I want to know whether unabsorbed depreciation can be carried forward if there is reconstitution of the firm or not???? kindly specify any case law regarding this??
3 Replies
Nitin Singhal
(Gaining knowledge...)
(320 Points)
Replied 09 September 2011
Yes it can be carried on if there is reconstitution. There are various case laws like Sakthi Trading Co. Link : https://law.incometaxindia.gov.in/DitTaxmann/IncomeTaxActs/2008ITAct/%5B2001%5D250ITR0871(SC).htm
If business is closed and there is no reconstitution then it cannot be carried on as business has ceased to exist.
nikhil
(CA)
(77 Points)
Replied 09 September 2011
but as per the above case law i.e. "Sakthi Trading Co." , it only talks about valuation of closing stock in case of reconstitution of the firm. i want the case law stating if the unabsorbed depreciation can be cariied forward or not in case a firm is reconstituted with removal of one or more partners.
CA Hardik Bunha
(self)
(2121 Points)
Replied 10 September 2011
YES, IT CAN BE CARRIED FORWARD FOR NUMBER OF YEARS................IF IT IS RECONSTITUTION STILL IT CAN BE CARRIED FORWARD. FOR BETTER INFORMATION REFER SECTION 41.
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