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TMI Blog1979 (1) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... orbed in the hands of the partners should be given set off against the income of the assessee-firm in the assessment year 1970-71 ? " The assessee is a registered firm consisting of 12 partners. This is one of the those unfortunate cases where the facts themselves do not appear either in the orders of the authorities or in the statement of the case. However, we are making the best out of what is available and we are proceeding to answer the reference as best as possible. The assessee submitted a return showing a loss of Rs. 5,96,362. This amount was arrived at after adjusting the losses of the previous years of Rs. 8,46,649 against the profits of Rs. 2,50,287 in the relevant previous year for the assessment year 1970-71. The ITO conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in the assessment of the partners as they had no business income. The Tribunal posed before itself the question whether the unabsorbed depreciation and development rebate could be carried forward and set off by the firm itself in the succeeding assessment years and the question was decided by directing their adjustment. We have no idea as to what are the amounts of unabsorbed depreciation and unabsorbed development rebate available for set off in the present case. As far as unabsorbed depreciation is concerned, we have already held in T.C. No. 28 of 1975 in the judgment pronounced on 2-1-1979 [since reported as CIT v. Nagapatinam Import and Export Corporation [1979] 119 ITR 444 (Mad)] that the unabsorbed depreciation along with the busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this allowance, the assessee has to create the reserve to the extent indicated in s. 33. Where the assessee qualifies himself for allowance of the development rebate by the creation of the reserve, then as to how the development rebate should be allowed is dealt with in sub-s. (2) of s. 33. It has provided as follows : " In the case of a ship acquired or machinery or plant installed after the 31st day of December, 1957, where the total income of the assessee assessable for the assessment year relevant to the previous year in which the ship was acquired or the machinery or plant installed or the immediately succeeding previous year, as the case may be,.... is nil or is less than the full amount of the development rebate calculated at t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowability of the development rebate would arise. The allowance of development rebate can only reduce the total income to nil. This provision stands in contrast to what is provided under s. 32(2) in relation to depreciation. In s. 32(2) the following words " where, in the assessment of the assessee (or, if the assessee is a registered firm or an unregistered firm assessed as a registered firm, in the assessment of its partners) full effect cannot be given to any allowance of depreciation " show that implicit in the statutory provision is the contemplation that the loss arrived at as a result of the depreciation allowance being adjusted as against the profits and gains arising to a firm will have to be apportioned among the partners. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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