Brought-forward unabsorbed depreciation set-off upheld in computing taxable income under the governing Supreme Court precedent.

A registered firm's entitlement to set off unabsorbed depreciation brought forward from earlier years against taxable income for assessment year 1977-78 was examined by applying the Supreme Court's ruling in Garden Silk Weaving Factory v. CIT. The governing principle noted was that brought forward unabsorbed depreciation is to be treated in computing taxable income in the manner recognised by that precedent. On that basis, the question was answered in the affirmative and the assessee was treated as entitled to the set-off.

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Issues: Whether the assessee, a registered firm, was entitled to set off unabsorbed depreciation of earlier years against the income liable to assessment for the assessment year 1977-78.

Analysis: The question referred was decided by following the binding decision of the Supreme Court in Garden Silk Weaving Factory v. CIT, which governed the treatment of brought forward unabsorbed depreciation in computing taxable income.

Conclusion: The question was answered in the affirmative, and the assessee was held entitled to the set-off.

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