In a retrospective amendment proposed both under section 115JA and section 115JB the set off otherwise permitted for either unabsorbed depreciation or loss against current year profits is ruled out in cases where there is either only depreciation or a loss. Using such a rigid interpretation it can similarly be said in a case where the two figures of unabsorbed depreciation and loss are equal. In order to avoid such a situation it is therefore advisable to use your own set off method as shall suit the assessee’s needs in each year since the Act does not provide for any particular manner in which the previous year losses are to be set off. For instance it may be wise to set off previous year losses/depreciation against current year profits to protect unabsorbed depreciation balances.
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