COMMISSIONER OF INCOME-TAX Vs. SHIVA PRASAD BAGARIA

JUDGEMENT

(1.) IN this reference under Section 256(1) of the Income -tax Act, 1961, for the assessment year 1983 -84, the following question of law has been referred to this court: 'Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the unabsorbed depreciation carried forward from the earlier years could be allowed to be set off against the assessee's income of the relevant previous year even though the business to which such unabsorbed depreciation related did not exist during the year ?'

(2.) SHORTLY stated, the facts are that the assessee was a partner in Shree Mahadeo Jute Mills Co. sharing 45 per cent, of the profit. The assessee was allocated the unabsorbed depreciation of Rs. 3,79,702. Out of the said unabsorbed depreciation, a sum of Rs. 1,21,108 was adjusted against the income from another firm, Partabmull Poonamchand, and the balance depreciation of Rs. 2,58,594 was carried forward under Section 32(2) read with Section 72(2) of the Income -tax Act for the assessment year 1982 -83. The assessee claimed carry forward and set off of unabsorbed depreciation during the year under appeal. The Income -tax Officer did not allow the claim of the assessee on the ground that Shree Mahadeo Jute Mills Co. did not carry on any business during the year under appeal.

(3.) THE Tribunal, following the decision of this court in the case of CIT v. Kishanlal and Sons (Udyog) Pvt. Ltd. : [1985]154ITR735(Cal) , upheld the findings of the Commissioner of Income -tax (Appeals).