TaxTMI 
TaxTMI 
TaxTMI 
1986 (3) TMI 4
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....he firm and in their place, the Kamala Town Trust was alleged to have become partner. The Revenue challenged this reconstitution of the firm and according to the Revenue, the Singhania brothers never retired and the trust never became a partner. Four questions were referred by the Tribunal to the High Court under section 66(1) of the Indian Income-tax Act, 1922 (hereinafter called the " Act "). Question No. 4 is the only question canvassed before us and survives for these appeals. The same is as follows: " Whether under the provisions of section 10(2)(vi), proviso (b), of the Income-tax Act, the unabsorbed depreciation of the unregistered firm in 1949-50 can be allowed as a deduction in the assessments of the partners of the registered fi....
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....uch profits or gains shall be computed after making the following allowances, namely:-... (vi) in respect of depreciation... Provided that-... (b) where, in the assessment of the assessee or if the assessee is a registered firm, in the assessment of its partners, full effect cannot be given to any such allowance in any year not being a year which ended prior to the 1st day of April, 1939, owing to their being no profits or gains chargeable for that year, or owing to the profits or gains chargeable being less than the allowance, then, subject to the provisions of clause (b) of the proviso to sub-section (2) of section 24, the allowance or part of the allowance to which effect has not been given, as the case may be, shall be added to the a....
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....rward of unabsorbed depreciation in case the firm became registered in the subsequent year. This appears, in our opinion, on a plain reading of the different provisions of the section. The entity being the firm, registration makes no difference to that entity. By registration, the firm gets certain additional qualifications and puts upon itself certain additional burden. The assessee in both the cases, however, is the same. We were referred to the provisions of section 23(5)(b) and section 24 of the 1922 Act and section 71 of the Income-tax Act, 1961. We do not think that on this aspect, the scheme of the Act indicates any intention to deprive the subsequently registered firm of its right to carry forward the unabsorbed depreciation. Deprec....
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....l Committee, affirming the decision of the High Court of Calcutta, (i) that the appellant company was not entitled to have the depreciation allowance of the Bengal Company computed on the original cost of such assets to the Bengal Company for the whole of the previous year but only up to the date of succession and that after that date, it had to be computed on the original cost to the appellant company; and (ii) that the appellant company was not in law entitled to carry forward the unabsorbed depreciation allowance of the Bengal Company. It was further held that the word " assessee " in section 10(2) must, when there is a successor to the business charged to tax, be read in certain of the paragraphs as including both the predecessor and th....
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....ents and to carry forward any loss which remained unabsorbed, as provided in sections 32(2) and 75(2) of the Income-tax Act, 1961. The firm, as such, was not entitled to carry forward the losses determined in the assessment. It could not be contended that since a registered firm was liable to a separate tax called the " firm tax ", which is over and above the tax payable by the partners, the registered firm should be treated like an ordinary assessee for the purpose of the assessment of " firm tax " and the losses of the earlier years computed in the assessment of the firm should be carried forward and set off against its business profits of the subsequent years. Though the " firm tax " was levied under the Finance Act, each year, it was a ....