The revised return effaces the original return, and the carried forward depreciation allowance cannot be treated for all purposes as the current year's depreciation.

K. Shivashankar Bhat, J.—The question referred to us under section 256 of the Income Tax Act, 1961 ("the Act"), read thus :

"(1) Whether on the facts and in the circumstances of the case, the Appellate Tribunal is right in law while holding that when once a valid revised return was filed by the assessee, it completely effaces and obliterates the original return and, therefore, it is only the revised return that has to be taken into account for the purpose of making the assessment ?

(2) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in holding that for purposes of allowing the entertainment expenses under section 37(2A) of the Income Tax Act, the profits and gains of the business should be taken to be the income without setting off the brought forward losses and unabsorbed depreciation of earlier years and right in granting relief or Rs. 25,000 to the assesses-company ?"

2. An answer to the second question would aid in solving the problem under the first question and, therefore, we proceed to consider the second question with reference to the facts.

3. The assessment year in question is 1979-80. The assessee claimed certain entertainment allowance under the provisions of section 37(2A) of the Act. The Income Tax Officer, however, held that the carried forward depreciation allowance of the previous year will have to be set off along with other allowances before arriving at the income under the head "Profits and gains of business" in question. The assessee appealed to the Commissioner of Income Tax (Appeals). The assessee contended before the Commissioner that the assessee has not claimed this allowance while computing the profits from business and, therefore it cannot be thrust upon the assessee. The Commissioner of Income Tax (Appeals) did not accept this contention and dismissed the appeal under this head. The assessee appealed to the Appellate Tribunal. Para 4 of the order of the appellate Tribunal itself shows that the appeal pertained to the disallowance of entertainment expenditure claimed by the assessee to the extent of Rs. 29,615 and this question was linked with the question of allowing depreciation allowance which was carried forward from the previous year, actually, the assesses-company had claimed this allowance in the original return but, while filing the revised return, the assessee had omitted to claim the same. The Income Tax Officer has ignored the omission made by the assessee and allowed the allowance of depreciation on the ground that he has to tax the real income of the assessee for which purpose the statutory allowance will have to be granted. The assessee had contended that, when the revised return was a valid return, the Income Tax Officer could not have referred to the withdrawn original return. That is how the first question referred to us has arisen. Independently of the first question, the Revenue also contended before us that, for the purpose of section 37(2A), while computing the profits from the business, the statutory allowance will have to be reckoned and should be deducted from the receipts even though the assessee fails to claim the deduction. The Appellate Tribunal held that the Income Tax Officer should not have referred to the original return at all since the assessee had filed a revised return and the original return stands obliterated. Regarding the interpretation of sub-clause (i) of section 37(2A) the Tribunal observes :

"If it were the intention of the Legislature that the profits and gains of business or profession over which the entertainment expenditure is allowable should be the figure after allowing the brought forward losses and carried forward depreciation, then it would have stated so in section 37(2A) itself. The taxing statute should always be strictly construed and whenever there is any ambiguity the benefit of doubt should go to the assessee."

4. The Appellate Tribunal refers to the Income Tax return form which sup