Law:

Section:

Section 72 of the Income-tax Act, 1961 - Losses - Carry forward and set off of business losses - Assessment year 1968-69 - Whether where business of assessee had been discontinued prior to relevant assessment year, Tribunal was justified in holding that assessee was not entitled to carry forward loss from ready business relating to assessment years 1963-64 and 1964-65 and set off same against business income for assessment year in question onwards - Held, yes FACTS In the assessment for the relevant assessment year, the ITO allowed set off of brought forward loss for the assessment years 1963-64 and 1964-65. The Additional Commissioner of Income-tax, invoked section 263 and issued notice to the assessee to show cause why the assessment order should not be modified so as to disallow the above set off as, according to him, the business had been discontinued prior to the relevant previous year. The assessee contended that the business was never discontinued, although it was lying dormant for a couple of years due to adverse trade conditions. The Additional Commissioner rejected this contention and held that the business had been closed down for three or four years earlier to the relevant previous year and, therefore, no brought forward loss could be set off in view of the proviso to section 72(1)(i). He, therefore, directed the ITO to revise the assessment by deleting the carry forward and setoff. On appeal by the assessee, the Tribunal confirmed the above direction of the Additional Commissioner. On reference: HELD The Tribunal had clearly found that the business had been closed down during the assessment years 1966-67 and 1967-68. The assessee had in fact admitted before the Tribunal in an earlier proceeding for the year 1967-68 that the business had been discontinued. This was a clear finding of fact by the Tribunal. This finding had not been challenged by the assessee by raising a specific question. Unless the assessee had a case that the finding of the Tribunal on this question of fact was without any evidence or that the finding was perverse, irrational or arbitrary, and a specific question in such terms was raised before the Court, the assessee could not…

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