Section 72(2) — the law in short
What the courts have decided on section 72(2), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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CIT v Mother India Refrigeration Industries (P) Ltd
Supreme CourtHelps department
I have brought forward business losses that will lapse in a few years. Can I set them off before this year's depreciation, so the losses do not run out?
No. The Supreme Court held that current depreciation must be deducted first, before the unabsorbed carried forward business loss of earlier years is set off. The priority given to carried forward losses is over the unabsorbed depreciation that is being carried forward, not over the current year's depreciation. The deeming provision that treats carried forward depreciation as part of the following year's allowance is a legal fiction created for a definite purpose - so that it can be set against income under any head - and cannot be stretched further. The appeals were allowed and the reference answered against the assessee, with costs.
Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.
