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Issues: Whether the order passed on the assessee's loss return for the earlier assessment year amounted to a completed assessment under section 23(1) of the Income-tax Act, 1922, or, in the alternative, whether it amounted to a computation and acceptance of the returned loss so as to permit carry-forward to the subsequent year.
Analysis: The assessment year in question arose from a loss return filed for the preceding year. Notices under sections 23(2) and 22(4) of the Income-tax Act, 1922 had been issued, and the Income-tax Officer thereafter passed an order stating that the case fell within the higher exemption limit and was N.A. for that year. The order was not one made without notice, so it could not be treated as an assessment completed under section 23(1). However, the legal effect of the order had to be gathered from its substance. Reading it in context, the order was more appropriately understood as accepting the returned loss and computing it at the amount declared by the assessee.
Conclusion: The order was not an assessment completed under section 23(1), but it did amount to computation of the loss at Rs. 12,862 and acceptance of that loss for the relevant year, entitling the assessee to carry it forward.
Ratio Decidendi: Where an income-tax order is passed after notice and hearing, its legal effect depends on its substance and context; if the order accepts the returned loss, it constitutes computation of loss even though it is not a completed assessment under section 23(1).
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