9911796707
TMI Blog2004 (8) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... wing question of law has been referred for the opinion of this court, at the instance of the Revenue: "Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal erred in law in allowing the assessee's claim that the unabsorbed depreciation of Rs. 20,392 brought forward from the assessment year 1976-77 should revert back in the case of the firm and it should be set off against the income of the firm in view of the provisions of section 32(2) of the Income-tax Act, 1961?" In Income-tax Reference No. 121 of 1982, at the instance of the assessee, the following question of law has been formulated: "Whether, on the facts and in the circumstances of the case, the Tribunal erred in law in holding that the amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of Rs. 20,392 determined by the Income-tax Officer. During the course of assessment proceedings for the year under consideration, the assessee made a claim before the Income-tax Officer that the said amount of Rs. 20,392 be allowed in the computation of the total income for the assessment year 1977-78. This contention was rejected by the Income-tax Officer. The assessee took the matter in appeal before the Commissioner of Income-tax (Appeals), who upheld the findings of the Income-tax Officer on both the issues. The assessee preferred a second appeal before the Tribunal. The Tribunal allowed the assessee's claim for set off of unabsorbed depreciation of Rs. 20,392 pertaining to the assessment year 1976-77. It was held that the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,61,768.06 made from the 52 creditors. The loss was duly allocated to the partners to be considered in their personal assessments. Since the payments of Rs. 11,61,768.06 had not been made to the 52 creditors during the accounting period relevant to the assessment year 1976-77, the same was shown as trading liability in the balance-sheet for that year. It is not in dispute that in the succeeding year, i.e., the assessment year 1977-78, the said 52 creditors accepted 50 per cent, of the amount due to them and remitted the balance amount of Rs. 5,80,884 in favour of the assessee. The assessee does not dispute that the remission of trading liability is deemed to be income under section 41(1) of the Act. However, the case of the assessee is that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rading liability by way of remission or cessation thereof, the amount obtained by him or the value of benefit accruing to him, shall be deemed to be profits and gains of business or profession and accordingly chargeable to income-tax as the income of that previous year, whether the business or profession in respect of which the allowance or deduction has been made is in existence in that year or not." A bare perusal of the aforesaid provision shows that the interpretation sought to be placed by the assessee is misconceived. As per this section, a benefit obtained by an assessee in respect of any loss, expenditure or trading liability by way of remission or cessation thereof, is deemed to be profits and gains of business or profession, if i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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