1998 (3) TMI 118

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..... section 139(10) of the Act. The assessee filed the return for the assessment year 1988-89 on July 29, 1988, declaring loss of Rs. 4,75,879 and on August 3, 1989, the assessee filed a revised return declaring loss of Rs. 7,41,330. While completing the assessment, the Assessing Officer has rejected the claim of the assessee for carrying forward the depreciation relating to the assessment year 1987-88 on the ground that the return for the assessment year 1987-88 was non est. Therefore, the depreciation allowance for 1987-88 has not been quantified. Aggrieved by the assessment order, the assessee preferred an appeal to the Commissioner of Income-tax (Appeals) and the same has been allowed holding that unabsorbed depreciation can be carried forw .....

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..... ncome-tax Act, 1922, on par with the return treated as non est under section 139(10) of the Income-tax Act, 1961, and applying the ratio of the decision of the Madras High Court in the case of Sathappa Textiles P. Ltd. v. ITO (Second) [1969] 71 ITR 260 ?" The main argument of learned counsel for the Revenue is that since the return filed under section 139(10) for the assessment year 1987-88 is non est, the depreciation for that year cannot be carried forward to the assessment year 1988-89 and treated as depreciation for that year. To consider the argument of learned counsel for the Revenue, it is necessary to refer to section 32(2) of the Act. "32. (2) Where, in the assessment of the assessee, full effect cannot be given to any allowanc .....

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..... the unabsorbed depreciation of past years had to be added to depreciation of the current year and the aggregate unabsorbed and current year's depreciation had to be deducted from the total income of the previous year relevant to the assessment year." Following the above, the answer to the questions are self-evident. Therefore, it is not necessary to call for the questions sought to be raised. Learned counsel relying on the judgment in CIT v. Dalmia Cement (Bharat) Limited [1995] 216 ITR 79 (SC) argued that in case a return is non est, the depreciation cannot be carried forward for the current year, cannot be sustained, as that judgment relates to carrying forward of losses of the previous year to the current year, for which there are l .....

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