Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding
  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 1998 (3) TMI HC This

  • Login
  • Summary

Forgot password       New User/ Regiser

⇒ Register to get Live Demo



 

1998 (3) TMI 118 - HC - Income Tax

Issues:
1. Whether unabsorbed depreciation from a previous assessment year where the return was non est can be carried forward and set off against the profit of a subsequent assessment year?
2. Whether allowing the carry forward of depreciation allowance from a year where the return was non est is the same as allowing depreciation for a subsequent year at a higher figure?
3. Whether a return filed under a specific section can be treated as non est and compared to a return filed under a different section for the purpose of carrying forward depreciation?

Analysis:
The case involved an application filed by the Revenue under section 256(2) of the Income-tax Act, 1961, regarding the carry forward of unabsorbed depreciation by an assessee-firm dealing in mining of barytes. The assessee had filed belated returns for the assessment years 1987-88 and 1988-89, with the dispute arising from the rejection of the claim for carrying forward depreciation from 1987-88 due to the return being considered non est. The Commissioner of Income-tax (Appeals) allowed the carry forward, which was upheld by the Tribunal, leading to the Revenue seeking reference of three questions.

The main contention was whether unabsorbed depreciation from a year with a non est return could be carried forward and set off in a subsequent year. The Revenue argued against this based on the non est status of the return for 1987-88. However, the court referred to section 32(2) of the Act, which allows for the addition of unabsorbed allowances to the following year's depreciation. Citing the Supreme Court judgment in CIT v. Jaipuria China Clay Mines, the court emphasized the treatment of unabsorbed depreciation from past years in the current year's calculation.

The court rejected the Revenue's argument that a non est return precludes the carry forward of depreciation, distinguishing it from the case law related to carrying forward losses. It was noted that there is no provision similar to section 32(2) in section 72 of the Act for losses. The court found the answers to the questions self-evident based on the statutory provisions and precedents cited, leading to the dismissal of the Revenue's application under section 256(2).

In conclusion, the judgment clarified the treatment of unabsorbed depreciation from a year with a non est return, highlighting the applicability of section 32(2) for carrying forward such allowances. The court's decision was based on a statutory interpretation and relevant case law, ultimately denying the Revenue's request for reference and upholding the allowance of depreciation carry forward for the assessee.

 

 

 

 

Quick Updates:Latest Updates