COMMISSIONER OF INCOME TAX Vs. R N MISHRA

JUDGEMENT

(1.) THIS is a reference at the instance of the Commissioner of Income -tax, Orissa, raising the following question : - - 'Whether, on the facts and in the circumstances of the case, the Tribunal was justified in directing the Income -tax Officer to allow the claim of the assessee to bring forward the unabsorbed depreciation determined in the earlier years and set off against the income of the year under consideration although such unabsorbed depreciation was apportioned in the past among the partners and was allowed to be adjusted against their other incomes in terms of Section 32(2) of the Income -tax Act, 1961 ?'

(2.) THE facts reveal, inter alia, that the assessee is a registered firm. The assessment year is 1979 -80. In the immediately preceding assessment year, unabsorbed depreciation was apportioned amongst the partners of the assessee -firm and was allowed to be adjusted against their other incomes in terms of Section 32(2) of the Income -tax Act, 1961. In the assessment year under consideration, the assessee -firm claimed that the unabsorbed depreciation as apportioned in the past, having remained unadjusted, should be carried forward to the year under consideration and adjusted against the profits of the year. The Income -tax Officer did not discuss the assessee's claim. The matter was carried in appeal before the Commissioner of Income -tax (Appeals) from whose order it was found that the assessee's claim related to the unabsorbed depreciation pertaining to the assessment years 1975 -76, 1976 -77 and 1977 -78 since allocated for set -off against the income of the partners in the subsequent years. The Commissioner of Income -tax (Appeals) found that the unabsorbed depreciation still remaining unabsorbed for a particular year in the hands of the partners, reverted to the firm and was allowable in the next year, first in the income of the firm and so on. The Income -tax Officer was, therefore, directed to ascertain the unabsorbed depreciation of the firm which still remained to be set off in the hands of the partners and add the same to the depreciation of the current year and allow the same as deduction against the income determined for that year. The matter was taken before the Tribunal. The Tribunal recorded that on the point under consideration there were conflicting decisions of some of the High Courts. Since preponderance of judicial decisions was found to be in favour of the assessee, the Tribunal upheld the order of the Commissioner of Income -tax (Appeals) in this regard. Hence, this reference before this court. - -

(3.) BY applying the ratio of the aforesaid two decisions to the facts of the present case, we do not find that the Tribunal has committed anything wrong. The present question raised before us is, therefore, answered in the affirmative and in favour of the assessee. The S. J. C. is disposed of. No costs.