Law: Income Tax Act, 1922

Section: 66(1),24(2),10(2)(vi)

Law: Income Tax Act, 1922

Section: 66(1),24(2),10(2)(vi)

JUDGMENT Kapur, J.- The following two questions of law have been referred to this court under section 66(1) of the Indian Income-tax Act, 1922: "(1)Whether, on the facts and in the circumstances of the case, the assessment order for the assessment year 1955-56 finally concluded the position that the sum of Rs. 1,76,919 directed to be carried forward to the next year, represented loss and not unabsorbed depreciation left over in the preceding year? (2)Whether, on the facts and in the circumstances of the case, the written down value of the two factories in question for the purposes of computation of depreciation allowance was Rs. 6,20,000?" The statement of case relates to the assessment year 1956-57 (previous year ending December 31, 1955). The assessee is a Hindu undivided family. A partnership firm was constituted in the name of Prem Narain Raj Narain by a written instrument dated January 1, 1944, between two brothers, Raj Narain and Prem Narain, each acting as a karta of his Hindu undivided family., The said partnership owned three factories, namely, (1) Prag Distilled Water Ice Factory, (2) Prag Cold Storage, and (3) Prem Raj Enamel Metal Factory. The firm carried on business up to January 1, 1955. Prag Distilled Water Ice Factory and Prag Cold Storage suffered losses of Rs. 2,12,027 and Rs. 1,02,481 respectively up to the end of the assessment year 1955-56 which were carried forward and the carried forward loss was Rs. 3,53,838 in the assessment of the said registered partnership for the assessment year 1955-56 comprising of Rs. 3,14,508 in the aforementioned two factories and Rs. 39,330 in Prem Raj Enamel Metal Factory. This loss was allocated equally between the twp partners so that the carried forward loss in the hands of each partner was Rs. 1,76,919. The partnership firm was dissolved on January 1, 1955. On the same date, the three factories were valued by the partners with the help of experts and divided into two lots. The lot comprising Prag Distilled Water Ice Factory as a going concern together with its assets and liabilities except goodwill and land and Prag Cold Storage also as a going concern together with its assets and liabilities excepting…

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