COMMISSIONER OF INCOME TAX Vs. ALANKAR BOTTLING CO

JUDGEMENT

(1.) The Tribunal, Allahabad, has referred the following questionslaw under Section 256(2) of the IT Act, 1961, hereinafter referred to as the Act, for opinion to this Court:

(2.) The present reference relates to the asst. yr. 1980-81.

(3.) Briefly stated, the facts giving rise to the present reference are as follows: The respondent-assessee is engaged in the business of bottling of aerated soft drink. For the assessment year in question the assessment was completed on 28th March, 1983, in the status of registered firm. The loss on account of depreciation and investment allowance was computed at Rs. 3,55,227 which was allowed to be carried forward for the next year. However, while passing the assessment order on 28th March, 1983, the ITO had not allocated the shares of the different partners in terms of Section 158 of the Act. Proceedings under Section 154 of the Act was initiated and vide order passed on 12th Feb., 1985, the ITO allocated shares of profit and loss amongst various partners. While doing so, he had also allocated the loss on account of unabsorbed depreciation and investment allowance at the hands of different partners. The net loss was recomputed at Rs. 1,54,611. Feeling aggrieved, the respondent preferred an appeal before the CIT(A) who had held that the AO was not justified in withdrawing depreciation in the order passed under Section 154 of the Act. Feeling aggrieved by the order of the CIT(A) the Revenue preferred an appeal before the Tribunal. The Tribunal has upheld the order passed by the CIT(A). It has further held that the AO was justified in directing, in the original assessment, that loss on account of depreciation can be carried forward for set off in the subsequent years. It was further of the view that the issue whether unabsorbed depreciation has to be allocated in the case of the respondent or of the partners, was a debatable issue, which could not be made a subject-matter of rectification under Section 154 of the Act.