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of <h1>Carried Forward Depreciation Allowed Against Total World Income: Tribunal Decision Upheld</h1> <h3>Hukamchand Mills Ltd. Versus Commissioner of Income Tax, Bombay City and Suburban District</h3> Hukamchand Mills Ltd. Versus Commissioner of Income Tax, Bombay City and Suburban District - [1962] 44 ITR 411 (Bom) Issues:Interpretation of clause (b) of the proviso to section 10(2)(vi) of the Indian Income Tax Act regarding the allowance of carried forward depreciation against total income or total world income.Analysis:The case involved a limited liability company incorporated in the State of Indore with a textile mill, conducting business in the manufacture and sale of textiles during the relevant assessment years. The question referred was whether the carried forward depreciation allowance of Rs. 5,98,482 should be allowed against the total income or the total world income of the assessee. The company was treated as a resident for tax purposes due to higher income earned in British India in previous years. However, in the assessment year in question, the income earned in the Indore State exceeded that earned in British India, leading to the company being treated as a non-resident for tax purposes.The Tribunal held that the depreciation allowance of the previous year assumes the same character as the depreciation amount determined for the current assessment year. As the depreciation amount for the current year was deductible against the total world income of the assessee, the carried forward depreciation allowance of Rs. 5,98,482 had to be allowed against the total world income. The court agreed with the Tribunal's decision, emphasizing that the adjustment of the unabsorbed depreciation allowance against total income or total world income depended on the deductibility of the depreciation amount against the total world income of the assessee.In conclusion, the court upheld the Tribunal's decision, ruling that the carried forward depreciation allowance should be allowed against the total world income of the assessee. The assessee was directed to pay the costs of the department, and the reference was answered accordingly.
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