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TMI Blog1991 (1) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... itate the same in the subsequent year, namely, the assessment year in question? 3. Whether, on the facts and in the circumstances of the case, the Tribunal's decision that the assessee is not entitled to, in view of section 80 of the Income-tax Act, 1961, the depreciation and allowance in 1965-66 of depreciation relating to the earlier years even though they were not quantified and notified for carry forward in those assessment years is correct ? The assessee is a private limited company. In respect of the assessment year 1965-66 for the previous year ending on March 31, 1965, originally, an assessment under section 144 of the Act was made on a total income of Rs. 35,000. However, as a result of the proceedings under section 146 of the Act, the assessment was set aside with a direction to pass a fresh assessment order by reopening the assessment. The assessee filed a return disclosing an income of Rs. 26,017. In the course of the assessment proceedings, the assessee claimed that unabsorbed depreciation totalling Rs. 78,984 in respect of the assessment years 1960-61 to 1964-65 should be allowed to be set off in the assessment year 1965-66. However, the Income-tax Officer took the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of the assess ment year 1963-64 precluding the assessee from questioning its correctness. For the assessment year 1964-65, the Income-tax Officer completed the assessment, according to the Tribunal, as "not assessable" on August 28, 1967. With reference to this assessment year also, the Tribunal pointed out that the assessee has not preferred an appeal. Considering the claim of the assessee for set-off of the unabsorbed depreciation for tile assessment year 1965-66, the Tribunal was of the opinion that, in view of the prior assessment orders which had attained finality, it was not open to the assessee to reopen concluded matters. The Tribunal also adverted to section 80 of the Act to conclude that no loss inclusive of depreciation can be carried forward and set off, unless it had been determined in pursuance of a return and having regard to the assessment orders passed already which had become final, it would not be open to the assessee to re-agitate the same. In that view, the Tribunal dismissed the appeal of the assessee and that is how the questions of law set out earlier have come up before this court. In order to consider the correctness of the view taken by the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee filed a return in time, an assessment was made to the effect "not assessable" with a finding that the assessee was not entitled to the carry forward of any depreciation. For the assessment year 1962-63, it appears that the assessee filed a loss return and that not having been filed under section 139(3) read with section 139(1) of the Act, it had also been ignored. That order could not have determined either the depreciation or directed the carry forward of unabsorbed depreciation. In respect of the assessment year 1963-64, it is seen that the assessment was completed on August 21, 1967, on a positive income of Rs. 700, after allowing depreciation to the extent of Rs. 27,197 claimed by the assessee. The unabsorbed depreciation of the earlier assessment years 1960-61 to 1963-64 could have been properly treated as the depreciation for the assessment year 1963-64 and to the extent to which the allowance of depreciation was restricted to Rs. 27,197 and there was no direction regarding the carry forward of the unabsorbed depreciation, the assessee was certainly a person aggrieved by the assessment order to that extent. However, the assessee did not challenge the correctness of that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowance for that previous year and so on for the succeeding previous years. But this can be done only in the assessment where full effect cannot be given to the depreciation as claimed in any 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, subject, of course, to sections 72(2) and 73(3) of the Act. In the absence, therefore, of any specific and clear findings in the course of the assessment orders regarding the claim for depreciation, its allowance either in full or in part, as the case may be, and the carry forward of the unabsorbed depreciation in accordance with section 32(2) of the Act, it would be futile for the assessee to claim that it can have the benefit of set-off of the unabsorbed depreciation in the course of the proceedings relating to the assessment year 1965-66. We may also observe that with reference to section D of the return applicable to companies, the adjustments to be made with reference to the income shown in sections A and B of Part I of the return had been indicated and accordingly, on account of depreciation or capital expenditure on scientif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplication of the principle laid down in Western India Oil Distributing Co. Ltd. v. CIT [1980] 126 ITR 497 (Bom). Thus, on a due consideration of the facts and circumstances, we answer questions Nos. 1 and 2 in the affirmative and against the assessee. In so far as the third question is concerned, it is seen from the opening paragraph of the order of the Tribunal that the controversy before it was restricted to the set off of the unabsorbed depreciation of the earlier years and in that context, it was really not necessary for the Tribunal to have referred to section 80 of the Act. Presumably for the purpose of emphasising the importance of the detemination of the claim for depreciation and a direction for its carry forward in the course of the assess ment order itself, as in the case of loss, a casual reference to section 80 had been made. We find that the reasoning of the Tribunal had proceeded entirely on the basis of the claim of the assessee for depreciation allowance and carry forward of the unabsorbed depreciation and the question of carry forward and set-off of loss as such does not appear to have figured and, under these circumstances, it was unnecessary for the Tribunal t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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