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PUNJAB & HARYANA HIGH COURT
Gokal Chand Mital and S.S.Sodhi JJ.
Commissioner Of Income-tax
Versus
Mahavir Steel Rolling Mills
Income tax Reference No. 31 of 1983,
Decided On : MARCH 2, 1989
Unabsorbed Depreciation - Carrying Forward - The court held that unabsorbed depreciation of earlier years is to be carried forward and set off in the hands of the assessee, a registered firm, and not that of its partners in the subsequent years.
Fact of the Case:
The matter concerns the carrying forward of unabsorbed depreciation. The question referred for the opinion of the court was whether unabsorbed depreciation of earlier years is to be carried forward and set off in the hands of the assessee, a registered firm, and not that of its partners in the subsequent years.
Finding of the Court:
The court found that a similar point had arisen before and was decided in favor of the assessee in a previous case, and consequently, the reference was answered in the affirmative, in favor of the assessee and against the Revenue.
Issues: The main issue was the treatment of unabsorbed depreciation of earlier years and whether it should be carried forward and set off in the hands of the assessee or its partners in subsequent years.
Ratio Decidendi: The court's decision was influenced by a previous decision that covered the same issue and held in favor of the assessee.
Final Decision: The reference was answered in the affirmative, in favor of the assessee and against the Revenue.
S.S.Sodhi, J.
1. The matter here concerns the carrying forward of unabsorbed depreciation. In this context, the question referred for the opinion of this court reads as under :
"Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that unabsorbed depreciation of earlier years amounting to Rs, 86,059 is to be carried forward and set off in the hands of and against the income of the assessee, a registered firm, and not that of its partners in the subsequent years ?"
2. A similar point arose before this court in Income-tax Reference No. 107 of 1979 (Pearl Woollen Mills v. C1T [1989] 179 ITR 368 (P & H)), decided on February 1, 1989, and this decision clearly covers the issue raised and in terms thereof, this reference is consequently answered in the affirmative, in favour of the assessee and against the Revenue. There will, however, be no order as to costs.
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