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1 - 10 of 18 (0.21 seconds)Section 72 in The Income Tax Act, 1961 [Entire Act]
Commissioner Of Income-Tax vs Nagapatinam Import And Export ... on 2 January, 1979
15. We are of the view that the decision relied on by the Revenue does not throw any light on the question to be decided here. On the other hand, those decisions proceed on the basis that the unabsorbed depreciation of the firm has to be allocated to the partners for adjustment in the first instance and if it could not be adjusted in full the unabsorbed portion shall be added in the account of the allowance for depreciation and carried forward and set off in the partner's hands. It is no doubt true, as pointed out by this court in CIT v. Nagapattinam Import and Export Corporation [1979] 119 ITR 444, the unabsorbed depreciation allowance can be adjusted only once either in the hands of the partners or in the hands of the firm but not in both. In this case the firm has been dissolved and has ceased to exist after 1970. There is, therefore, no possibility of the unabsorbed depreciation being adjusted in the hands of the firm any longer. Therefore, the assessee is entitled to treat the unabsorbed depreciation as depreciation in the current year as contemplated by s. 32(2) of the Act and set office the same against her aggregate income.
Ballarpur Collieries Co. vs Commissioner Of Income-Tax, Poona on 14 April, 1972
In Ballarpur Collieries Co. v. CIT [1973] 92 ITR 219 (Bom), the assessee-firm was carrying on the business of coal mining. For the year 1958-59, the total of the firm was determined by the ITO at Rs. 5,24,035 after making allowance for the depreciation and development rebate allowable for that year and the profits were allocated among the partners in accordance with their shares. The firm appealed to the AAC contending that the aggregate losses of the earlier years should be set off against the income of Rs. 5,24,035 before tax was levied on the registered firm. This contention having been rejected by the appellate authority, the matter was taken to the Income-tax Appellate Tribunal contending that the unabsorbed depreciation of Rs. 1,12,283 in respect of the assessment year 1956-57 and of Rs. 2,15,911 in respect of the assessment year 1957-58 should be deducted from the income of Rs. 5,24,035 to arrive at the income of the firm for 1958-59 The Tribunal held that the unabsorbed depreciation in the partner's hands was available for set off by the firm itself in the following year in view of the provisions of proviso (b) to s. 10(2) (vi) of the 1922 Act and that the depreciation for 1956-57 could be set off by the firm against the income for the year 1958-59. At the instance of the Revenue, the matter was referred to the High Court. Before the High Court it was urged by the Revenue that once the loss resulting on account of unabsorbed depreciation is allocated to the shares of the partners, the firm itself cannot claim a right to carry forward the unabsorbed depreciation so as to have it deducted from its income before the taxable income of the firm is determined. On the other hand, the assessee contended that the right to carry forward unabsorbed depreciation by s. 32(2) which says that depreciation which remained unabsorbed has to be taken into account before the income of the firm in question is computed. The court rejected the contention of the Revenue and held that even though for certain purposes of set off, losses occasioned on account of unabsorbed depreciation is dealt with under s. 24 of the Act, it does not lose its character or nature as unabsorbed depreciation and is carried forward not by virtue of the provisions of s. 32(2) but by virtue of the express provisions of s. 10(2) (vi), proviso (b), of the Act of 1922. The Allahabad High Court in K. T. Wire products v. Union of India [1973] 92 ITR 459, has, however, taken a different view. It has held that in the case of a registered firm, the net loss including the depreciation allowance, if any, is allocated to the partners who alone are entitled to set off the loss allocated to them in their individual assessments and to carry forward any loss which remains unabsorbed, as provided in ss. 32(2) and 72(2) of the Act and that the firm as such is not entitled to carry forward the losses determined in its assessment. However, the question that arose in those two decisions is entirely different. The question that arose for consideration in those cases was as to whether after allocation of the unabsorbed deprecation allowance as between the partners to be adjusted against their individual income, it is possible for the firm to go back on the earlier allocation and take the unadjusted unabsorbed depreciation allowance and to carry forward the same for setting it off against its future income. While the Bombay High Court held it is possible, the Allahabad High Court held that it is not possible. The question that arises here is as to whether a partner could carry forward his share of the unabsorbed depreciation allowance in the partnership for the purpose of set off against his future income As a matter of fact, on the question arising here, both the decisions proceed on the basis that the partner is entitled to carry forward his share of the unabsorbed depreciation allowance and set it off against his future income.
The Income Tax Act, 1961
Section 35 in The Income Tax Act, 1961 [Entire Act]
Commissioner Of Income Tax, Calcutta vs Jaipuria China Clay Mines (P) Ltd on 1 November, 1965
The view we have taken finds support from the decision of the Supreme Court in CIT v. Jaipuria China Clay Mines (P.) Ltd. [1966] 59 ITR 555. In that case the Supreme Court has observed that in proviso (b) to s. 10(2)(vi) of the 1922 Act corresponding to s. 32(2) of the 1961 Act, the Legislature clearly assumed that erect can be given to depreciation allowance in the assessment of partner and the only way in which it could be given in the assessment of of a partner was by setting it off against income, profits and gains under other heads. The following passage at page 559 is pertinent :
Section 24 in The Income Tax Act, 1961 [Entire Act]
Section 28 in The Income Tax Act, 1961 [Entire Act]
Raj Narain Agarwala vs The Income Tax Commissioner, Delhi on 23 January, 1969
In support of the said contention, he relied on the decision of the Gujarat High Court in CIT v. Garden Silk Weaving Factory [1975] 101 ITR 658, the decision of the Allahabad High Court in CIT v. Virmani Industries (P) Ltd and of the Delhi High Court in Raj Narain Agrawala v. CIT [1970] 75 ITR 1.