Judgment G.M. Akbar Ali, J. 1. Appeal filed against the order of the Income Tax Appellate Tribunal "B" Bench, Chennai dated 23.09.2003 in Income Tax Appeal No.2298/Mds/95. 2. The assessee filed return of Income on 24.12.1992 for the Assessment Year 1992-93 declaring nil income. The Assessing Officer issued notice under Sec.143(2) of Income Tax Act and finalised the assessment. The assessee had claimed unabsorbed depreciation under the head “capital gains”. However, the Assessing Officer was of the view that in view of the restriction under Sec.34A of the Act, no set off of unabsorbed depreciation can be allowed and passed the assessment order without giving benefit of unabsorbed depreciation. 3. The Assessee preferred an appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) allowed the appeal and held as follows: “As regards unabsorbed depreciation, section 32(2) makes it very clear that it has to be treated on par with the current year's depreciation. This will therefore add to enhance the loss under the head business for this year and accordingly the capital gains will get set off against such loss. The Supreme Court decision in Jaipuria Clay Mines Pvt Ltd (59 ITR 555) and the CBDT's instruction No.13/8/69-IT (A II) dated 24.6.69 will also clarify this position. I therefore direct the assessing officer to allow set off of the capital gains of Rs.4,27,392/- against the unabsorbed depreciation since such depreciation has to be treated as part of the current year's depreciation. Naturally the interest income of Rs.99,150/-, whether it be assessed as income from business or income from Other Sources, will also get set off against the unabsorbed depreciation. In the result I direct the assessing Officer to set off the entire income assessed against the unabsorbed depreciation and fix the total income of the appellant for the current year at “Nil”. The Appeal is thus allowed”. 4. Aggrieved by which, the Revenue has preferred an appeal before the Tribunal. Before the Tribunal, it was submitted by the assessee that the issue was covered by the decision of the Tribunal for the same Assessment Year of 1992-1993 in ITA Nos. The Appeal is thus allowed”. 4. Aggrieved by which, the Revenue has preferred an appeal before the Tribunal. Before the Tribunal, it was submitted by the assessee that the issue was covered by the decision of the Tribunal for the same Assessment Year of 1992-1993 in ITA Nos. 350 and 351 of 1995 dated 13.3.2003, whereby the Tribunal has confirmed the action of the Commissioner (Appeals), following the decision of the Hon'ble Supreme Court in the case of Garden Silk Waving Factory vs CIT reported in 189 ITR 512.Therefore, the Tribunal, following the above decision of the Apex court, dismissed the appeal. Aggrieved by which, the Revenue is before this court. 5. On admission, the following substantial questions of law have been formulated: (1) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in upholding the order of the Commissioner of Income Tax (Appeals) directing the set off of the income under the head “ capital gains” against unabsorbed depreciation for the assessment year 1992-93? (2) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in ignoring the provisions of sub-sections (1) and (2) to Section 34A which were in force for the assessment year 1992-93, as per which the set off of unabsorbed depreciation allowance and/or unabsorbed investment allowance has to be restricted to two-third of such allowance or allowances? 6. The matter was pending from 2004 for want of service of summons to the assessee. On 11.8.2014, the matter was called and the following order was passed.: “Despite specific direction to serve notice on the respondent, the Revenue has not taken steps. List the matter under the caption “for dismissal” on 13.8.2014.” 7. On 13.8.2014, the learned counsel for the appellant submitted that the respondent assessee is under liquidation and they have served notice to the Official Liquidator and on subsequent hearings, on 26.8.2014 Mr.B. Dhanaraj, entered appearance for the Official Liquidator and submitted that he has been served with the papers. Therefore, it is recorded that the assessee is under liquidation and the Official Liquidator is representing the assessee. 8. Therefore, it is recorded that the assessee is under liquidation and the Official Liquidator is representing the assessee. 8. The learned counsel for the Revenue submitted that Commissioner of Income Tax (Appeals) as well as the Tribunal have not considered the restrictions under sec.34A of the Act which came into effect on 1.4.1992 and was in force for the Assessment Year 1992-93. The learned Standing Counsel pointed out that as per the amended section, the set off of unabsorbed depreciation allowance or unabsorbed investment allowance has to be restricted to two third of such allowance. The leaned standing counsel would also submit that the set off cannot be allowed against the income under the head “capital gains”. 