TMI Blog2015 (2) TMI 1039X X X X Extracts X X X X X X X X Extracts X X X X ..... al has not addressed the issue in the light of the said provision Section 32(2)(iii)(a) of the Income Tax Act. Tribunal says in paragraph 9 of the order is that, though it is abundantly clear that Section 32(2)(iii) is operational in the case of the assessee, it only says that unabsorbed depreciation can be carried forward to the successive years. That is not the issue raised in the appeal. Furthermore, the decisions of the Supreme Court in the case of CIT Vs Cocanada reported in [1965 (4) TMI 11 - SUPREME Court] raised in the grounds of appeal by the assessee have also not been adverted to. Thus remand the matter back to the Tribunal to consider and pass orders on the entire issues raised by the assessee. - Decided in favour of assessee for statistical purposes - Tax Case (Appeal) No.758 of 2007 - - - Dated:- 20-1-2015 - R. Sudhakar And R. Karuppiah,JJ. For the Appellant : Mr. R. Vijayaraghavan for M/s. Subbaraya Aiyar Padmanabhan For the Respondent : Mr. M. Swaminathan Standing Counsel for Income Tax JUDGMENT (Judgment of the Court was delivered by R. Sudhakar,J.) This Tax Case (Appeal) is filed by the assessee as against the decision of Special Bench o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness included gains arising from sale of business asset, though it was assessable under separate head of income for the purpose of computation. In support of this contention, the assessee relied upon the decisions of the Supreme Court in the case of CIT Vs Cocanada reported in 57 ITR 306 and Sasoon Vs. CIT reported in 86 ITR 575. 5. The Assessing Officer, however, rejected the claim of the assessee and brought to tax the short term capital gains to tax. 6. Not satisfied with the order of the Assessing Officer, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals), who held against the assessee, thereby dismissed the appeal. Hence, the assessee pursued the matter before the Income Tax Appellate Tribunal. The Tribunal constituted a Special Bench to decide the question, which we have already referred supra. 7. Before the Tribunal, the assessee/appellant had raised the following grounds: 2. The assessing Officer and Commissioner of Incometax (Appeals) - I Madurai, erred in law in holding that unabsorbed depreciation loss of earlier years cannot be adjusted against short term capital gains arising on sale of business assets. 3. The Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not state about the capital gain on sale of assets. It only provides for withdrawal of depreciation already allowed on depreciable asset at the time of sale. Hence, the carry forward depreciation allowance for the assessment year 1997-98 as originally allowed is in order and there is no income escaping assessment. He also submitted that Tribunal had not adverted to the decisions of the Supreme Court in the case of CIT Vs Cocanada reported in 57 ITR 306 and Sasoon Vs. CIT reported in 86 ITR 575, wherein, it was held that the income arising from business activities, though taxed as income under different heads, constitute business income. Further more, the Tribunal had not addressed the issue that in terms of Section 32(2)(iii), whether the assessee will be entitled to set off the brought forward depreciation loss against capital gains. 12. Per contra, learned Standing Counsel appearing for the Revenue supported the decision of the Special Bench of the Tribunal and contended that if the business from which the depreciation claim arose is not carried out in any of the assessment years, the assessee would not be entitled to set off. 13. Heard learned counsel appearing for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) it shall be set off against the profits and gains, if any, of any business or profession carried on by him and assessable for that assessment year; (b) if the unabsorbed depreciation allowance cannot be wholly so set off, the amount of unabsorbed depreciation allowance not so set off shall be carried forward to the following assessment year not being more than eight assessment years immediately succeeding the assessment year for which the aforesaid allowance was first computed: Provided that the business or profession for which the allowance was originally computed continued to be carried on by him in the previous year relevant for that assessment year. (emphasis supplied) 15. Section 72 of the Income Tax Act provides for carry forward and set off of business loss and Clause (2) of Section 72 of the Income Tax Act provides the manner in which the carry forward and set off of business loss should be computed. Section 72 of the Income Tax Act reads as follows: Carry forward and set off of business losses. 72. (1) Where for any assessment year, the net result of the computation under the head Profits and gains of business or profes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be carried forward for the following six assessment years. There is no dispute on this finding of the Tribunal. 18. But the core issue is whether in terms of Section 32(2)(iii) of the Income Tax Act, the assessee will be entitled to set off the brought forward depreciation loss against capital gains. That issue, apparently, has not been addressed by the Tribunal in the order in question. All that the Tribunal says in paragraph 9 of the order is that, though it is abundantly clear that Section 32(2)(iii) is operational in the case of the assessee, it only says that unabsorbed depreciation can be carried forward to the successive years. That is not the issue raised in the appeal. 19. At the risk of repetition, we once again reiterate that the issue to be decided in the case is whether the capital gains arising out of sale of depreciable assets could be set off against the profits and gains of business for the assessment year 1999-2000. That issue, unfortunately, has not been considered by the Tribunal. Furthermore, the decisions of the Supreme Court in the case of CIT Vs Cocanada reported in 57 ITR 306 and Sasoon Vs. CIT reported in 86 ITR 575 raised in the grounds of appea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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