the view that
"this manipulation was however tough with ubsorbed dep as an assessee needed actual fixed assets to claim dep and the amendment came only for denying set off salary income with pgbp loss...pgbp loss is always diff from unabsorbed dep...as they are governed by different dections...& sec 32 doesnt deny benefit of such set off"
Also the actual lines of FA 2004 are....
"Sub-Section (2A) has been inserted in Section 71 to prohibit set off of
business loss against income assessable under the head ‘Salaries’."
CONCLUSION at last:
The AMENDMENT was brought in SEC 71 & NOT 32(2)... THUS SET OFF OF UNABSORBED DEPRECIATION u/s 32(2) AGAINST IS CONTINUED.
CA. Praveen Narayan
(Querist)
03 October 2010
Thank u very much Adithya and Punit for ur valid contributions.. excellent..
CA. Praveen Narayan
(Querist)
03 October 2010
Thank u very much Adithya and Punit for ur valid contributions.. excellent..
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