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TMI Blog1983 (1) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... rd as annexure-D, the relevant clauses dealing with the effect of the death of one of the partners are clauses 4 and 5. Clause 4 of the partnership deed provides that the partnership is at will and that on the death or retirement of any partner, the partnership shall continue and the share of the partner so dying or retiring shall belong to his nominees, as specified in clause 5 of the deed, who shall be admitted to the partnership. T.-A. Patel was the father of the two other partners. Clause 5 of the partnership deed expressly provides that the nominee of Shri T. A. Patel will be his sons, Shri R. T. Patel and Shri M. T. Patel, and they will have equal shares in the share of Shri T. A. Patel, i.e., each one will have 1/6th share on the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll be restricted to the aggregate of unabsorbed depreciation remaining in the hands of the two continuing partners. In so far as the assessment year 1970-71 was concerned, in place of a sum of Rs. 14,81,575 which, according to the assessees, was the correct amount which should be permitted to be carried forward, the carry forward amount was restricted to Rs. 9,92,844. The Revenue was aggrieved by the decision of the AAC permitting the unabsorbed depreciation to be carried forward in accordance with the decision of this court in Ballarpur Collieries Co. v. CIT [1973] 92 ITR 219. The assessee-firm was also aggrieved by the order of the AAC in so far as the entire unabsorbed depreciation amount was not allowed to be carried forward. Therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the hands of the partners who died should be allowed in the hands of the present assessee-firm ? With regard to the controversy incorporated in question No. 1, the position appears to us to be settled by the earlier decision of this court in Ballarpur Collieries Co. v. CIT [1973] 92 ITR 219, to which one of us was a party. The question as to what is to happen when full effect to the depreciation allowance cannot be given in the assessment of the partners has been extensively considered in that decision and it was held that loss occasioned on account of unabsorbed depreciation does not lose its character or nature as unabsorbed depreciation and is carried forward not by virtue of s. 24(2) of the I.T. Act, 1922, but by virtue of the expres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in taking the view which it has taken, dissenting from the view taken by the Bombay High Court, is that there is another court which has taken a view contrary to the decision in Ballarpur Collieries Co. [1973] 92 ITR 219 (Bom), and that decision was K. T. Wire Products v. Union of India [1973] 92 ITR 459 (All), which was a decision of the Allahabad High Court. The Gujarat High Court also made a reference to the decision in Raj Narain Agarwala v. CIT [1970] 75 ITR 1 (Delhi). The learned counsel for the Revenue, therefore, wanted us to follow the Gujarat view in preference to the view of this court. Unfortunately for the Revenue, the decision of this court does not now stand as a lone view taken with regard to the question as to wheth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not been given to the depreciation allowance in the assessment of the partners, the unabsorbed allowance should be, allowed to be set off by the registered firm in the succeeding year. Apart from the fact that the decision in Ballarpur Collieries Company's case [1973] 92 ITR 219 (Bom) is a decision of this court and as such is binding on us, we find that it has also been followed by two other High Courts, and, in our view, it does not require any reconsideration. Question No. 1 must, therefore, be answered in the affirmative and in favour of the assessee. So far as question No. 2 is concerned, the learned counsel for the Revenue has contended that guidance should be taken from the provisions of s. 78 of the I.T. Act, 1961, in order to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ricted to the subject-matter dealt with by that provision namely, business loss. by Parliament, and it would be wholly improper to deal with the unabsorbed depreciation loss on the basis of an analogy with reference to s. 78(1). It is obvious that, notwithstanding the death of one of the partners, the partnership business continued to belong to the remaining partners by virtue of specific stipulation made in the partnership deed. It may also be true that for a limited purpose the new partnership may be a reconstituted firm, but it is difficult to see how unabsorbed depreciation will lose its character as unabsorbed depreciation merely because one of the partners to whose share it was allotted was dead. It is not in dispute that if he had li ..... X X X X Extracts X X X X X X X X Extracts X X X X
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