Where in the assessment of the assessee, full effect cannot be given to any depreciation allowance in any previous year owing to—
(a) there being no profits or gains chargeable for that previous year. or
(b) the profits or gains chargeable being less than the depreciation allowance,
then, subject to the provisions of sections 72(2) (relating to carry forward of business loss) and 73(3) (relating to carry forward of speculation loss), the depreciation allowance or part of the depreciation allowance to which effect has not been given, as the case may be, shall—
(i) be added to the amount of allowance for depreciation for the following previous year and deemed to be part of that allowance, or
(ii) if there is no such depreciation allowance for that previous year, be deemed to be the allowance for that previous year, and so on for the succeeding previous years.
In other words, the depreciation allowance shall be allowed as under:—
(1) current depreciation is first deductible from the income of business.
(2) If any balance is left due to income from business being insufficient, it can be set off from any source under any other head of income (except salary) in the same previous year.
(3) In case there is still a balance left over, it is to be treated as unabsorbed depreciation and is to be taken to the next succeeding year and added to the current depreciation of that year. If, however, there is no current depreciation for such succeeding year, the unabsorbed depreciation becomes the depreciation allowance for such succeeding year.
However, if there is any carry forward of business loss or speculation loss also, the set off to the succeeding previous year shall be done in the following order.
(a) Set off current year depreciation.
(b) Set off brought forward business loss/speculation loss.
(c) Set off brought forward unabsorbed depreciation. |
