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Issues:
1. Application of sec. 44-B 2. Set off of unabsorbed losses against income of the current year Analysis: Issue 1: Application of sec. 44-B The Tribunal referred to the decision in Anchor Line Ltd. v. ITO [1984] 10 ITD 63 (Bom.) and other cases to establish that sec. 44-B is applicable to the assessee. However, the assessee argued that unabsorbed losses from earlier years had not been set off against the income for the current years. The Tribunal considered the decision in Tino Kauin Kaisha Ltd. v. ITO [1988] 26 ITD 326 (Bom.) where it was held that depreciation should be allowed to be carried forward and set off within 8 years like any other business loss. The Tribunal directed the Income-tax Officer to allow business loss and unabsorbed depreciation of earlier years in accordance with sec. 72, subject to the limitation of not carrying forward beyond 8 years. Issue 2: Set off of unabsorbed losses The Judicial Member supplemented the reasoning by explaining the provisions under Chapter IV-D of the Income-tax Act, 1961, specifically focusing on sec. 44-B which deals with the computation of profits and gains of shipping business for non-residents. The section excludes other provisions from Chapter IV in computing profits and gains for shipping business. However, it was clarified that the provisions for set off and carry forward of losses under sections 70 to 80 should be applied even in cases of non-residents when computing profits and gains under sec. 44-B. Therefore, the Tribunal allowed the appeals partly, following the direction to apply the provisions for set off and carry forward of losses even in cases involving non-residents. This comprehensive analysis of the judgment highlights the application of sec. 44-B and the set off of unabsorbed losses against current year income, providing a detailed understanding of the Tribunal's decision and the legal reasoning behind it.
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