SUPREME COURT OF INDIA
COMMISSIONER OF INCOME TAX, KANPUR ETC.
Vs.
M/S. MOTHER INDIA
DATE OF JUDGMENT – 14/08/1985
BENCH: TULZAPURKAR, V.D. , MUKHARJI, SABYASACHI (J) , MISRA RANGNATH
CITATION: 1985 AIR 1720, 1985 SCR Supl. (2) 556, 1985 SCC (4)1, 1985 SCALE (2)236
ACT: Indian Income Tax Act, 1922, ss. 10(2) (vi) proviso (b) and 24 (2) proviso (b)
Income Tax Act, 1961. ss. 32(2) and 72 (2).
Unabsorbed carried forward losses and current depreciation -Deduction of – Unabsorbed carried forward losses cannot be given preference over current depreciation While computing the total income of an assessee in an assessment year.
HEADNOTE:
The Respondent-assessee in the Civil Appeals had an unabsorbed business 1088 of Rs. 67534 and unabsorbed depreciation of Rs. 1,78,154 at the end of assessment year 1950-51. The respondent’s income without taking into account the current depreciation was Rs. 50,624 in 1951-52 and Rs. 64332 in 1952-53. The amount of current depreciation was, however, Rs. 58,140 in 1951-52 and Rs. 44,580 in 1952-53. The respondent contended before I.T.O. that before deducting the current depreciation from the above profits the unabsorbed 1088 of the earlier year 1950-51 should be first set off. The I.T.O. held that the carried forward 1088 could not be given priority over the current year’s depreciation in the matter of set off and completed the assessment Accordingly. Aggrieved by the order of I.T.O., the respondent preferred appeals for both the years before the A.A.C. who accepted the same holding that unabsorbed carried forward business 1088 should be set off first in each year before deducting the current year’s depreciation. On further appeals by the appellant Revenue the Appellate Tribunal restored the order of the I.T.O. But, the High Court in a reference at the instance of the respondent-assessee answered the question in favour of the assessee. Similar question of law arose for decision in the Tax Reference Case.
