Court allows set-off of unabsorbed business loss against income. Petitioner's writ petitions allowed with costs.

The court directed the respondent to carry forward the unabsorbed business loss of Rs. 18,041 and set it off against the business income of the petitioner for the assessment years 1970-71 and 1971-72. The writ petitions filed by the petitioner were allowed with costs of Rs. 500.

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Issues Involved:
1. Entitlement to carry forward and set off unabsorbed business loss.
2. Limitation period for rectification of assessments u/s 154 of the Income-tax Act.
3. Duty of the Income-tax Officer to carry forward and set off losses determined in earlier years.

Summary:

1. Entitlement to Carry Forward and Set Off Unabsorbed Business Loss:
The petitioner, an assessee, sought a writ of mandamus to direct the respondent to carry forward the unabsorbed business loss and set it off against the business income for the assessment years 1970-71 and 1971-72. The Income-tax Officer had initially computed the income without conceding the claim to carry forward and set off the 1962-63 assessment year's loss due to the reopening of assessments and de novo assessments for the years 1963-64 to 1966-67. The Appellate Assistant Commissioner and the Income-tax Appellate Tribunal had set aside the assessments and directed the Income-tax Officer to redo them, resulting in the determination of losses to be carried forward.

2. Limitation Period for Rectification of Assessments u/s 154:
The respondent contended that the assessments for the years 1970-71 and 1971-72 could not be revised as the time limit for rectification u/s 154 was barred by limitation. The petitioner argued that the statutory right to set off losses carried forward from earlier years should be honored, and the respondent had a corresponding duty to rectify the assessments. The court held that the Income-tax Officer is duty-bound to rectify the assessments by allowing proper set off of losses, even if the assessments for subsequent years were completed before the finalization of earlier years' assessments.

3. Duty of the Income-tax Officer to Carry Forward and Set Off Losses:
The court emphasized that once the loss is determined by the Income-tax Officer, he is duty-bound to carry forward and set off the loss of earlier years in subsequent years. The court cited judicial precedents, including CIT v. Manmohan Das [1966] 59 ITR 699 (SC), which held that the determination of whether the loss of profits or gains in any year may be carried forward to the following year and set off against the profits and gains of the same business is to be determined by the Income-tax Officer dealing with the assessment in the subsequent year.

Conclusion:
The court directed the respondent to carry forward the unabsorbed business loss of Rs. 18,041 and set it off against the business income of the petitioner for the assessment years 1970-71 and 1971-72, in accordance with law. The writ petitions filed by the petitioner were allowed with costs of Rs. 500.

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