Law: Income Tax Act, 1922

Section: 35

Section 154, read with section 72 of the Income-tax Act, 1961 [Corresponding to section 35, read with section 24(2) of the Indian Income-tax Act, 1922] - Rectification of mistakes - Apparent from record - Assessment years 1950-51 - Whether right to carry forward and set off losses in relevant previous year was a substantive right which could not be claimed apart from, and independently of, provisions of Act, and, therefore, when by an enactment a right is given to carry forward losses, unless there is anything to contrary in enactment itself, that right can be claimed only in respect of period during which enactment has been in force - Held, yes - Whether where AAC had allowed losses sustained by assessee in Indore State to be carried forward and set off against income accruing in taxable territories for assessment year 1950-51, in disregard of unamended section 24(2) and specific and clear provision of clause 3 of Taxation laws (Part B States) (Removal of Difficulties) Order, 1950, this was a mistake apparent from record which could be corrected under section 35 - Held, yes - Whether AAC's aforesaid decision which was not in fact subject-matter of further appeal and was not actually considered in that appeal, could not be regarded as having been adjudicated upon by Tribunal by implication and having merged in Tribunal's order - Held, yes - Whether, therefore, principles of merger did not apply, and power of AAC to rectify that part of his order remained unaffected - Held, yes FACTS In the assessment years 1948-49 and 1949-50, the petitioner, who was assessed as a non-resident, incurred losses for the most part in the native State of Indore in the insurance business carried on by it. The petitioner had claimed, inter alia, that the losses sustained by it in the assessment years 1948-49 and 1949-50 be carried forward and set off in the assessment year 1950-51. The ITO disallowed the claim. On appeal, the AAC directed that the losses of the previous years be carried forward and set off as claimed. In the absence of any further appeal by the department, this part of the AAC's appellate order became final. The petitioner had also appealed against the order of ITO,…

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