9911796707
TMI Blog1984 (4) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... rs and electric motors. In its return of income for the assessment year 1977-78, for which the previous year ended on 31-3-1977, it declared a total loss of Rs. 1,11,57,578, after deducting unabsorbed losses brought forward from earlier years and the investment allowance. While completing the assessment under section 143(3) read with section 144B of the Income-tax Act, 1961 ('the Act'), the ITO determined the business income of the assessee for this year at Rs. 14,90,282. In computing this income, the ITO deducted depreciation of Rs. 5,61,180, representing current year's depreciation and then deducted investment allowance of Rs. 84,556. Thereafter the ITO allowed set off of the past losses brought forward from earlier years to the extent of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d business losses of earlier years would be Rs. 21,36,018 and that the depreciation amounting to Rs. 5,61,180 and investment allowance amounting to Rs. 84,556 relating to the current year would be allowed to be carried forward for set off against the income of the subsequent years. Accordingly, the Commissioner (Appeals) allowed the assessee's appeal and directed the ITO to modify the assessment as per his directions. 4. The revenue feels aggrieved by this order of the Commissioner (Appeals) and has come up in appeal to the Tribunal on the ground quoted above. 5. We have heard the learned counsel on both sides and carefully considered their submissions in the light of the authorities placed before us. 6. In our view, the question rais ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the conclusion which has appealed to all the learned commentators on the law of income-tax and at least two of them have relied upon the specific wordings in the parenthesis in sub-section (2) of section 33 for the purpose of fixing this order of priority. Both, by way of process of interpretation and looking to the rationale, viz., preventing erosion of the capital base of the assessee's business the order of priority that we have mentioned earlier is the correct order of priority as between carried forward business losses, unabsorbed depreciation and unabsorbed development rebate of the previous years. " 7. In Hindustan Vacuum Glass Ltd.'s case, the Special Bench of the Tribunal held as follows : " 1. Strictly speaking, the allowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... over the unabsorbed depreciation, the identity of which is maintained in terms of section 72(2). " 8. These two decisions, in our view, are sufficient to dispose of the revenue's appeal in its favour. However, it was argued by Shri B.A. Palkhivala, the learned counsel for the assessee, that in the present case we are not concerned with the question as to which of the two views expressed in the various decisions is correct. According to Shri Palkhivala, we are directly governed by the decision of the Tribunal, in the case of Gannon Norton Metal Diamonds Dyes Ltd. [IT Appeal No. 734 (Bom.) of 1974-75, dated 26-4-1975], since the said decision of the Tribunal has been affirmed by the Supreme Court, who refused to grant special leave to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td.'s case and of the Supreme Court in Cambay Electric Supply Industrial Co. Ltd.'s case, as well as the Special Bench decision of the Tribunal in the case of Hindustan Vacuum Glass Ltd. The orders of the Bombay High Court as well as the Supreme Court dismissing the petition filed by the revenue under section 256(2) of the Act and the special leave petition therefrom, only show that their Lordships were not satisfied that it was a fit case for directing the Tribunal to state a case and make a reference to the High Court, and nothing more. They are not decisions on the merits of the controversy raised by the parties in the present case. We are, therefore, unable to accept the contentions of the learned counsel of the assessee. We would, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X
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