1998 (3) TMI 118

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....0) of the Act. The assessee filed the return for the assessment year 1988-89 on July 29, 1988, declaring loss of Rs. 4,75,879 and on August 3, 1989, the assessee filed a revised return declaring loss of Rs. 7,41,330. While completing the assessment, the Assessing Officer has rejected the claim of the assessee for carrying forward the depreciation relating to the assessment year 1987-88 on the ground that the return for the assessment year 1987-88 was non est. Therefore, the depreciation allowance for 1987-88 has not been quantified. Aggrieved by the assessment order, the assessee preferred an appeal to the Commissioner of Income-tax (Appeals) and the same has been allowed holding that unabsorbed depreciation can be carried forward and under....

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....22, on par with the return treated as non est under section 139(10) of the Income-tax Act, 1961, and applying the ratio of the decision of the Madras High Court in the case of Sathappa Textiles P. Ltd. v. ITO (Second) [1969] 71 ITR 260 ?" The main argument of learned counsel for the Revenue is that since the return filed under section 139(10) for the assessment year 1987-88 is non est, the depreciation for that year cannot be carried forward to the assessment year 1988-89 and treated as depreciation for that year. To consider the argument of learned counsel for the Revenue, it is necessary to refer to section 32(2) of the Act. "32. (2) Where, in the assessment of the assessee, full effect cannot be given to any allowance under clause (ii)....