Res judicata in income-tax law applies only where a prior ruling finally ines a continuing right, not a year-specific issue.

In income-tax matters, a prior decision binds later assessment years only if it finally determines a right or title, or a fact or legal position fundamental to the decision, and not where the earlier ruling was confined to a single year's circumstances. The earlier Allahabad High Court ruling did not decide that unabsorbed depreciation could be carried forward and set off in subsequent years, and the later year involved different facts. The doctrine of res judicata therefore did not extend the earlier answer to the later assessment, and the assessee was not entitled to set off accumulated depreciation against later-year profits.

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Issues: Whether a prior decision in an earlier assessment year operated as res judicata so as to entitle the assessee to set off unabsorbed depreciation against profits of the later year.

Analysis: The earlier decision was confined to the assessment year of transfer and turned on the factual and legal setting then prevailing. A prior tax decision can bind later years only where it finally determines a right or title not peculiar to a single assessment year, or where a fact or legal position fundamental to the earlier decision remains the same. Here, the earlier ruling did not decide that unabsorbed depreciation could be carried forward and set off in subsequent years, and the later year involved different circumstances. The doctrine of res judicata could not therefore extend the earlier answer to the later assessment.

Conclusion: The assessee was not entitled to claim set-off of the accumulated depreciation against the profits of the later year; the answer was against the assessee.

Ratio Decidendi: In income-tax matters, a prior decision operates as res judicata only when it finally determines a right or title, or a fact or legal position fundamental to the decision, which is not confined to a single assessment year; a decision limited to one year cannot control a later year with different circumstances.

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