9. Mr.Dhanaraj, the learned Official Liquidator would also concede that there is a restriction under sec.34A of the Act restricting only 2/3rdof unabsorbed depreciation. However, he would point out that the matter has to be remitted back to the Assessing Officer to recompute and the department has to make an application only to the Official Liquidator for any tax due during the relevant period, as the company is in liquidation. He would also submit that the restricted allowance can be made against the “capital gains” also and relied on the following case laws: 1. Commissioner of Income Tax vs Jaipuria China Clay Mines (P) Ltd (1966) 59 ITR 555 (SC) 2. Garden Silk Weaving Factory vs Commissioner of Income Tax (1991) 189 ITR 512(SC) 3. Commissioner of Income Tax vs Kunal Engineering Co Ltd (2010) 236 CTR (Mad) 619 4. Commissioner of Income Tax vs Kisan Engineering Ltd (2013) 84 CCH 131 AIIHC 10. The carry forward and set off of unabsorbed depreciation allowance was considered by the Hon'ble Supreme Court in the case of Commissioner of Income Tax vs Jaipuria China Clay Mines (P) Ltd (1966) 59 ITR 555 (SC). The Hon'ble Supreme Court, while answering the question under reference “Whether, in the facts and circumstances of the case, the unabsorbed depreciation of the past years should be added to the depreciation of the current year and the aggregate of the unabsorbed depreciation and the current year's depreciation to be deducted from the total income of the previous year relevant for the assessment year 1952-53?”, and answered in favour of the assessee. The Commissioner (Appeal) placed reliance on the above decision while allowing the appeal by the assessee. 11. The Commissioner (Appeal) placed reliance on the above decision while allowing the appeal by the assessee. 11. In Garden Silk Weaving Factory vs Commissioner of Income Tax reported in (1991) 189 ITR 512 (SC) cited supra, Sec.32(2) of 1961 Act was considered by the Hon'ble Supreme Court. While answering the question “whether unabsorbed depreciation can be carried forward and set off”, the Hon'ble Supreme Court answered in favour of the assessee. This decision was followed by the Tribunal while confirming the order of the Commissioner of Income Tax (Appeals). However the contention of the revenue is that the restriction under sec.34A which came into force with effect from 1.4.92 was not under consideration in the above two decisions. 12. In Commissioner of Income Tax vs Kunal Engineering Co Ltd (2010) 236 CTR (Mad) 619, a Division Bench of this court considered sec.34A of the Act, which is as follows: This court considered that sec.34A of the Income Tax Act restricts on unabsorbed depreciation and unabsorbed investment allowance for limited period, in case of certain domestic companies. Sec.34A was introduced by the legislature w.e.f.1stApril, 1992 which reads as follows: “34A(1) In computing the profits and gains of the business of a domestic company in relation to the previous year relevant to the assessment year commencing on the 1stApril, 1992, where effect is to be given to the unabsorbed depreciation allowance or unabsorbed investment allowance or both in relation to any previous year relevant to the assessment year commencing on or before the 1stday of April, 1991, the deduction shall be restricted to two-third of such allowance or allowances and the balance. (a) where it relates to depreciation allowance, be added to the depreciation allowance for the previous year relevant to the assessment year commencing on the 1stday of April, 1993, and be deemed to be part of that allowance or if there is no such allowance for that previous year, be deemed to be the allowance for that previous year and so on for the succeeding previous years; (b) where it relates to investment allowance, be carried forward to the assessment year commencing on the 1stday of April, 1993, and the balance of the investment allowance if any still outstanding shall be carried forward to the following assessment year and where the period of eight years has expired before the portion of such balance is adjusted, the said period shall be extended beyond eight years till such time the portion of the said balance is absorbed in the profits and gains of the business of the domestic company”. and held “From the reading of the above clause it is clear that the set off unabsorbed income should be restricted to the extent of two-thirds, the CIT as well as the Tribunal correctly followed the above provision. Therefore the order of the Tribunal is in accordance with law and the finding is given based on materials”. 13. Similarly, in the case of Commissioner of Income Tax vs Kissan Engineering Ltd (2013) 84 CCH 131 AIIHC, High Court of Allahabad considered the restriction under sec.34A. The facts of the above case is also similar to the case on hand where the assessee has claimed unabsorbed depreciation against capital gain. The court has considered sec.32(2), 32A(3) and sec.34A of the Act and also placed reliance of Commissioner of Income Tax vs Kunal Engineering Co Ltd (2010) 236 CTR (Mad) 619 cited supra and held that the set off of unabsorbed depreciation on capita gains can be allowed but restricted to the extent of 2/3. 14. On perusal of the above case laws would show that the unabsorbed depreciation can be allowed under the head “capital gains”, however, it shall be restricted to 2/3rd of such allowance. 15. Therefore, both the questions of law are decided accordingly in the light of the case law reported in (2013) 84 CCH 131 AIIHC (Commissioner of Income Tax vs Kisan Engineering Ltd) , which pertains to the same Assessment Year 1992-93. 16. 15. Therefore, both the questions of law are decided accordingly in the light of the case law reported in (2013) 84 CCH 131 AIIHC (Commissioner of Income Tax vs Kisan Engineering Ltd) , which pertains to the same Assessment Year 1992-93. 16. In the result, the matter is remitted back to the Assessing Officer to recompute the unabsorbed depreciation as stated above. Since the Company is in liquidation, the Assessing Officer shall issue notice to the Official Liquidator. 17. With the above observation, the appeal is disposed of. No costs.