Back
1989 Supreme(P&H) 338
PUNJAB & HARYANA HIGH COURT
Gokal Chand Mital and S.S.Sodhi JJ.
Commissioner Of Income-tax
Versus
Amrit Lal (Prop.Kismat Industries)
Income tax Reference No. 38 of 1983,39 of 1983,
Decided On : APRIL 12, 1989
The Income-tax Officer dealing with the assessment for the subsequent year can compute the loss in the previous year for the purpose of Section 80 J of the Act.
Headnote:
INCOME TAX - Deduction under Section 80J - Computation and carry forward of deduction - Whether assessee entitled to computation and carry forward of deduction under Section 80J for assessment years 1972-73, 1974-75 and 1975-76 for being set off against income of subsequent years - Yes
Fact of the Case:
The assessee, a sole proprietor, claimed deduction under Section 80J of the Income-tax Act, 1961 for assessment years 1972-73, 1973-74, 1974-75, 1975-76 and 1976-77. The Income-tax Officer allowed the deduction for 1973-74 and 1976-77, but disallowed it for the other years. The Commissioner of Income-tax (Appeals) allowed the deduction for 1974-75 and 1975-76, but upheld the disallowance for 1972-73. The Tribunal allowed the deduction for all the years in question.
Finding of the Court:
The High Court held that the assessee was entitled to the computation and carry forward of deduction under Section 80J for the assessment years 1972-73, 1974-75 and 1975-76 for being set off against the income of subsequent years.
Issues: Whether the assessee was entitled to the computation and carry forward of deduction under Section 80J for the assessment years 1972-73, 1974-75 and 1975-76 for being set off against the income of subsequent years ?
Ratio Decidendi: The court held that there is no bar to the Income-tax Officer dealing with the assessment for the subsequent year to compute the loss in the previous year for the purpose of Section 80 J of the Act.
Final Decision: The question posed has thus to be answered in the affirmative, in favour of the assessee and against the Revenue.
S.S.Sodhi, J.
1. The matter here concerns the carrying forward of deductions under Section 80J of the Income-tax Act, 1961 (hereinafter referred to as "the Act").
2. The assessee, as a sole proprietor of Kismat Industries, Faridabad, carries on the business of manufacture of tractors and trolleys. Production commenced on January 7, 1972. The assessee filed a return for the assessment year 1972-73 declaring a loss of Rs. 41,651. No claim was made for any deduction under Section 80J of the Act for that year. The Income-tax Officer did not, therefore, determine the deduction admissible under this provision of law for the purposes of carrying it forward and setting it off against profits and gains in any subsequent year.
3. In the next assessment year, namely, 1973-74, the assessee, in the first instance, filed a return declaring an income of Rs. 11,769, but later filed a revised return showing a loss of Rs. 42,069. Deduction under Section 80J of the Act was claimed in the revised return for both the assessment years, 1972-73 and 1973-74. The Income-tax Officer determined and allowed deduction under Section 80J for the year 1973-74 and carried it forward for being set off against profits and gains in the subsequent years, but disallowed the claim for the assessment year 1972-73, on the ground that it had not been claimed in that year, that is, 1972-73. No appeal was filed against this order.
4. Next, for the assessment years 1974-75 and 1975-76, the assessee claimed deductions under Section 80J of the Act This claim for both these years was declined by the Income-tax Officer as there was a net loss in these years. This order too became final as no appeal was filed against it.
5. Finally, for the assessment year 1976-77, the assessee filed a return and claimed deduction under Section 80J to the extent of Rs. 1,404 for that year. Later, he filed a revised return claiming deduction under Section 80J to the extent of Rs. 1,59, 845, the details of the deductions claimed being as under : Assessment yearAmount of claim Rs. 1972-7323,565 1973-7423,212 1974-7537,319 1975-7635,715 1976-7749,034 _________ 1,59,845
6. The Income-tax Officer did not accept the assessees claim for deduction of Rs. 23,565 for the assessment year 1972-73 on the ground that the earlier claim in this behalf had already been rejected while dealing with the assessment year 1973-74 and that that matter had become final. The claim for deduction of Rs. 23,212 in respect of 1973-74 was, however, admitted. As regards the assessment years 1974-75 and 1975-76, the claim for both these years was disallowed as it had already been rejected and this rejection had become final. Further, the Income-tax Officer observed that the preconditions for the claim under Section 80J of the Act for these two assessment years had not been fulfilled. The deduction to the extent of Rs. 1,404 for the assessment year 1976-77 was, however, allowed with the direction that this claim be carried forward and set off against profits and gains in the subsequent years.
7. When the matter went up in appeal, the Commissioner of Income-tax (Appeals) allowed the claim for 1974-75 and 1975-76 also, but as regards 1972-73, it was held that as this matter had become final by the order for the assessment year 1973-74, the assessee could not claim this benefit for that year.
8. The Tribunal, however, allowed the deduction claimed in respect of all the assessment years in question including the assessment year 1972-73, following the judgment of the High Court of Allahabad in Addl. CIT v. Sheetalaya [1979] 117 ITR 658 and the later judgment of the High Court of Madras in CIT v. Bluemount Ceramics Ltd. [1980] 123 ITR 385. It is in this factual background that the following question of law is now being referred for the opinion of this court:
"Whether, on the facts and in the circumstances of the case, the Tribunal has been right in law in holding that the assessee was entitled to the computation and carry fo
