TaxTMI 
TaxTMI 
1962 (8) TMI 70
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....d its business on August 1, 1949, and commenced doing the business of importing trimobiles, clocks and cement and deal in those goods. This new business was commenced before the year ended August 31, 1949. In April, 1950, the assessee again re-started its rubber shoes factory, but again closed that business within a couple of years. In respect of the assets used for the shoe manufacturing business during the assessment years 1950-51 and 1951-52 a total amount of depreciation amounting to Rs. 51,547 (Rs. 13,909 for 1950-51 and Rs. 37,638 for 1951-52) remained unabsorbed during those years and was therefore carried forward. This aforesaid amount of unabsorbed depreciation in respect of the assets used in the shoe manufacturing business was claimed as a deduction by the assessee from the profits of the assessment years 1956-57 and 1957-58. As already stated, the assessee's business of manufacture and sale or rubber shoes was completely stopped within a couple of years after it re-commenced in the year 1950. In the accounting years the assessee was dealing only in trimobiles, clocks and cement. The claim of the assessee for deduction of the aforesaid amount of unabsorbed depreciati....
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....es. Section 8 relates to computation of income from securities. Section 9 relates to computation of income from property; and section 10 relates to computation of profits and gains of business profession and vocation. Material part of section 10 is as follows: "10. (1) The tax shall be payable by an assessee under the head 'profits and gains of business, profession or vocation' in respect of the profits and gains of any business, profession or vocation carried on by him. (2) Such profits or gains shall be computed after making the following allowances, namely: (iv) in respect of insurance against risk of damage or destruction of buildings, machinery, plant, furniture, stocks or stores, used for the purposes of the business, profession or vocation, the amount of any premium paid; (vi) in respect of depreciation of such buildings, machinery, plant or furniture being the property of the assessee, a sum equivalent....... to such percentage on the original cost thereof to the assessee as may in any case or class of cases be prescribed and in any other case, to....
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....djusted leads to the only inference that, for its continue. It postulates continuance of that business. If the business does not continue, then no question arises of ascertaining the depreciation allowance allowable for that year in respect of those depreciable assets. Now, when no question arises about the computation of depreciation allowance, nor can it be substituted in its place. In our opinion, in order to claim adjustment of unabsorbed depreciation of the previous year in the assessment year, the assessee must establish that his business is continuing. If the business is no more in existence, unabsorbed depreciation cannot thereafter be adjusted in the assessments of future years. Had the intention of the legislature been to adjust the unabsorbed depreciation allowance against the profits and gains chargeable to tax of the following year or years irrespective of whether that business continues or not, it would have said so. But it has not said so and the reason appears to be obvious. If unabsorbed depreciation in respect of assets of a defunct business is added to the depreciation allowance in respect of a running business of an assessee it would adversely affect the written....
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....d by Mr. Ramaswami are, in our view, not of any assistance to the assessee. None of them deals with the question of adjustment of unabsorbed depreciation as against the profits of the subsequent years. In Ambica Silk Mills Co. Ltd. v. Commissioner of Income-tax [1952] 22 I.T.R. 58 the question that arose for decision was whether the depreciation allowance of the current year could be set off against the income from other heads if the income of that particular business was not sufficient to absorb it and it was held that in such a case the amount of depreciation allowance could be adjusted against income from other heads. At page 64, the learned Chief justice observed: "In our opinion the only proper interpretation that should be placed upon the expression 'profits or gains' is 'profits or gains, not merely from the particular business in respect of which depreciation is claimed, nor profits or gains from any business conducted by the assessee, but the profits or gains which may accrue or arise to the assessee under any of the heads referred to in section 6'." These observation....