Become a Govt. Certified GST Practitioner in just 58 hours. Register Now!

Inter head adjustment

Deeps (Article Assisstant) (2485 Points)

13 November 2009

Though this was one of the earlier discussion topic, pl. clarify me now

Can Unadbsorbed depreciation allowance be set off against salary ince?

"According to Section 58(4), any loss or unabsorbed depreciation allowance cannot be set off against any income in the form of winning from lotteries, crossword puzzles, races including horse races, card games and other games of any sortor from gambling or betting."

Then does this mean it shall be set off against salary income? Pl. reply

Thanks in advance

Reply
Follow
Share

2 Replies

FATEMA (CHARTERED ACCOUNTANT) (719 Points)
Replied 13 November 2009

Hi Deepika,

According to section 32(2),

If the depreciation allowance is not fully deductible under the head "Profit and gains from business or profession" because of absence or inadequacy of profits then it is deductible from income chargeable under other heads of income for the SAME ASSESSMENT YEAR (EXCEPT INCOME CHARGEABLE UNDER THE HAED " SALARIES ")

Thus the section clearly states that unabsorbed depreciation cannot be set off against salaries.

If the depreciation is still unabsorbed,it can be carried forward to the subsequent assessment years. (CAN BE CARRIED FORWARD FOR INDEFINITE PERIOD)

In the case of set off ,following order of priority is followed in subsequent years:

a.Cuurent depreciation

b.Brought forward business loss

c.Unabssorbed depreciation

Regards,

Fatema

Upgrade to CAclubindia Pro. Subscribe Now!

Jobin Mathews (Student) (42 Points)
Replied 13 November 2009

Hi,

If you want the logical reasoning as to why one cannot set-off any income against salary income is because salary income can never be negative. (You can never get negative salary, right?) That is why no set-off is applicable against SALARY INCOME.