Carry-forward of capital loss under the successor tax law was upheld where the loss had been determined in earlier assessment.

A capital loss computed and recorded in assessment under the Indian Income-tax Act, 1922 remained available for carry forward and set-off against later capital gains under the Income-tax Act, 1961. Reading section 74(1)(b) with section 80, the Supreme Court treated the transition provision as preserving the earlier entitlement where the loss had been determined in assessment proceedings. Section 80 did not bar the claim because the loss was already ascertained under the earlier Act. The Revenue's objection to set-off therefore failed, and the loss was held admissible for set-off in the later year.

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Issues: Whether a capital loss incurred and recorded under the Indian Income-tax Act, 1922 could be carried forward and set off against capital gains in a later assessment year governed by the Income-tax Act, 1961, and whether section 80 of the 1961 Act barred such set-off.

Analysis: The loss claimed for the earlier assessment year had been taken note of and computed in the assessment order, and the record showed that the dispute was only about its character and availability for future set-off. Reading section 74(1)(b) of the Income-tax Act, 1961 with section 80, the statutory scheme preserved the benefit of losses computed under the 1922 Act for later years under the 1961 Act. The requirement in section 80 was satisfied because the loss had been determined in the assessment proceedings, and the transition provision in section 74(1)(b) continued the earlier entitlement.

Conclusion: The set-off was admissible and the Revenue's challenge failed.

Ratio Decidendi: A capital loss determined in assessment under the earlier Act remains available for carry forward and set-off under the successor Act where the transition provision preserves it, and section 80 does not bar the claim when the loss has been determined in assessment.

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