Dear Rajat sir,

I would like to add a little to what u have already said...

The carry forward and set off of business loss is restricted to 8 years by section 76,

But the unabsorbed depreciation is carried forward infinitely, because there is no such restriction under any provision, and the basic provisions regarding carry forward and set off of unabsorbed depreciation is actually based on the decision taken in the case of Virmani Intdustries Ltd... It needs mention that the unabsorbed depreciation can be set off against other any other incomes on the basis of the decision.

It is in my opinion, an incorrect proposition that business loss and unabsorbed depreciation can be equated with, and judged in relation to each other...

As per the words in sec 32, the brought forward depreciation is treated as current year depreciation allowance…. But section 71(2A) restricts only set–off of business loss against salary…

Ironically, unabsorbed depreciation can also arise in the computation of IFOS, see the sec 57 for allowable deductions… That can be set off against salary, cos of the loophole in section 71, that income from IFOS can be set off against any head… Pls note that the unabsorbed depreciation from IFOS is specified in sec 57, as per the words employed in section 57, is to be treated in exactly the same manner as the unabsorbed depreciation in sec 32…

So we find that unabsorbed depreciation is actually allowed to set off against salary as per the words employed in the income tax act… Because the law itself recognizes that business loss, loss in computing IFOS and unabsorbed depreciation are different, otherwise, such contradictory situation wont arise…

But still not possible to set off the same against salary because there is simply no provision in the return...

Unabsurbed Depreciation is absolutely yr deduction........... U can claim it irrespective of any provisions.......... So no confusions........... Cheeeeeers..........

THanks G.K. Bhai for sharing the above points and the points which i had raised earlier was also your taken from earlier threads.......sorry for taking ur points in the discussion.....please dont mind it.....

So till now can we conclude that logically or literally we can setoff the unabsorbed dep with salary income bcoz income tax nowhere restricts for the same.....

But practically it is not possible due to lack of option in the return.........

Please correct me if I am Wrong.....

Originally posted by : Uday Kiran
	Yes i too agree that this topic is debatable and can run into hours days and so on. and Rajat i got your point of view. Thanks for the discussion. But Dhiraj, what stand you take? You sometimes say it can be setoff and sometimes not. Let me know your FINAL stand so that the view of this discussion enlarges and comes to an end.

Hi uday, in none of my replies i said that it CAN'T BE SET OFF.... I have alwz said one can set off such depreciation, coz there is no official denial by the act. But yes, as ITR does not provide u the facility of setting of an unabsorbed depreciation against salary, one should do it manually and write the net figure in the form....

Carry forward and set off of losses

Unabsorbed loss under house property, capital loss and business loss can be carried forward for 8 years. Unabsorbed speculation business loss can be carried forward only for a period of 4 years.

Loss can be carried forward and set off even if the business in respect of which it was incurred has been discontinued. However, such loss cannot be set off against income under any other head. An exception exists in respect of unabsorbed depreciation from business which can be set off against any other source of income in the absence of business income and can be carried forward indefinitely, even if the business through which depreciation was incurred has ceased to exist.

    Carry forward of losses (other than loss from house property and unabsorbed depreciation) is permissible if the return of income for the year, in which loss is incurred, is filed in time. The late filing of return should not impact the status of carry forward of loss of previous years.