1. Treatment for current year depreciation:
Step1: Claim deduction of current year depreciation from business to which it relates.
Step2: Deficiency in step1 can be set-off against the profits or gains of any other business of assessee.
Step3: Deficiency in step2 can be set-off against any other head of income of current previous year.
Step4: Deficiency in step3 is “Unabsorbed Depreciation” for the current previous year.
2. Treatment for unabsorbed depreciation:
- Unabsorbed depreciation of current previous year shall be added to following previous year’s depreciation.
- It can be set-off against any head of income.
- It can be carried forward to any no. of years until it is fully set-off.
- In case of carry forward of business loss or speculation loss, the set-off shall be done after setting off current depreciation and such loss.
3. Continuity of business: Continuity of business is not relevant for set-off and carry forward.
4. Carry forward of depreciation: Depreciation can be carried forward by the same
