diff --git a/erpnext/hr/utils.py b/erpnext/hr/utils.py
index 2a07e56..7fd3a98 100644
--- a/erpnext/hr/utils.py
+++ b/erpnext/hr/utils.py
@@ -312,7 +312,12 @@
 	leaves_for_passed_months = assignment.get_leaves_for_passed_months(allocation.leave_type,
 		annual_allocation, leave_type_details, date_of_joining)
 
-	if allocation.total_leaves_allocated >= leaves_for_passed_months:
+	# exclude carry-forwarded leaves while checking for leave allocation for passed months
+	num_allocations = allocation.total_leaves_allocated
+	if allocation.unused_leaves:
+		num_allocations -= allocation.unused_leaves
+
+	if num_allocations >= leaves_for_passed_months:
 		return True
 	return False