Unabsorbed depreciation

Tax queries 715 views 4 replies

CA.Swathi Jain

155 Points Joined March 2010

Please respond:

In the Previous year 2010-11 the partners of a firm purchased windmills in their individual capacity and claimed depreciation at 80% in their individual returns.After claiming depreciation, partners incurred loss and resulted in unabsorbed depreciation. In the beginning of the next year, the windmills were sold to a company as the partners discontinued windmill business. The query is whether the partners can set off unabsorbed depreciation with other income in the year of sale of windmill, since it is in the nature of discontinued business.

thanks...

Replies (4)

Swami Ayyappa Nuli

TAX ADVISOR & CONSULTANT AT G.S.T SUVIDH

1372 Points Joined June 2012

i think

u can't claim deduction as unabsorbed depreciation because at the time of selling wind mill u give benifit because u deduct w.d.v(including unabsorbed depreciation) from sale consideration.so up the amount of

unabsorbed depreciation u claim benifit under capital gains

Swami Ayyappa Nuli

TAX ADVISOR & CONSULTANT AT G.S.T SUVIDH

1372 Points Joined June 2012

i think

unabsorbed depreciation u claim benifit under capital gains

pls send me pm whether my conclusion is correct or not

CS RAJESH C.CHOUDHARY

ASSISTANT MANAGER

14607 Points Joined July 2011

Dear Swati Jain,

Partners in their individual capacity can set off losses with income of other business in the same year.

Regards,

RAJESH CHOUDHARY

CA.Swathi Jain

155 Points Joined March 2010

thanks for the reply ayyappa and rajesh...

Rajesh: can u tell me by virtue of which section of the Income tax act, can the partners adjust unabsorbed depreciation with income from other sources, or any case law is available to support this stand...