Law:

Section:

Section 72, read with section 256 of Income-tax Act, 1961 – Losses – Carry forward to set off of business losses – Assessment years 1964-65 and 1965-66 – Assessee-company carried on business of selling vehicles manufactured abroad – With withdrawal of franchise for dealing in those vehicles, stocks were sold without leaving any closing stock – ITO disallowed assessee's claim for set-off of previous losses, against income of relevant assessment years as no business was carried on – Both AAC and Tribunal upheld disallowance – Whether question as to whether assessee had ceased to carry on any business was a question of fact and not a question of law or a mixed question of fact and law, and therefore, no referable question of law arose from Tribunal's order – Held, yes FACTS The assessee-carried on the business of selling Land Over Jeeps, Rover Cars, etc., which were manufactured abroad but franchise for dealing in those vehicles was withdrawn and stocks of cars and trucks and spare parts were sold by the assessee in the accounting period ending on 30-11-1972, without leaving any closing stock. On these facts, the ITO held that the business, for which the loss was computed in the assessment year 1963-64, was not carried on by the assessee in the previous years relevant to the assessment years 1964-65 and 1965-66. The ITO, therefore, disallowed the claim of the assessee to set off previous losses carried forward against the income of the assessee assessed for the assessment years 1964-65 and 1965-66. On appeal, the AAC also held that the assessee had sold all the assets of the business and had also given up the premises where the assessee used to carry on business and, therefore, the assessee must be held to have discontinued the business in respect of which the loss, which was sought to be set off against, was incurred. On further appeal, the Tribunal upheld the order passed by the AAC. It also rejected reference application under section 256(1) on the ground that its finding regarding discontinuance of the business did not give rise to any question of law. On application under section 256(2): HELD On facts, the Tribunal found that the assessee had ceased to carry…

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