9911796707
TMI Blog1989 (10) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. For asst. yr. 1975-76 the assessee firm, in the first instance filed Form No. 12 seeking continuation of registration. However subsequently it filed revised return along with an application seeking withdrawal of Room No. 12 originally filed. The ITO accepting assessee's prayer of withdrawal of continuation of registration framed assessment on it under s. 143(3) r/w s. 144B of the Act, treating it as URF. In the assessment the ITO had determined the loss at Rs. 1,20,869. Considering this assessment as made by the ITO on 7th July, 1978 for asst. yr. 1975-76 are erroneous and prejudicial to the interest of Revenue the Commissioner intended to initiate proceedings under s. 263. He, therefore, issued notice, dt. 27th June, 1980, under s. 26 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 56(2) of the Act. 5. For asst. yr. 1977-78 which is presently under consideration, the assessee filed its return on 30th June, 1976 declaring a loss of Rs. 7,9,9930, requesting the same to be carried forward and claiming its assessment in the status of URF The ITO declined to assess the assessee in that status on the grounds that there was no change either in the constitution of the firm or in the profit sharing ratio of the partners and also that assessment of the firm in the status of RF would be beneficial to the interest of Revenue He, therefore, treated the firm as RF under s. 183(6) of the Act and allocating the loss of Rs. 7,02,098 amongst its four partners, completed the assessment under s. 143/144B of the Act. 6. In appeal th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssesses firm as R.F. in the year is required to be appreciated in the totality of circumstances Mr. Sharma pointed out that looking to the huge profits earned by the assessee in the immediately succeeding asst. yr. 1978-79 the assessee adopted the ploy of seeking assessment as U.R.F. in the year under consideration Referring to the provisions of s. 183(b) in the light of working of the tax effect in the status of the assessee as R.F. URF as prepared by the ITO and produced before us, the learned Departmental Representative submitted that since the assessment of the assessee firm in the status of R.F. in the year under consideration was obviously beneficial to the interest of Revenue, the ITO was perfectly justified invoking the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, the position, as it stands to date in the case of the assessee firm, is that for both the immediately preceding years, i.e. 1975-76 and 1976-77. The assessee firm has been assessed in the status of U.R.F. In both these years the assessee firm had returned losses and in view of the assessment made on it in the status of U.R.F. the determined losses stand carried forward the firm returned losses in the year under consideration too. It is thus obvious that looking to the determined loss of the firm upto and including the year of under consideration the assessment on the assessee firm in the status of R.F. is not going to be beneficial to the interest of Revenue. In that view of the matter provisions of s. 183 (b) do not ipso facto stand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -77 Rs. 13,78,354 Asst. yr. 1977-78 Rs. 7,99,930 The ITO held that since the assessee firm has been assessed in the status of R.F. in earlier years the question of set off of the losses of earlier years did not arise. In this behalf he applied the ratio in the decision of Gujarat High Court in the case of CIT vs. GARDEN SILK WEAVING FACTORY (1975) 101 ITR 958 (Guj) In appeal the CIT (A) confirmed this view of the ITO. 14. Relying upon the decisions of Karnataka High Court in the case of ADDL CIT vs. B.A.S. DALL MILLS (1981) 24 CTR (KAR) 10 (1981) 131 ITR 111 (KAR) and of Supreme Court in the case of CIT vs. J.K. HOSIERY FACTORY. Mr. Shah urged that there being no change in the constitution of the assessee firm in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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