TMI Blog1996 (9) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... and 2: " (1) Whether, in the facts and circumstances of the case, the Tribunal was right in holding that the loss carried forward from earlier years in the business of 'growing and manufacturing of tea in India' cannot be set off against the income of the relevant previous year, as manufacturing activity was not carried on in the current previous year ; particularly in the light of judicial decision and the fact that manufacturing activity was restarted after an interval of six years ? (2) Whether, in the facts and circumstances of the case, the Tribunal was right in holding that unabsorbed depreciation of the earlier years cannot be set off against the income of the current previous year, on the ground that there is no depreciation during the current previous year on assets on which the unabsorbed depreciation was allowed, or on any other ground ? " The proceeding presents yet a third feature in the matter of deleting the addition to the income on account of debts borrowed. In regard to this position, the assessee contended for a reference of the question framed by him as question No. 3 in the following manner : "(3) Whether, in the facts and circumstances of the case, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer has, therefore, on a plain reading of the statutory provisions of section 72(1)(i) of the Income-tax Act, 1961, held that since there is no business activity carried on by the assessee during the year, the losses of earlier years cannot be set off as laid down in section 72(1)(i) of the Act. The first appellate authority also proceeded to endorse the said situation to the effect that the business of manufacturing of tea was not in existence during the year and the tea factory itself had been sold, there is no provision for setting off or bringing forward depreciation against the income of another business. The Tribunal in the course of the travel of the proceedings (in paragraph 3.5-page 16) has examined the statutory provisions of section 72 of the Act and in regard thereto has observed that one of the conditions laid down in section 72 which provides for the set-off or the carrying forward of loss of earlier years against the income of the subsequent years is that the business in which the loss was sustained should continue to be carried on by the assessee in the year in which the carried forward loss is to be set off. The Tribunal further observed that during the year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the situation could be one of temporary suspension of the business. This was also answered by the Tribunal, also in regard to the contention that the assessee could still get tea manufactured by some other concerns, in the following way. The Tribunal has seen the statutory requirement that what is required to be considered is the situation of the assessment year under consideration, it being 1983-84 and in regard thereto, on factual basis, the question whether there could be a set off or there could be carrying forward in the context of the factual position. Obviously submissions were made before the Tribunal on speculative basis at least as far as the assessment year under consideration is concerned. Even a bare perusal of the concerned statutory requirements (section 32 and section 72 of the Act) would show that the period of relevance is the assessment year in question. The provisions of section 32(2) of the Act speak of a situation where full effect cannot be given to any allowance in regard to the assessment year in question. If not anything else, it is abundantly clear from the reading of the statutory provision of section 32 that the situation is required to arise w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting to the assessment year 1956-57 were not claimed for set-off against the property income. The assessee made a claim only when he commenced another business of a different character in the accounting year relevant to the assessment year 1965-66 only and it was the claim and its consideration for the accounting year relevant to the assessment year 1965-66 that came up for consideration before the apex court. There cannot be any dispute or even discussion in regard to the observations of the apex court in view of the fact that the factual matrix before us, especially with reference to the assessment year 1983-84, leaves no room for any kind of travel subsequent thereto. What we find from the order of the Tribunal is only a speculative submission that it is a temporary suspension. We are afraid that we are not called upon to express anything as to whether the suspension was temporary or otherwise. As and when there is an occasion, if there is any to consider it, the answer to the eventuality might require consideration of the decision cited by learned counsel. In our judgment, the factual matrix accepted consistently and endorsed emphatically by all the three authorities does not r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nced the credit by cheque. With regard to Sri M. E. Mathew who has advanced Rs. 60,000 on September 22, 1981, January 6, 1982, and January 8, 1982, it is observed that there was no documentary material to prove the source of the fund to the tune of Rs. 60,000. The creditworthiness of the party is also not established. With regard to the third person Sri P. A. Joseph, the first appellate authority has considered the position of advancement of Rs. 15,800 on June 29, 1982, by cash which was repaid on February 28, 1983. It is found that the sources are not disclosed in the confirmation letter. In fact the observation is that the confirmatory letter does not prove anything. Further travel of the proceedings before the Tribunal is an endorsement of the above factual findings. In paragraph 7 of the order, the Tribunal has considered about Sri M. E. Mathew observing absence of documentary evidence proving advancement of Rs. 60,000. As far as Sri Cherian is concerned, the situation also is discussed in paragraph 8 of the order. The Tribunal has quoted ad verbatim the reasoning of the first appellate authority and endorsing the same it is observed that Sri Cherian cannot be said to h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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