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TMI Blog1983 (1) TMI 154X X X X Extracts X X X X X X X X Extracts X X X X ..... years besides computing the relief under section 80J of the Act, to be carried forward and unabsorbed depreciation in the following manner : Assessment year Assessment year 1976-77 1977-78 Rs. Rs. Business loss 12,797 1,13,172 Unabsorbed depreciation 4,27,833 2,33,322 Unabsorbed allowance under section 80J 66,000 66,000 ---------------------- --------------------- 5,06,630 4,12,494 ---------------------- --------------------- After completion of the assessment for 1976-77, it was modified by another order under section 154 of the Act, wherein, the ITO reduced the loss by an amount of Rs. 21,394. The above figures for the assessment year 1976-77 are after the effect of the order under section 154. The Commissioner felt that the assessments were prejudicial to the interests of the revenue on the ground that the loss was computed on returns filed beyond the time-limit entitling the assessee to set off the same against future income under section 80. He. therefore, issued notices under section 263. He cancelled the assessment for 1976-77 while for the assessment year 1977-78 he found it possible to hold that the return was filed within the time allowed under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision by pointing out that the Bombay case related to a reassessment and not the original assessment. 5. We have carefully considered the records as well as the arguments. We will take up the appeal for the assessment year 1976-77 first. The assessee had not filed a voluntary return for this year within the assessment year and it was filed only in response to the notice under section 148. This fact is not disputed. Section 148 would apply only where a taxable income has escaped assessment or where the assessee having a taxable income had failed to make a return. At the time when the ITO had issued the notice, he had reason to believe that the assessee had made profits as it was in business during the year. Initiation of the proceedings is valid. However, it was open to the ITO to have dropped the proceedings once he found that there was no taxable income. However, the ITO has to go through the exercise of computing the income in order to find whether there was taxable income or not. Hence, the mere computation of the income on his part cannot be said to be wrong or unjustified in law. It is not also revenue's case that the loss that he has computed is excessive or that he had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt inasmuch as the reason for which the assessment was sought to be cancelled is not a wrong computation of loss but the mere apprehension of possible prejudice. Such apprehension has to be treated as academic for the assessment year under consideration it was also pointed out by the learned counsel for the assessee that at least in respect of unabsorbed depreciation and relief under section 80J which is to be carried forward, there could be no objection to the determination of both during the year. We find that the Allahabad High Court in the case of Sheetalaya held that the relief under section 80J can be claimed in the year of profit and that there is no requirement to have it computed in the year in which the deficiency had arisen. The Calcutta High Court in the case of Indian Aluminium Co. had also held that there was no requirement to have the deficiency determined for section 80J in the year when it was not sought to be absorbed. The Madras High Court had taken the same view in the case of Bluemount Ceramics Ltd. Hence, it is clear that the determination of section 80J deficiency in this year also is a matter of academic interest inasmuch as the assessee is entitled to the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e year apparently is redundant and, therefore, did not have any legal effect. Hence, the ITO, according to the assessee, was justified in computing the loss as well as the deficiency under section 80J and the unabsorbed depreciation as part of such computation. This has been practically conceded by the first appellate authority inasmuch as he had finally found only one objection to the order for the assessment year 1977-78 and, that is, that the ITO had categorised the business loss, the unabsorbed depreciation and the unabsorbed relief under section 80J in the foot-note to this order for both the assessment years 1976-77 and 1977-78 under the heading ' Losses to be carried forward '. As we had repeatedly pointed out in the preceding paragraph, such a direction which was, however, absent for the assessment year 1976-77 can have no legal effect. At any rate, it was not at all necessary for the ITO to repeat the figures for the assessment year 1976-77. ' As for the assessment year 1977-78, his observation is also presumably not wrong as the loss has been determined in pursuance of a return under section 139, and, therefore, not hit by section 80. Even otherwise, as observed by us in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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