14/01/2019
UNABSORBED DEPRECIATION :- While dealing with unabsorbed Depreciation one should keep in mind the following points :
1) Depreciation allowance of the previous year is first deductible from the income chargeable under the head profits and gains of business or profession".
2) If depreciation allowance is not fully deductible under the head “Profits and gains of business or profession” because of absence or inadequacy of profits, it is deductible from income (other than income chargeable under the head “Salaries"') chargeable under other heads of income for the same assessment year.
3) If depreciation allowance is still unabsorbed, it can be carried forward to the subsequent assessment year(s). No time-limit is fixed for the purpose of carrying forward of unabsorbed depreciation; it can be cam'ed forward for indefinite period, if necessary.1n the subsequent year(s), unabsorbed Depreciation it can be set off against any income whether chargeable under the head “Profits and gains of business or profession’ or under any other head (not being income chargeable under the head “Salaries"‘). In the matter of set off the following order of priority is followed in the subsequent year(s) :
a. Current depreciation.
b. Brought forward business loss.
c. Unabsorbed depreciation
It may be said that if in the subsequent year(s), there is no brought forward business loss, unabsorbed depreciation can be added to current depreciation for the purpose of claiming deduction.
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