Partial discontinuance of a composite business does not defeat carry forward of losses or depreciation, and rectification is barred without a genuine issue.

Where a composite business continues in substance and only one activity is sold, the discontinuance is treated as partial rather than a cessation of the whole business, so entitlement to carry forward and set off unabsorbed losses and depreciation against other income is not lost. The note also states that withdrawal of relief already granted in the original assessment was not justified under section 155 because there was no genuine debatable issue or factual controversy supporting rectification, and reliance on section 154 was rejected. The assessee's claim accordingly remained undisturbed.

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Issues: Whether sale of one activity forming part of a composite business amounted to a mere discontinuance of an activity so as to deny carry forward and set off of unabsorbed losses and depreciation, and whether withdrawal of relief granted in the original assessment could be made under section 155 of the Income-tax Act, 1961.

Analysis: The business carried on by the assessee was found to be a composite one, and only the hotel activity was sold during the relevant previous year. On those facts, the discontinuance related only to one part of the composite business and did not destroy the assessee's entitlement to carry forward and set off unabsorbed losses and depreciation against other income. The relief had also been granted in the original assessment, and the attempt to withdraw it was not supported by any real controversy on facts or law. The matter did not present a debatable issue warranting action under section 155, and the reasoning invoking section 154 was not accepted.

Conclusion: The assessee remained entitled to the carry forward and set off claimed, and withdrawal of the benefit under section 155 was not justified.

Final Conclusion: The reference petition was rejected, leaving the assessee's claim undisturbed.

Ratio Decidendi: Where only one activity of a composite business is discontinued, the assessee is not thereby disentitled to carry forward and set off unabsorbed losses and depreciation against other income, and rectificatory withdrawal of a relief already granted is not permissible in the absence of a genuine debatable issue.

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