1974 (8) TMI 37 - HC - Income Tax

Summary

Issues Involved:
1. Appealability of the Income-tax Officer's order under section 30 of the Indian Income-tax Act, 1922, or section 246 of the Income-tax Act, 1961.
2. Determination and carry-forward of losses under section 24(2) of the Indian Income-tax Act, 1922, or section 72 of the Income-tax Act, 1961.

Issue-wise Detailed Analysis:

1. Appealability of the Income-tax Officer's Order:

The primary issue was whether the Income-tax Officer's communication, which stated that the losses for the assessment years 1959-60 to 1962-63 would not be carried forward, constituted an appealable order under section 30 of the Indian Income-tax Act, 1922, or section 246 of the Income-tax Act, 1961. The Tribunal had dismissed the assessee's appeal, holding that the communication was not an appealable order.

The court analyzed the nature of the communication and concluded that it must be deemed to be a computation of loss at "nil," thus depriving the assessee of the benefit of section 24(2) of the Act or section 72(1) of the 1961 Act. The court referred to the Supreme Court's decision in Commissioner of Income-tax v. Kulu Valley Transport Co. P. Ltd., which supported the view that the Income-tax Officer could not ignore the return and had to determine the losses. The rejection of the return, thus disentitling the assessee to carrying forward of the loss to a subsequent year, was deemed to be on par with an order under section 24 computing the loss at nil.

The court also considered other relevant cases, such as Esthuri Aswathiah v. Income-tax Officer and M. CT. Muthuraman v. Commissioner of Income-tax, which supported the view that an order indicating no action on the returns and that the losses would not be carried forward amounted to a computation of loss at nil.

The court held that the Tribunal was not legally correct in dismissing the petitioner's appeal and in holding that the order of the Income-tax Officer was not appealable. Thus, the first question was answered in favor of the assessee.

2. Determination and Carry-forward of Losses:

The second issue was whether the loss returned by the assessee for the four years required to be determined or carried forward under section 24(2) of the Indian Income-tax Act, 1922, or under section 72 of the Income-tax Act, 1961. However, the court noted that this point was never raised before the Tribunal nor was it the subject-matter of consideration by it. It is well settled that a question of law not raised before the Tribunal and not dealt with by it in its order cannot be said to arise out of the order, even if, on the facts of the case stated in the order, the question fairly arises.

Therefore, the court declined to answer the second question, stating that it was not necessary to give any opinion on it as it did not arise out of the Tribunal's order.

Conclusion:

The court concluded that the first question referred was answered in favor of the assessee and against the department, holding that the Tribunal was not legally correct in dismissing the petitioner's appeal. The second question was declined to be answered as it did not arise out of the Tribunal's order. There was no order as to costs in these references.