Commissioner of Income Tax vs Myul Chemicals (P.) Ltd.

Dr. B.P. Saraf, J.—By this reference u/s 256(1) of the income tax Act, 1961 (''the Act'') the Tribunal has referred the following question of law to this Court for its opinion: Whether, on the facts and in the circumstances of the case, the Tribunal - was right in law in holding that the assessee is entitled to challenge the computation of deficiency u/s 80J for the earlier years of set-off?

The assessee is a private limited company and the assessment year is the assessment year 1977-78. In the assessment for the immediately preceding assessment year, i.e., 1976-77, the ITO had computed the deficiency u/s 80J of the Act at a particular figure, against which the assessee did not file any appeal. In the course of the assessment proceedings for the year 1977-78, the assessee sought set-off of the deficiency for the assessment year 1976-77'', not on the basis of the figure determined by the ITO in the assessment for the assessment year 1976-77 but on some other basis. It was contended by the assessee that it was entitled to get redetermination of the deficiency for the assessment year 1976-77 even in course of proceedings for the subsequent assessment year, viz., 1977-78 as the actual set-off was to be made in that assessment year only. The ITO did not accept the contention of the assessee and allowed the assessee the set-off of deficiency on the basis of the figure determined in the proceedings for the assessment year 1976-77. The assessee appealed to the Commissioner (Appeals), who upheld the order of the ITO. On further appeal to the Tribunal, the Tribunal decided in favour of the assessee. It was held that the assessee was entitled to challenge the computation of the deficiency for the assessment year 1976-77 in the appeal for the subsequent year in which the set-off was sought for. Hence this reference at the instance of the revenue.

We have perused the order of the Tribunal. We find it difficult to uphold the finding of the Tribunal. The deficiency related to the assessment year 1976-77 and was computed by the ITO in the order of assessment for that assessment year. The amount of deficiency shown therein was the only amount which could be carried forward to be set off in the subsequent years in accordance with law. If the assessee was in anyway aggrieved with the computation or determination of the deficiency u/s 80J, it could have taken appropriate remedy by way of appeal, revision, etc., against the order of assessment for the year 1976-77. Having not done so, the assessment for that year became final and the amount determined by the ITO cannot be challenged by the assessee in course of assessment or appeal for the subsequent year. In the subsequent year the assessee is only entitled to get set-off of the amount as determined by the ITO in the earlier assessment year.

In view of the aforementioned position, we are of the clear opinion that the Tribunal was in error in holding that the assessee was entitled to challenge the computation of deficiency u/s 80J for the earlier years in a subsequent assessment year when set-off was being given. The question referred to us is, therefore, answered in the negative, i.e., in favour of the revenue and against the assessee. No order as to costs.