Dipak Kumar Sen, J. - (1.) American Export Isbrandtsen Lines Ltd. the assessee, an American shipping company, was assessed to income-tax in the assessment year 1972-73, the corresponding accounting year ending on December 31, 1971. In its return, the assessee disclosed a net loss. It also claimed a deduction of $ 1,00,53,970 under Section 32(1)(iii) of the I.T. Act, 1961, the deficiency arising from sale of two vessels belonging to the assessee sold during the accounting year at a price less than their written down value in the books. The assessee claimed that the same should be taken into account in computing its business loss and should be carried forward as a business loss under Section 72 of the Act.
(2.) The ITO rejected the claim of the assessee. He held that under the Act, the allowance provided in Section 32(1)(iii) was not meant to be carried forward as it had been excluded from Section 32(2). He held further that on an asset which ceases to exist in an accounting year, the allowance thereon must be restricted to such year only.
(3.) On appeal, the AAC upheld the decision of the ITO. He held that an assessee could claim deduction for unabsorbed depreciation only on an asset still in use. Where the asset was no longer in use, depreciation thereon, not absorbed was not intended to be allowed as deduction to be carried forward.;