Law: Income Tax Act, 1922

Section: 24

Income tax---Assessment of Income Profits from non speculative business cannot be set off against brought forward losses before making adjustment for depreciation for year in question. (1971) 80 I T R 510 (All.) dissented from. 117 I T R 555 (Andh. Pra) ; (1976) 104 I T R 1 ; (1971) 80 I T R 510 and 59 I T R 555 ref. JUDGMENT CHANDURKAR, J. The assessee company carries on the business of manufacture of vegetable oil. In the assessment for the assessment year 1959 60, the assessee had made a profit of Rs 10,342 in non speculative business and it claimed that this profit should be set off against the loss for non speculative business brought forward since the year 1954 55. The assessee further claimed that the balance of the non speculative loss for the year 1954 55 should then be set off against the speculative profit of Rs 25,570. The current year's depreciation for the assessment year 1959 60 to which the assessee was entitled amounted to Rs. 35,769. and according to the assessee this should not be absorbed at all against the profits of the assessment year 1959 60, but should be added to the depreciation brought forward from the earlier years and should be carried forward to the next year. The obvious intention was to see that the depreciation of the current year could be set off in future years and the business loss brought forward from the year 1954 55 could be set off before it becomes impermissible to set off at the end of eight years. 2. The Income tax Officer declined to allow the current year's depreciation to be carried forward, and he adjusted the current year's depreciation amounting to Rs. 35,769 and determined the loss from non speculative business at Rs. 25,427. This loss was adjusted by him against speculation profit of Rs. 25,570. Thus, the figure of profit arrived at was Rs. 143. The meagre amount was then adjusted against the loss brought forward from the year 1954 55, which was a sum equal to Rs. 3,21,854. As the assessee's contention that the current year's depreciation should not be taken into account before determining the profit, but instead loss from non speculative business should be adjusted first was rejected by the Income tax…

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