P. CHAKRAVARTTI, C. J.

( 1 ) THIS Reference under Section 66 (1) of the Income-tax Act, involves a point which, though short, is somewhat tricky.

( 2 ) THE assessee is a company, called the Alluminium Corporation of India Limited and the assessment year in question is 1949-50. It appears that during the accounting year 1948-49, relative to that year of assessment, the assessee company showed a profit of Rs. 9,56,479/-which was done without deduction of the depreciation due for that year. The amount of depreciation allowance to which the assessee wag entitled in respect of its working during the year in question was Rs. 12,52,117/ -. The Income-tax Officer set off that depreciation against the pro-fit and determined the difference, namely, Rs. 2,95,638/-, as the loss for the year. The amount so determined as loss was directed to be carried over to the next year as unabsorbed depreciation.

( 3 ) THE company, however, had an amount of Rs. 27,359/- as loss carried forward from earlier years. Before the Income-tax Officer it was contended that against the year's profit of Rs. 9,56,479/-, the amount of the loss carried forward from the previous years, namely, Rs. 27,359/-, should firs

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