TMI Blog1962 (8) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... of manufacture and sale of rubber shoes in its own factory. It appears that some time before August 1, 1949, the labour working in the factory made certain demands and the Industrial Tribunal had made an award in terms of the demands made by the labour. The assessee anticipating that it would not be profitable to work the factory if those demands were to be satisfied, closed its business on August 1, 1949, and commenced doing the business of importing trimobiles, clocks and cement and deal in those goods. This new business was commenced before the year ended August 31, 1949. In April, 1950, the assessee again re-started its rubber shoes factory, but again closed that business within a couple of years. In respect of the assets used for the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turns on the construction of the proviso (b) to clause (vi) of sub-section (2) of section 10 of the Act. Mr. Ramaswami, learned counsel for the assessee, contends that even though the assessee was not carrying on the business of manufacture and sale of rubber shoes he was entitled to set off the aforesaid unabsorbed depreciation against the profits and gains of his business for the two assessment years in question. According to Mr. Ramaswami, the continuance of the business is not a condition precedent to entitle the assessee to claim a set-off in respect of the unabsorbed depreciation of previous years. That can be set off, even if the business does not continue, against the profits made by the assessee in the subsequent years. It is his a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iv) in respect of insurance against risk of damage or destruction of buildings, machinery, plant, furniture, stocks or stores, used for the purposes of the business, profession or vocation, the amount of any premium paid; (vi) in respect of depreciation of such buildings, machinery, plant or furniture being the property of the assessee, a sum equivalent....... to such percentage on the original cost thereof to the assessee as may in any case or class of cases be prescribed and in any other case, to such percentage on the written down value thereof as may in any case or class of cases be prescribed....... Provided that (b) where, in the assessment of the assessee or if the assessee is a registered firm, in the assessment of its p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anner provided in clause (vi) of sub-section (2) is to be set off against the profits and gains of the assessee chargeable in that year. If there are no profits or if the available profits are not sufficient to absorb the amount of depreciation, proviso (b) further provides that such unabsorbed depreciation allowance is to be included in the depreciation allowance allowable to the assessee in the next year, or if there is no such allowance for that year, then the unabsorbed depreciation of the previous year is to be deemed the depreciation allowance of that year. This provision as to the manner in which the unabsorbed depreciation allowance is to be adjusted leads to the only inference that, for its continue. It postulates continuance of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account. No decision contrary to the one of the Madras High Court has been pointed out to us by Mr. Ramaswami. It is, however, his contention that the decision no more correctly states the law, inasmuch as proviso (b) has undergone a change by reason of its amendment in 1941 and that makes all the difference. Now, by the amendment in 1941, all that is introduced in proviso (b) is the clause subject to the provisions of clause (b) of the proviso to sub-section (2) of section 24 . We fail to see how any difference has been made by the introduction of this clause in the second proviso. All that has been done by that proviso is to postpone adjustment of the unabsorbed depreciation till adjustment of the previous loss. In other words, as betwe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner of Income-tax [1952] 22 I.T.R. 58 the question that arose for decision was whether the depreciation allowance of the current year could be set off against the income from other heads if the income of that particular business was not sufficient to absorb it and it was held that in such a case the amount of depreciation allowance could be adjusted against income from other heads. At page 64, the learned Chief justice observed: In our opinion the only proper interpretation that should be placed upon the expression 'profits or gains' is 'profits or gains, not merely from the particular business in respect of which depreciation is claimed, nor profits or gains from any business conducted by the assessee, but ..... X X X X Extracts X X X X X X X X Extracts X X X X
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