Carry-forward of business loss and unabsorbed depreciation upheld where a revival scheme had overriding effect and belated filing did not bar relief.

The revival scheme for a sick company was treated as having overriding effect for the relevant period, and the assessee's claim to carry forward business loss and unabsorbed depreciation was accepted. The Tribunal noted that the Revenue had accepted the same issue in the immediately preceding year, and the same factual matrix could not be given opposite treatment. It further held that the current year's assessment could not finally pre-empt the subsequent year's determination of actual set-off of brought-forward loss. Unabsorbed depreciation was also treated as distinct and not deniable merely because the return was filed belatedly. The adverse lower-order findings were set aside, and the rectification challenge became infructuous.

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Issues: Whether the assessee was entitled to carry forward business loss and unabsorbed depreciation for the assessment year in question and whether the denial of such carry forward could be sustained under the rectification and scrutiny orders.

Analysis: The scheme framed for revival of the sick company and the orders of the BIFR were treated as having overriding effect in relation to the period covered by the sanctioned scheme. The Tribunal also noted that the Revenue had accepted the assessee's success on the same issue for the immediately preceding assessment year, and the same factual matrix could not justifiably yield opposite results. On the merits, the Tribunal held that the current assessment year's authority could not pre-empt the subsequent assessment year's power to examine the actual set-off of brought-forward loss. The Tribunal further accepted that unabsorbed depreciation stands on a different footing and cannot be denied merely because the return was filed belatedly.

Conclusion: The assessee succeeded on the substantive issue of carry forward of losses and unabsorbed depreciation, and the adverse findings of the lower authorities were set aside. The rectification appeal became infructuous after relief was granted on merits.

Final Conclusion: The assessee obtained substantive relief on the carry-forward issue, while the connected rectification challenge did not survive independently.

Ratio Decidendi: The eligibility to carry forward business loss or claim unabsorbed depreciation cannot be finally denied in the year of assessment by pre-empting the subsequent year's set-off determination, especially where the revival scheme and its overriding statutory effect govern the period in question.

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