1989 (4) TMI 45 - HC - Income Tax

Court upholds Tribunal's decision on deductions under Income-tax Act; Assessee entitled to carry forward losses

The court upheld the Tribunal's decision, allowing the deductions claimed under section 80J of the Income-tax Act for all assessment years, including the ... New Industrial Undertaking, Special Deduction Issues:Carrying forward of deductions under section 80J of the Income-tax Act, 1961.Analysis:The judgment concerns the matter of carrying forward deductions under section 80J of the Income-tax Act, 1961. The assessee, a sole proprietor of a business, filed returns for various assessment years claiming deductions under section 80J. The Income-tax Officer allowed deductions for some years but disallowed for others based on different grounds. The issue arose when the Tribunal had to determine whether the assessee was entitled to the computation and carry forward of deductions under section 80J for specific assessment years to set off against income in subsequent years.In the case, the Tribunal allowed the deductions claimed for all the assessment years, including the disputed year 1972-73, relying on previous judgments. The Tribunal's decision was based on the interpretation that there is no requirement in section 80J for the assessee to make a definite claim before carrying forward deductions, especially in cases where the undertaking had suffered losses. This interpretation was supported by various authorities and judgments cited in the case.However, the Revenue relied on a judgment from the High Court of Karnataka, arguing that the Income-tax Officer must compute the loss in the previous year for the subsequent year's assessment before allowing carry forward. This argument was based on the principle that if the loss is not computed for the previous year, there is nothing for the assessee to carry forward and set off against the subsequent year's income.The court favored the interpretation followed by the Tribunal, emphasizing that there is no bar for the Income-tax Officer to compute the loss in the previous year for the purpose of section 80J of the Act during the subsequent year's assessment. The court distinguished the case cited by the Revenue and upheld the Tribunal's decision, stating that the assessee was entitled to the computation and carry forward of deductions under section 80J for the disputed assessment years. Therefore, the court answered the posed question in the affirmative, in favor of the assessee and against the Revenue, disposing of the reference without any costs.