COMMISSIONER OF INCOME TAX Vs. FABRIQUIP PRIVATE LIMITED

JUDGEMENT

(1.) THE assessee was a wholly owned subsidiary of Elscope (P) Ltd. On 1st March, 1977, the assessee had sold its undertaking to Elscope (P) Ltd. under certain terms and conditions mentioned in the agreement entered into between the assessee and Elscope (P) Ltd. with which we are not concerned in this reference.

(2.) IN the assessment framed under S. 143(3), r/w S. 144B of the IT Act, 1961 ('the Act'), the ITO brought to tax income from house property on notional basis in respect of certain properties transferred to Elscope (P) Ltd. Further, he did not allow the assessee's claim for carry forward and set off of unabsorbed depreciation, development rebate and investment allowance of the earlier years on the ground that the assessee had ceased to carry on business during the year under reference. The ITO had also charged interest under S. 215 of the Act.

(3.) AS far as the first question is concerned, our attention is invited to the decision of this Court in Deepak Textile Industries Ltd.'s case (supra) and the decision of the apex Court in CIT vs. Virmani Industries (P) Ltd. (1995) 129 CTR (SC) 189 : (1995) 216 ITR 607 (SC) : TC S27.2831. In the aforesaid decisions, the Courts have taken the view that in order to avail of the benefit under S. 32(2) of the Act, it is not necessary that the business carried on in the following previous year should be the same business as was carried on in the preceding previous year. In the absence of any words to that effect, no such requirement ought to be read into the said sub section. Contrasting the provisions of S. 32(2) with the provisions of S. 72(1), the Courts have further held that in the following year, the assessee need not carry on any business or profession for availing of the benefit of sub s. (2) of S. 32. Applying the aforesaid principles to the facts of the present case, we have no doubt in holding that the Tribunal was right in taking the view that the assessee was entitled to carry forward and set off of unabsorbed depreciation. Accordingly, our answer to question No. 1 is in the affirmative, i.e., in favour of the assessee and against the Revenue.