TMI Blog1990 (3) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... ck for computation of the total income of the firm in the subsequent years, as if it were the firm's unabsorbed depreciation ?" A few facts, in brief, necessary for deciding the above-referred question is that for the assessment year 1972-73, the assessee which is a registered partnership firm carrying on business as a raising contractor in collieries claimed set-off of the brought forward unabsorbed depreciation against its income for the previous year relevant to the assessment year. The Income-tax Officer disallowed the claim by order dated 7th July, 1979, holding that, in accordance with section 32(2) of the Act in the case of a registered firm, the unabsorbed depreciation allocated to their partners in the earlier assessment year cannot be carried forward to a subsequent year in the assessment of the firm. The Income-tax Officer placed reliance on the decision of the Gujarat High Court in CIT v. Garden Silk Weaving Factory [1975] 101 ITR 658. It was held on the basis of the aforesaid decision that once the allocation of unabsorbed depreciation is made to the partners, there remains nothing to carry forward in the hands of the registered firm in the subsequent year. The A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly by the partner and not by the firm. The Tribunal, however, did not deal with the question in detail and chose to rely on the latest decision of the Gauhati High Court reported in CIT v. Singh Transport Co. [1980] 123 ITR 698, which had taken a view in favour of the assessee. Following the aforesaid view of the Gauhati High Court, the Tribunal held that the assessee was entitled to carry forward the unabsorbed depreciation and claim set off of Rs. 1,05,704. As there were conflicting decisions of several High Courts on the question raised before the Tribunal in the matter, the Tribunal has made the present reference for decision of this court. Learned counsel appearing for the Department placed reliance on the following decisions: Raj Narain Agarwala v. CIT [1970] 75 ITR 1 (Delhi); K. T. Wire Products v. Union of India [1973] 92 ITR 459 (All); CIT v. Garden Silk Weaving Factory [1975] 101 ITR 658 (Guj) ; Kalani Udyog v. ITO [1979] 117 ITR 431 (MP) ; CIT v. Kailashpat Jutha Lal [1980] 125 ITR 11 (All) ; Sankaranarayana Construction Co. v. CIT [1984] 145 ITR 467 (Kar) ; Garden Silk Weaving Factory v. CIT [1983] 144 ITR 613 (Guj) and CIT v. Pioneer Enterprises [1990] 181 ITR 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... between the partners of the firm and they alone shall be entitled to have the amount of the loss set off and carried forward for set off under sections 70, 71, 72, 73, 74 and 74 A. (2) Nothing contained in sub-section (1) of section 72, sub-section (2) of section 73, sub-section (1) or sub-section (3) of section 74 or sub-section (3) of section 74A shall entitle any assessee, being a registered firm, to have its loss carried forward and set off under the provisions of the aforesaid sections." Having considered the submissions of both the parties and having looked into the relevant case law, it may be stated that the Gujarat view in CIT v. Garden Silk Weaving Factory [1975] 101 ITR 658, can be said to be the representative view of the High Courts in favour of the Department and the Andhra Pradesh view in CIT v. Srinivasa Sugar Factory [1988] 174 ITR 178 (AP), can be said to be the representative view of the High Courts in favour of the assessee and need to be considered by this court for the decision of the reference The said opinion of the Gujarat High Court is supported by reasonings in the following words (at p. 665): "Once the allocation of loss of a firm of which depreci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 90): "As noted section 32(2) of the Act provides for carrying forward of the unabsorbed depreciation of the previous year to the succeeding previous years for purposes of computation of the income of the firm. This provision, however, is subject to sections 72(2) and 73(3) of the Act. It is to be borne in mind that there is a material omission of reference to section 75 of the Act in section 32(2), more so in the face of specific reference therein to sections 72(2) and 73(3) of the Act. This omission, Mr. Ratnakar submits, is deliberate and very much intended by the Legislature, particularly when section 182(2) governing the set-off or carry forward of the share of a partner in the losses of the firm is specific in making a reference to the provisions of sections 70 to 75 of the Act ... Thus, a clear distinction is drawn between unabsorbed depreciation and business loss. There are two distinct sections dealing with these two items. Unabsorbed business loss is carried forward and set off against the assessments of the partners exclusively by virtue of section 72, and that too, only for a period of eight assessment years immediately succeeding the assessment year for which the loss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ational and Grindlays Bank Ltd. v. National and Grindlays Bank Ltd., AIR 1976 SC 611). Depreciation is thus related to an asset and is a notional loss as against the actual loss in the sense of outgoings of a business. So far as carrying forward of loss is concerned, section 75 places the restriction that it can be carried forward only in the hands of a partner of a firm. But there is no such restriction so far as carrying forward of depreciation under section 32 of the Act is concerned. The absence of such restriction or limitation in section 32 of the Act in permitting carrying forward of depreciation is a clear indication of the legislative intent that depreciation, if not fully absorbed in an earlier assessment year in the case of a registered firm or an unregistered firm assessed as registered firm in the assessment of its partners, can be carried forward to subsequent years subject only to the priority to be given to carrying forward of loss as provided in section 32(2) read with section 73(3) of the Act. The decisions of the High Courts in favour of the Department, however, take view that once partners have apportioned losses with depreciation, nothing remains with the firm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he hands of the firm. The settled rules of interpretation do not permit the court to read something in a statute which is a clear omission. The rule is known as "casus omissus" which was first applied by the Privy Council in the decision in Crawford v. Spooner [1846] 6 Moo P C C 1 and relied on in Lord Howard De Walden v. IRC [1948] 2 All ER 825 (HL). It has also been referred to in the representative view of the Andhra Pradesh and in CST v. Parson Tools and Plants [1975] 35 STC 413 ; AIR 1975 SC 1039, to which the Gujarat High Court has also made reference in CIT v. National Taj Traders [1980] 121 ITR 535. The Supreme Court, applying the maxim "casus omissus" in construing sections 33B and 34(3) of the Act, made the following observations (at p. 541): "Two principles of construction one relating to casus omissus and the other in regard to reading the statute as a whole appear to be well-settled. In regard to the former, the following statement of law appears in Maxwell on the Interpretation of Statutes ( 12th edition), at page 33: 'Omissions not to be inferred.' It is a corollary to the general rule of literal construction that nothing is to be added to or taken from a statute ..... X X X X Extracts X X X X X X X X Extracts X X X X
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