1995 (12) TMI 65 - HC - Income Tax

High Court declines to answer reference on unabsorbed depreciation due to non-appearance. No obligation without applicant.

Azad Bus Service Versus Commissioner Of Income-Tax

The High Court declined to answer the reference regarding the allowance of unabsorbed depreciation for set-off against income due to the non-appearance of ... Finding Of Fact, Question Of Law Issues:1. Allowability of unabsorbed depreciation for set-off against income of a specific assessment year.2. Eligibility of unabsorbed depreciation and loss for set-off against income of a subsequent assessment year.3. Qualification of unabsorbed depreciation not considered in partners' assessment for set-off against firm's income in subsequent years.4. Availability of benefit of carry forward of unabsorbed depreciation for a registered firm.5. Applicability of a specific court decision to the appellant.Analysis:The case involved a dispute regarding the allowance of unabsorbed depreciation for set-off against income. The firm, engaged in passenger bus business, had unabsorbed depreciation for multiple assessment years. The Income-tax Officer allowed current depreciation only for the assessment year 1981-82, denying set-off of unabsorbed depreciation from earlier years. The first appellate authority and the Income-tax Appellate Tribunal upheld this decision, leading to the firm filing an application under section 256(1) of the Income-tax Act to refer questions of law to the High Court.The questions raised included the eligibility of unabsorbed depreciation and loss from previous years for set-off against income of the subsequent year, the qualification of unabsorbed depreciation not considered in partners' assessments, the availability of carry forward benefit for unabsorbed depreciation, and the applicability of a specific court decision to the appellant. The Tribunal, however, only referred question one to the High Court for opinion.During the hearing, the applicant/assessee did not appear, leading the counsel for the Department to argue that the reference should not be answered based on precedent. Citing a relevant case law, the court agreed that in the absence of the party at whose instance the reference was made, there was no obligation to answer the reference. Consequently, the court refused to answer the reference, accepting the argument put forth by the Department's counsel.The court's decision was based on the non-appearance of the applicant/assessee, leading to the refusal to answer the reference regarding the allowance of unabsorbed depreciation for set-off against income. The application was disposed of without any cost orders, and the Tribunal was informed accordingly, concluding the matter without a detailed examination of the substantive issues raised in the application.