TMI Blog1986 (12) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. Business loss 2,77,119 Unabsorbed depreciation for 1975-76 2,494 Unabsorbed depreciation for 1974-75 7,686 -------- 2,87,299 -------- Following was set off against the income of the assessment year 1976-77 : Rs. Business loss of 1975-76 95,647 Unabsorbed depreciation for the assessment year 1974-75 7,686 -------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 79 was attracted. According to him, clauses (a) and (b) of section 79 are independent of each other and, therefore, application of one of them was enough to shut out the claim of the assessee for setting off of losses. He, therefore, did not examine if clause (b) was also applicable in the instant case. The assessee took up the matter in appeal before the Commissioner (Appeals) who, following the decision of the Hon'ble Bombay High Court in the case of Italindia Cotton Co. (P.). Ltd. v. CIT [1978] 113 ITR 58, held that for denying claim of set off of losses conditions mentioned in both the clauses should be satisfied. He accordingly remitted the case to the ITO for examination if clause (b) was also attracted to the case of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avoiding or reducing any liability to tax and as such clause (b) was not attracted. The assessee was, therefore, entitled to set off of losses in the assessment year 1977-78 and there was no question of lapse. (iii) In the assessment year 1978-79 there was no change in the shareholding and, therefore, section 79 has no application at all. 6. The learned departmental representative repelled all the contentions of the assessee. According to him, since no loss to be carried forward in the subsequent year was determined in the assessment year 1977-78 the question of set off in the assessment year 1978-79 does not arise. Further, he drew our attention to the acts of Gulshanrai Sachdev group subsequent to the acquisition of more than 51 per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ghts of films in the Eastern region so that he might not be dependent on the mercy of the producers of Bombay circuit where he had large business. Shri Gulshanrai, therefore, acquired substantial shares in the assessee-company having established business in the Eastern region and it was not his intention to avoid of reduce tax liability. Further it is pointed out by him that the losses were incurred by the assessee-company in the assessment year 1975-76 and the company started earning good profits in the subsequent assessment years and, therefore, there was no question of having intention to avoid tax liability. 8. It is been held by the Hon'ble Supreme Court in the case of CIT v. Khushal Chand Daga [1961] 42 ITR 177 that where the ITO ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent year is not binding on the assessee." 9. Thus, the fact that carry forward loss was not determined and notified by the ITO in the assessment year 1977-78 does not come in the way of the assessee to get it redetermined in the assessment year 1978-79. The only question which survives for our consideration is as to whether conditions laid down in both the clauses (a) and (b) of section 79 were fulfilled. In that event the assessee would not be entitled to set off of losses in the assessment year 1977-78 and its right to carry forward the loss in the subsequent year would lapse. It is to be seen that there was no such conduct of the assessee in the assessment year 1977-78 wherefrom it can be inferred that change in the shareholding was e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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