1995 (2) TMI 102 - AT - Income Tax

Assessing Officer, Business Loss, Capital Gains, Carry Forward, Investment Allowance, Set Off, Unabsorbed Depreciation

Summary

Issues:
1. Entitlement to carry forward unabsorbed depreciation and investment allowance.
2. Interpretation of provisions of section 139(3) and 139(10).
3. Applicability of precedents in determining carry forward of depreciation.
4. Impact of section 80 on determining carry forward of losses.
5. Discretion of Assessing Officer in allowing carry forward of losses.

Detailed Analysis:
1. The main issue in this case is the entitlement of the assessee to carry forward unabsorbed depreciation and investment allowance. The Assessing Officer disallowed the carry forward claim citing the filing of the return belatedly. However, the Tribunal held that unabsorbed depreciation and investment allowance are distinct from business losses and are governed by separate provisions under sections 32 and 33. The Tribunal emphasized that the provisions of section 139(3) do not apply to the carry forward of depreciation or investment allowance.

2. The Tribunal also analyzed the provisions of section 139(10) regarding the filing of returns below the taxable limit. The Assessing Officer contended that the return was non est in law due to the income being below the taxable limit. However, the Tribunal noted that the exceptions to section 139(10) were amended to include returns of the firm, indicating a clarificatory nature of the amendment. The Tribunal held that the assessee should be entitled to succeed despite the Assessing Officer's argument.

3. The Tribunal further discussed the interpretation of precedents cited by the assessee before the CIT (Appeals) regarding the availability of depreciation in belatedly filed returns. The Tribunal disagreed with the CIT (Appeals) and held that the core issue was the carry forward of unabsorbed depreciation and investment allowance for set off in subsequent years. The Tribunal emphasized that the unabsorbed depreciation and investment allowance should be carried forward as per sections 32 and 33, unaffected by other provisions.

4. Regarding the impact of section 80 on determining carry forward of losses, the Tribunal clarified that section 80 only pertains to the return of loss and does not restrict the carry forward of unabsorbed depreciation or investment allowance. The Tribunal rejected the departmental representative's contention that disallowance in earlier years would disentitle the assessee from claiming the same, citing a Supreme Court decision supporting the assessee's right to carry forward losses.

5. Ultimately, the Tribunal allowed the appeal, directing the Assessing Officer to quantify the unabsorbed depreciation and investment allowance from earlier years to be set off against the income for the assessment year in question. The Tribunal upheld the assessee's claim for carry forward of unabsorbed depreciation and investment allowance, emphasizing the distinct nature of these allowances from business losses.