9911796707
TMI Blog1993 (9) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... the High Court out of its order dated May 17, 1988, rendered in Income-tax Appeal No.1181/(Ahd.) of 1978-79. Facts : The assessee, Deepak Textile Industries (P.) Ltd., carried on business in purchase and sale of cloth. In the previous year relevant to the assessment year 1975-76, it suffered a trading loss of Rs. 32,608. In respect of the said loss, a set off under section 71(2) of the Act was claimed against its long-term capital gains of Rs. 31,247. The Income-tax Officer was of the view that the said business loss was not genuine and, therefore, he disallowed the claim of set off. The assessee also claimed set off of unabsorbed depreciation of earlier years against the assessee's income of the year under consideration. The Income- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question. In view of the above conclusion, the Tribunal dismissed the appeal by order dated May 17, 1988. The Commissioner of Income-tax, therefore, moved an application under section 256(1) of the Act requiring the Tribunal to draw up a statement of case and refer certain questions of law for the opinion of the High Court. The Tribunal was satisfied that four questions of law arose out of the order passed by it in Income-tax Appeal No. 1181/(Ahd.) of 1978-79 and, therefore, the Tribunal drew up the statement of case and has made a reference of the following four questions of law for the opinion of the High Court : "1. Whether, on the facts and in the circumstances of the case, the unabsorbed depreciation brought forward from earlier ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee had sold its business of textile mills and had ceased carrying on business of manufacture and sale of cloth in the assessment year 1964-65?" After considering the scheme of section 32 and more particularly of sub-section (2) of section 32 read with section 72, sub-section (2) and section 73, sub-section (3), of the Act, it has been held by the High Court as under (headnote): "Section 32 of the Income-tax Act, 1961, deals with depreciation. Section 32(2) specifically lays down that if in a previous year owing to there being no profits or gains chargeable for that previous year, or owing to the profits or gains chargeable being less than the allowance, then, subject to the provisions of sub-section (2) of section 72 and sub-sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l as the Tribunal, after appreciation of the evidence have come to the conclusion that the assessee did carry on business in the year of account. In view of the decision rendered in the case of this very assessee referred to hereinabove, we are of the opinion that, on the facts and in the circumstances of the case, unabsorbed depreciation brought forward from earlier years should be adjusted against the assessee's income from other sources and the assessee was entitled to unabsorbed depreciation brought forward from earlier years to be adjusted against its income from other sources notwithstanding the fact that the assessee had sold its business of textile mills and had ceased carrying on business of manufacture and sale of cloth in the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of any assessment year, when the net result of the computation under any head of income, other than "Capital gains", is a loss and the assessee's income is assessable under the head "Capital gains", the assessee would be entitled to the set off of such loss against his income, assessable for that assessment year under any other head including income assessable under the head "Capital gains". In view of the abovereferred statutory provisions, we are of the opinion that, on the facts and in the circumstances of the case, the assessee is entitled to the set off of business loss against its long-term capital gains and as the assessee carried on business during the year under consideration, the assessee was entitled to the set off of the b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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