TaxTMI 
TaxTMI 
1988 (2) TMI 113
X X X X Extracts X X X X
X X X X Extracts X X X X
....Income-tax Officer completed the assessment u/s 143(3) of the IT Act, 1961 on 19-2-1982. In the computation of total income the Income-tax Officer determined income under the statutory heads of total income, namely, 'Income from house property', 'Income from business' and 'Capital gains'. Income from house property was determined at Rs. 46,591. Income from business came to Rs. 53,643. There was profit u/s 41(2) amounting to Rs. 48,200. The business income before depreciation thus came to Rs. 1,01,852. From this figure the Income-tax Officer deducted Rs. 55,455 being depreciation allowance for the year under appeal. The balance net business income came to Rs. 46,397. Under the head 'Capital gains' the figure determined was Rs. 25,586. Thus, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s which were carried forward should have first been set off against the profits of a business and if some profits remained, then alone the unabsorbed depreciation of earlier years could be deducted so that the business income was reduced to nil. On this line of reasoning the Commissioner of Income-tax further observed that in the present case there was no positive income under the head 'Business' when the earlier years' losses were set off and, therefore, the Income-tax Officer's action in setting off unabsorbed depreciation against income of the current year under other heads was erroneous and prejudicial to the interests of revenue. To this show-cause notice the assessee objected and pointed out that the provisions of section 32(2) read w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the order of the ITO and in issuing directions to the ITO as he did. On the other hand, the learned departmental representative, relying upon a judgment of this Bench of the Tribunal in the case of South India Corpn. (Travancore) (P.) Ltd. [IT Appeal No. 377 (Coch.) of 1974-75, dated 19-11-1977] supported the order of the Commissioner of Income-tax. 6. We have given careful consideration to the rival submissions and we find no justification whatsoever for the Commissioner of Income-tax to assume jurisdiction to make the order u/s 263 in the case of the assessee for the year under appeal. In order to assume lawful jurisdiction the Commissioner of Income-tax must have jurisdictional facts and these facts include that the order of the Incom....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... be deducted from the total income of the previous year relevant to the assessment year 1952-53. According to the Hon'ble Court, the Act draws no distinction between various allowances and they have to be deducted from the gross profits and gains of a business. According to commercial principles, depreciation would be shown in the accounts and the profit and loss account would reflect the depreciation accounted for in its account. If the profits are not large enough to wipe off the depreciation the profit and loss account would show a loss. Carry forward of depreciation is provided in section 10(2)(vii) and section 24(2) of the Indian IT Act, 1922, only deals with losses other than losses due to depreciation. 7. A question may, however, ....