TaxTMI 
TaxTMI 
2020 (2) TMI 730
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....of the CIT passed under Section 263 of the Act holding that when the claim of the assessee made for rectification has been justifiably allowed by the assessing officer then the same cannot be treated as a ground to invoke the provisions of Section 263 of the Act; overlooking the fact that the mistake rectified by the assessing officer was not apparent from the record but was that of a debatable issue?" 4. Assessment proceeding for the assessment year 2011-12 was concluded by the assessing officer under Section 143(3) of the Act on 29.03.2014 determining total taxable income of the respondent at Rs. 18,16,28,888.00. 5. Respondent thereafter filed application on 28.04.2014 for rectification of the assessment order under Section 154 of the Act. It was mentioned that respondent had carried forward business loss as well as unabsorbed depreciation to be set-off against income for the assessment year 2011-12 as well as for future years. While computing the total taxable income during assessment proceedings, set-off of the said brought forward business loss and unabsorbed depreciation aggregating to Rs. 34,25,68,953.00 was not granted. In such circumstances, respondent sought for rec....
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....wer authorities particularly to the order passed by the Commissioner. He submits that the Commissioner had rightly held the issue to be debatable. His further contention is that the Commissioner had done the right thing to remand the matter back to the assessing officer to re-hear the rectification application after giving a reasonable opportunity to the respondent. Therefore, no prejudice was caused to the respondent by the order passed by the Commissioner. He also submits that carried forward depreciation cannot be set-off against deemed income. 10. On the other hand, learned counsel for the respondent refers to the order passed by the Supreme Court in Virmani Industries Pvt. Ltd. (supra) and submits that the issue in the rectification application is squarely covered by the aforesaid decision. Therefore, when the assessing officer had followed the decision of the Supreme Court and allowed the prayer for rectification by setting-off the carried forward unabsorbed depreciation with the income of the respondent, the same could not have been construed by the Commissioner to be an order which is erroneous and prejudicial to the interest of the Revenue. In such circumstances, questi....
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....pears to refer only to profits or gains of business or profession chargeable under Section 28. But this court has repeatedly held that the said expression is not so confined and that it refers to income under all the heads of income specified in Section 14. In Jaipuria China Clay Mines (P) Limited, the facts were these: the total income of the respondent - assessee for the Assessment Year 1952-53 before charging depreciation was Rs. 14,041/-. After deducting depreciation of Rs. 5,360/-, the Income Tax Officer computed the profit at Rs. 8,681/-. Against this profit, he set off the losses of an earlier year. Having done this, the Income Tax Officer computed the income of the assessee from dividends at Rs. 2,01,130/- and levied tax on it. The assessee claimed that the unabsorbed depreciation aggregating to Rs. 76,857/- should be deducted from the dividend and if it is so done, the total income would get reduced to Rs. 1,32,955/-. The Income Tax Officer rejected the claim. When the matter was ultimately carried to this Court, it took note of the opening words of sub-section, viz., "where, in the assessment of the assessee or if the assessee is a registered firm, in the assessm....
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....g that what the legislature contemplated was an assessment of those partners who were carrying on other business. But in our opinion this suggestion is unsound. What would happen if a partnership consists of four partners, two carrying on other business, Mr. Sastri was unable to explain. Now, if this is the inference to be drawn from these words, it is quite clear that the words "no profits or gains chargeable for that year" are not confined to profits and gains derived from the business whose income is being computed under section 10." To the same effect is the decision in Rajapalayam Mills Ltd. v. CIT, (1978) 115 I.T.R. 777. The court observed that when the profits or gains of a business for a particular assessment year are to be computed under Section 10 (of 1922 Act), the current depreciation allowance for the assessment year in question is deductible under clause (vi) of Section 10(2), but the depreciation allowance of the preceding years would be liable to be taken into account only if, and to the extent to which, it is not absorbed by the total income of the assessee computed under different heads and chargeable to tax for those assessment years. The Court observed ....