Jagatjit Industries Ltd. vs Commissioner of Income Tax

D.K. Jain, J.

These are 12 references made by the Tribunal, Delhi Bench ''D'', u/s 256(1) of the Income Tax Act, 1961 (hereinafter referred to as ''the Act''), at the instance of the assessed and the revenue. In respect of the assessment years 1960-61, 1962-63 to 1966-67, the following questions have been referred for our opinion :

"1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in its conclusion that the two business activities of the assessed-company, in running the distillery and the sugar factory (now defunct) did not constitute the same business within the meaning of section 24(2) of the Indian Income Tax Act, 1922, as amended by the Finance Act, 1955 and section 72(1) of the Income Tax Act, 1961 ?

Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in its conclusion that the assessed is not entitled to the carry-forward and set-off of its loss computed from the sugar factory for the assessment years 1957-58 and 1958-59 against the profits of the distillery business in any of the six assessment years 1960-61 and 1962-63 to 1966-67 ?

Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in its conclusion that the assessed-company is entitled to carry forward and set off the unabsorbed depreciation of the defunct sugar factory against its income of distillery business in the assessment years 1960-61 and 1962-63 to 1966-67?"

The first two questions have been referred at the instance of the assessed whereas the third question has been referred at the instance of the revenue.

There is no appearance on behalf of the assessed. Therefore, we decline to answer the first two questions.

Insofar as the third question is concerned, the issue sought to be raised by the revenue stands answered by the Supreme Court in Commissioner of Income Tax, Meerut and Others Vs. Virmani Industries Pvt. Ltd. and Others, wherein it has been held that for the purpose of carry-forward and set-off of unabsorbed depreciation, it is not necessary that business in respect of which depreciation was granted should be carried on in the following year. As a matter of fact, it has also been observed that even the assets which earned depreciation need not exist in the following year.

In view of the said decision, the third question is answered in the affirmative, i.e., in favor of the assessed and against the revenue. There will be no order as to costs.