Judgment

V. D. TULZAPURKAR, J. :- In these appeals and the tax reference the common question arising for determination relates to the priority between current depreciation and unabsorbed carried forward business loss that is to say which should be deducted first while computing the total income of an assessee for the concerned assessment year.

2. The facts giving rise to the above question in the civil appeals are these. The concerned assessment years are 1951-52 and 1952-53. At the end of assessment year 1950- 51 there was an unabsorbed business loss of Rs. 67534/- and unabsorbed depreciation of Rs. 1,78,154/-. The assessees income without taking into account the current depreciation was Rs. 50,624/- in 1951-52 and Rs. 64,332/- in 1952-53. The assessee contended before the ITO that before deducting the current depreciation from the above profits the unabsorbed loss of the earlier year 1950-51 should be first set off. The ITO did not accept the contention and what he did was that from the profit of Rs. 50,624/- for 1951-52, the depreciation allowance for that year amounting to Rs. 58,140/- was partially set off and the balance of the depreciation of Rs. 7516/- was ordered to be carri