9911796707
|
Home
Issues:
1. Whether the receipt of Rs. 8,19,495 was a casual receipt exempt under section 10(3) of the Income-tax Act, 1961. 2. Whether the unabsorbed depreciation relating to Indian business could be carried forward and set off against Indian income for the assessment year 1967-68. Analysis: Issue 1: The Tribunal referred two questions for opinion, primarily focusing on whether the receipt of Rs. 8,19,495 was a casual receipt exempt under section 10(3) of the Income-tax Act, 1961. The assessee contended that the amount was a windfall due to negotiations with a Hungarian party post-devaluation, thus qualifying for exemption. However, the authorities treated it as a business receipt directly linked to export, not a casual receipt. The High Court concurred with the Tribunal's view, citing precedents like CIT v. Canara Bank Ltd. and Shree Hanuman Trading Co. v. CIT to support that the amount was a business receipt, not a casual one, hence ruling in favor of the Department. Issue 2: The second question revolved around the unabsorbed depreciation of Rs. 5,16,795 in the assessment year 1965-66 and whether it could be carried forward and set off against Indian income for the assessment year 1967-68. The authorities had adjusted this amount against the surplus Pakistan income in 1965-66, contending it need not be carried forward. The High Court analyzed a similar case, Mahalaxmi Sugar Mills Co. Ltd. v. CIT, where the net loss was determined by setting off business loss against capital gains. The court held that losses could only be set off against assessable income. Applying this principle, the High Court ruled in favor of the assessee, stating that the unabsorbed depreciation was not set off against Pakistan income, and the set-off could be allowed in the assessment year 1967-68. The judgment emphasized the separate taxation of Indian and Pakistan incomes under the Avoidance of Double Taxation Agreement. In conclusion, as both parties partly succeeded and failed, they were left to bear their own costs.
|
