TMI Blog1979 (1) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 90,790. After adjusting the losses brought forward from the preceding three years, the ITO determined the total income at nil. He recorded also in his order that the following amounts be carried forward : Losses to be carried-forward : --------------------------------------------------------------------------------------------------------------------------------------------------- Asstt. Business loss Unabsorbed depreciation year --------------------------------------------------------------------------------------------------------------------------------------------------- Rs. Rs. 1964-65 ... 4,227 1965-66 ... 8,763 1966-67 ... 45,506 1967-68 49,395 77,181 1968-69 ... 2,290 ----------------------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithstanding anything contained in this Chapter, where a change in shareholding has taken place in a previous year in the case of a company, not being a company in which the public are, substantially interested, no loss incurred in any year prior to the previous year shall be carried forward and set off against the income of the previous year unless-- (a) on the last day of the previous year the shares of the company carrying not less than fifty-one per cent. of the voting power were beneficially held by persons who beneficially held shares of the company carrying not less than fifty-one per cent. of the voting power on the last day of the year or years in which the loss was incurred ; or (b) the Income-tax Officer is satisfied that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red any losses prior to the previous year, unless it came within the exception provided in the statute. Learned counsel for the revenue contended that the Tribunal was not justified in picking out unabsorbed depreciation and development rebate and treating them as if they were not covered by the restrictions in s. 79 in the present case. It may be stated here that there is no dispute about the fact that as far as the general loss is concerned, the provisions of s. 79 would apply in the present case. The only point is whether unabsorbed depreciation and development rebate stand out differently from the general loss to which s. 79 admittedly applies. Learned counsel for the Commissioner relied on the opening words of the section, "Notwi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifferent meaning for different assessees. Learned counsel for the revenue relied on two decisions as supporting his stand that " loss " includes whatever has been included in it by way of unabsorbed depreciation and development rebate. The two decisions relied on are CIT v. Chugandas and Co. [1965] 55 ITR 17 (SC) and CIT v. Cocanada Radhaswami Bank Ltd. [1965] 57 ITR 306 (SC). In CIT v. Chugandas and Co. [1965] 55 ITR 17 (SC), the assessee, which was a firm dealing in securities, was assessed to tax under the Indian I.T. Act, 1918. It received substantial amounts as interest on securities in the years 1946 and 1947. The business was discontinued on 30th June, 1947. The question was whether the interest on securities formed part of the bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucceeding assessment years and the loss was allowed to be set off against the income under the head " Business ". However, when it came to the fourth year, the ITO refused to do so, pointing out that the income from securities was different from the income from business. The Supreme Court pointed out, whether a particular income is part of the income of the business, falls to be decided, not on the basis of the provisions of s. 6 of the 1922 Act but on commercial principles. This decision also was rendered in relation to s. 24(2) of the Indian I.T. Act, 1922, and does not appear to us to throw any light on the interpretation of s. 79. The whole Chapter in which s. 79 occurs has made specific provisions as to how the losses are to be compu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fect has not been given is to be added to the amount of the allowance for depreciation for the following previous year and deemed to be part of that allowance, or if there is no such allowance for that previous year, it should be deemed to be allowance for the subsequent year and so on. The result is, the treatment of depreciation is different from loss as seen from s. 72(2) itself. That is why s. 72(2) also provides for a priority in the matter of carry forward and set off of unabsorbed depreciation before the loss is set off. If, therefore, for the purpose of s. 72, losses would not include depreciation, then, as far as s. 79 also is concerned, the same position would have to hold good. In the interpretation that we have placed on s. 79 t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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